Concourt Rules on Constructive Dismissal After 18 Months

The Constitutional Court has ruled that an employee cannot claim constructive dismissal claim based on the anticipation that working conditions will become intolerable.

• The Constitutional Court has ruled that an employee cannot succeed in a constructive dismissal claim based merely on anticipation that working conditions will become intolerable.
• The majority judgment also held that employees must exhaust internal grievance procedures before resigning, with resignation being a last resort.
• Four judges dissented, arguing that the case should have been understood in the context of continued tokenism of Black employees in white corporate South Africa.

In a significant judgment that has taken the Constitutional Court over 18 months to deliver, the court has ruled that an employee cannot succeed in a claim for constructive dismissal based merely on an anticipation that their working conditions will become intolerable.

The court also stressed that employees must first exhaust internal grievance procedures before resigning. Resignation, the court held, should be a measure of last resource.

Constructive dismissal arises where an employee resigns because the employer has made their continued employment intolerable.

CCMA and Labour Court rulings

The case involved Mr Maleka, who was employed by ADT from 2014 until his resignation in 2017 as IT director and a member of its executive committee (EXCO). ADT is a subsidiary of Irish-based Tyco International. Maleka reported to global IT head Paul Birmingham and locally to ADT managing director Stuart Clarkson.

In late 2016, Fidelity Security Group (FSG) entered negotiations to acquire ADT from Tyco. In December that year, Clarkson announced that Allan Quinn would be appointed new financial director and would oversee the IT portfolio, which had previously fallen under Maleka. Maleka would now report to Quinn.

Maleka regarded the change as a demotion, given that Quinn had been his peer. Clarkson maintained that it was not a demotion but intended to provide Maleka with IT support, as Quinn had extensive experience with the systems used by Fidelity.

In March 2017, the Competition Commission approved FSG’s acquisition of ADT. Quinn invited Maleka to a Fidelity-ADT integration meeting.

Maleka again raised his unhappiness with the change in his reporting line, but Clarkson told him it was final. He assured Maleka that his duties, responsibilities, status and salary would remain the same.

Maleka resigned on 23 March 2017. In his resignation letter, he described the change as unacceptable, said he should have been consulted, and maintained it amounted to a demotion from an executive role to a managerial one.

Maleka referred the dispute to the CCMA, claiming constructive dismissal.

But the commissioner found that the purpose of the change was not to demote him but ensure that he receives additional IT support and did not render his working conditions intolerable. His salary and responsibilities remained the same. The commissioner described Maleka’s complaint as an “ego thing”.

Maleka approached the Labour Court to review the CCMA decision. The court held that irritation, frustration and workplace tension are common and do not, on their own, render conditions intolerable. It also found that Maleka had failed to provide a satisfactory explanation for not pursuing internal grievance procedures before resigning. The Labour Court dismissed his application.

The Labour Appeal Court reached the same conclusion.

The Constitutional Court judgment

The Constitutional Court considered whether the unilateral change in line reporting rendered Maleka’s continued employment intolerable and left him with no reasonable alternative but to resign.

The court also examined whether he was obliged to use internal grievance procedures before resigning.

In a majority judgment written by acting Justice Rishinand Seegobin, with justices Jody Kollapen, Steven Majiedt, Zukisa Tshiqi and acting Justice Ronel Tolmay concurring, the appeal was dismissed.

The majority held that constructive dismissal requires proof that continued employment is “intolerable” – something ‘insufferable”, not merely “difficult, fraught or even sour”. Conduct that is merely “rude, uncompromising or unbecoming” would not suffice.

Labour law, the majority said, does not permit employees to resign for “flimsy reasons” and then claim constructive dismissal. Resignation must be a last resort.

The majority noted that the reporting change did not alter Maleka’s title, position, salary, role and responsibilities or his position on the EXCO.

The court observed that “the business world is a fluid environment” and businesses constantly restructure and rebrand to “meet the demands of a changing world”. Although restructuring can sometimes lead to redundancies, Maleka had not lost his job following the acquisition.

The majority characterised his complaint as one of “anticipated intolerability” rather than a response to concrete conduct that had already rendered his position unbearable.

The majority also found that Maleka’s failure to make use of internal grievance processes before resigning counted against him, because an employee could not resign and claim constructive dismissal every time their feelings were hurt.

Dissenting judgment

A dissenting judgment, by acting Deputy Chief Justice Mbuyiseli Madlanga, with Chief Justice Mandisa Maya, Justice Rammaka Mathopo and Justice Owen Rogers concurring, would have upheld Maleka’s appeal.

The judges contended that Maleka’s decision to resign had to be understood in the broader context of the continued tokenism of Black employees in white corporate South Africa.

The minority took the view that “we are in a society with a history of which we are all aware, a significant part of whose negative legacies continue to engulf us.”

The minority said the argument that Quinn was providing support to Maleka was not substantiated and it was never suggested that Maleka lacked the necessary competence.

It was also unclear if any other executives had been subjected to similar changes. It did not make sense that one executive should report to another.

The dissenting judges found that without providing a cogent reason, the change was belittling and injured Maleka’s dignity. Although his title, salary and so on remained the same, in their view his position had been reduced to a hollowed-out version.

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