A bridge too far: rejecting the conversion of procedural unfairness into substantive injustice

Universal Product Network (UPN), the logistics arm of Woolworths, charged approximately 256 employees for misconduct during a protected strike in October 2015, all but three of whom were dismissed. The misconduct included breaches of picketing rules, contraventions of an interdict, and obstruction of vehicles accessing UPN premises.

Twenty‑three disciplinary hearings were conducted. Most employees were found guilty and dismissed. The dismissals were referred to the CCMA.

The commissioner found:

• The dismissals were substantively fair (employees were guilty and dismissal was appropriate), but
• procedurally unfair, and awarded one month’s salary to each employee as compensation.

The trade union reviewed the award in the Labour Court.

Labour court decision

The Labour Court:

• Did not interfere with the one‑month compensation award,
• but set aside the commissioner’s finding of procedural unfairness, and
• substituted it with a finding that the dismissals were substantively unfair because the procedural defects were “gross”, ordering reinstatement and further compensation.

Crucially, this issue (gross procedural unfairness converting into substantive unfairness) had not been pleaded by the union nor argued before the arbitrator.

Issue on appeal

The central legal question before the Labour Appeal Court was whether gross procedural unfairness in a dismissal “mutate” or “morph” into substantive unfairness under the Labour Relations Act 66 of 1995.

Decision of the Labour Appeal Court

The appeal succeeded. The Labour Appeal Court:

• Set aside the Labour Court’s judgment;
• reinstated the original arbitration award; and
• dismissed the union’s review application.

No costs order was made.

Key findings and legal principles

Clear distinction between substantive and procedural unfairness

• The LAC reaffirmed that the LRA draws a strict bifurcation between:
  • Substantive unfairness (absence of a fair reason); and
  • procedural unfairness (absence of a fair procedure).
• Section 188 of the LRA treats these as distinct enquiries. Procedural unfairness, regardless of its severity, cannot convert a dismissal that has a fair reason into a substantively unfair dismissal.

Gross procedural unfairness does not equal substantive unfairness

• The Court expressly rejected the Labour Court’s reliance on authorities suggesting that “gross” procedural failures vitiate the outcome of a dismissal.
• The LAC held:
  • The notion that procedural unfairness can morph into substantive unfairness is inconsistent with the current LRA framework.
  • Earlier authorities that blurred this distinction were decided under the 1956 LRA or concerned gross irregularities in arbitration proceedings, not internal disciplinary hearings.

Arbitration is a hearing de novo

• Any procedural defects in the internal disciplinary process lose significance once the matter proceeds to arbitration, which is a full rehearing.
• The commissioner correctly assessed substantive fairness based on the evidence before him.

Courts may not decide unpleaded cases

• The Labour Court erred by introducing, of its own accord, an argument that procedural unfairness became substantive unfairness.
• A reviewing court:
  • Is bound by the grounds pleaded;
  • may not raise new factual disputes requiring evidence; and
  • may not substitute appeal‑style reasoning for the review test.

Compensation for procedural unfairness

• The commissioner’s award of one month’s compensation fell squarely within the discretion permitted by section 194(1) of the LRA and was not unreasonable.

Importance of the judgment

This decision is significant because it:

• Reasserts doctrinal clarity on the separation of substance and procedure in dismissal law.
• Curbs an emerging tendency in some Labour Court judgments to elevate severe procedural shortcomings into substantive unfairness.
• Confirms that procedural unfairness is remedied primarily through compensation, not reinstatement, where a fair reason exists.
• Reinforces limits on judicial intervention in CCMA awards and the importance of pleaded review grounds.

Conclusion

This judgment is a clear reassertion of principle under the Labour Relations Act. The Labour Appeal Court confirmed that procedural unfairness, however serious, does not transmogrify into substantive unfairness where the employer has established a valid and fair reason for dismissal. Equally important is the Court’s reaffirmation of the limits of review jurisdiction. A reviewing court is bound by the case pleaded and the test of reasonableness; it is not entitled to recast the dispute or substitute its own view under the guise of review. The decision serves as a reminder that gross procedural defects are remedied through compensation, not through the reclassification of an otherwise substantively fair dismissal.

For advice or more information, please contact Riona Kalua, head of our Labour and Employment team.