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By Ivan Israelstam
Employer's discretion and management prerogative are terms used every day in business. These terms reflect the right of the employer to make business decisions in the interests of the effective running of the enterprise. However, the right of the manager to make business decisions is substantially limited both by the internal rules of organisations and by labour law.
Every organisation has written or unwritten rules on the limits of each manager's authority. Whether or not these rules have been spelt out clearly, the fact remains that they exist, even if subconsciously. Problems relating to over-stepping of these limits arise where the authority limits are not spelt out clearly and unambiguously. In such cases, managers take decisions that they are either not entitled to take and/or are ill-equipped to take.
If it is shown that the manager reasonably believed he or she had the right and the duty to make the decision, his or her dismissal might be found to be unfair at the CCMA or other tribunal. This places the onus on the employer for clearly spelling out the decision-making limits of each manager. All rules of the organisation must be vetted to ensure that they do not conflict with the law. For example, it is dangerous for the company rules to allow managers to fire employees without following proper dismissal procedure.
It is fairly obvious where the law draws the line. For example, most employers know that, on a first offence of late-coming, an employee cannot normally be fired. However, it is not well known among employers the amount of discretion managers have, for example, in deciding to promote one employee and not another. The LRA effectively prohibits unfair promotional practices but does not state what constitutes fair and unfair promotion. The big question then arises: On what grounds does a manager have the discretion to decide that an employee is not suitable for promotion?
In Dumisa v the University of Durban-Westville the employer decided not to promote the employee on the grounds that he failed to meet the criteria laid down by the employer's promotional policy. While the CCMA did not find these criteria unfair, it still decided to order the employer to consider the employee for promotion. This was because the arbitrator found that the employer had promised to consider the employee for promotion, therefore giving rise to a legitimate expectation.
The question here is whether the person who gave this undertaking to Dumisa had the authority to do so. If the employer's promotional policy laid down specific promotional criteria which Dumisa did not fit then, in terms of the limits set by that policy, no person had the right to promise him that he would be considered for the post. It might have been different if the undertaking to consider him for promotion was made conditional on his meeting the criteria laid down in the policy.
Therefore, the arbitrator found that, while it is management's prerogative to judge if an employee is suitable for promotion, this prerogative is outweighed by any undertaking made to an employee that may contradict company policy. In PSA obo Steenkamp vs SAPS the arbitrator found that the employer did have a right to exercise its discretion in deciding whether the employee should be promoted. However, the arbitrator also found this discretion had not been exercised fairly. This finding was based on the fact that the employer failed to bring sufficient evidence justifying why another employee was promoted instead of Steenkamp.
It is therefore the employer's onus to ensure that:
- its rules affecting management decision making are crystal clear;
- its policies are fully aligned with the law;
- its managers remain within the law and company policy; and
- management discretion is exercised based on the law, company rules and sound reasoning.
Ivan Israelstam is chief executive of Labour Law Management Consulting. You can contact him on 011-888-7944 or via email:
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Our thanks to Ivan and The Star newspaper for the permission to publish this article
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