Deliwe Nancy Nyathikazi v Public Health and Social Development Sectoral Bargaining Council and Others

The appellant, Deliwe Nancy Nyathikazi, was employed by the Department of Health – Limpopo as Senior General Manager: Academic and Tertiary Department. She was dismissed following a disciplinary hearing where she was found guilty on two counts: (1) In March 2011, she approved procurement of control room/two-way radio equipment from Kitso Tech Cooper Radio for R7,085,409.16 without following proper supply chain processes; (2) In February-March 2011, she approved procurement and payment for additional Columbus software for R4,976,647.20 without following supply chain processes. Both procurements contravened the Public Finance Management Act 1 of 1999, Treasury Regulations, and in the Columbus case, section 7 of the SITA Act 88 of 1998 which required procurement of IT goods through SITA. The appellant referred the dismissal dispute to the bargaining council where it proceeded to arbitration. The arbitrator (second respondent) found the misconduct proven but the dismissal substantively unfair due to inconsistent discipline (three other acting heads of department who approved similar expenditure were not disciplined) and procedurally unfair (the hearing proceeded in the appellant's absence when the presiding officer had initially been late). The arbitrator awarded compensation of R181,495.32 (two months' remuneration) instead of reinstatement. The appellant applied to review and set aside the award in the Labour Court, which was dismissed. She then appealed to the Labour Appeal Court.

• Whether the arbitrator's award was reasonable and one a reasonable decision-maker could reach on the evidence
• Whether the appellant's approval of procurement constituted irregular expenditure in contravention of the Public Finance Management Act and related regulations
• Whether the Kitso procurement was justified as participation in the Polokwane Municipality contract
• Whether the Columbus software procurement complied with the SITA Act and contract RT543
• Whether the principle of discriminatory discipline (parity principle) was properly applied
• Whether condonation should be granted for non-compliance with Labour Appeal Court Rules
• Whether the award of compensation instead of reinstatement was appropriate

The appeal was dismissed with costs. The arbitration award awarding the appellant compensation of R181,495.32 (equivalent to two months' remuneration) was upheld.

The binding legal principles established are: (1) An arbitration award will only be set aside on review if it is one that no reasonable arbitrator could reach on the material before them, applying the Sidumo test; (2) The parity principle in discriminatory discipline cases must be applied with caution - employees who commit serious misconduct cannot escape appropriate sanction merely because other employees who committed similar offenses were not properly disciplined in the past; (3) Senior public servants who approve procurement expenditure in contravention of the Public Finance Management Act, Treasury Regulations and the SITA Act (particularly where IT goods must be procured through SITA) commit misconduct justifying dismissal; (4) An initial procurement contract for specific purposes does not authorize subsequent unrelated procurement from the same supplier without following proper supply chain processes; (5) Even where unfairness in dismissal is found, reinstatement is not appropriate where the employee committed serious misconduct involving millions in irregular expenditure, showed no remorse, and the employment relationship has become intolerable.

Davis JA made several important obiter observations: (1) The entire legislative framework for adjudicating dismissal disputes in South Africa requires careful and thorough re-examination to assess whether the LRA's objectives are adequately met, given the chronic delays illustrated by this case taking over 5 years to resolve; (2) The chaotic state of this litigation, including failure to provide the full record timeously and filing vast swathes of inconsequential documents, exemplifies systemic problems in labour dispute resolution; (3) While the arbitrator and Labour Court's approach to discriminatory discipline contradicted the proper approach in Absa Bank Ltd v Naidu, the appellant benefitted from this error as no cross-appeal was lodged by the respondent; (4) The principle in Steenkamp v Edcon that labour disputes should be resolved expeditiously is a significant consideration in condonation applications, though prospects of success remain paramount.

This case is significant in South African labour law for several reasons: (1) It emphasizes the challenges in achieving the LRA's objective of expeditious dispute resolution, with this dismissal dispute taking over 5 years from dismissal to final appeal; (2) It reinforces the Sidumo test that awards will only be set aside if unreasonable - not merely for errors of fact or law unless they render the outcome unreasonable; (3) It clarifies the limits of the parity principle in discriminatory discipline cases, affirming the approach in Absa Bank Ltd v Naidu that the principle must be applied with caution and should not allow employees who commit serious misconduct to escape appropriate sanction merely because previous offenders were improperly treated leniently; (4) It demonstrates the application of public finance management legislation in the labour law context, confirming that senior public servants who authorize irregular expenditure in breach of the PFMA, Treasury Regulations and SITA Act can be dismissed for misconduct; (5) It illustrates that even where procedural and substantive unfairness is found, reinstatement may be inappropriate where the employment relationship has irretrievably broken down due to serious misconduct and lack of remorse.