- Valentia Mahlaba carried out a verification for a VAT refund claim of about R3.6 million. However, she did not record findings on three risk codes.
- SARS dismissed her for gross negligence, though it later admitted that she had addressed three other identified risks.
- The Labour Court found there was no financial loss, dishonesty, or breakdown of trust and ordered that she be reinstated with retrospective effect.
A SARS auditor who carried out a VAT verification but did not record three of her findings has won her job back after the Labour Court in Johannesburg ruled that her dismissal was too harsh.
Judge M Makhura found that Valentia Mahlaba was negligent because she did not record audit findings for risk codes 4021, 4026, and 4039. However, the evidence showed she had performed the audit work required.
Mahlaba had worked for SARS since 1995 as a Compliance Auditor or VAT verifier. In December 2019, she verified a VAT refund claim of about R3.6 million by the Muslim Judicial Council Land Trust. SARS had identified six risks that needed attention, and during the review SARS conceded that Mahlaba had addressed three of them: risk codes 4001, 4017, and 4038.
The remaining issue was about risk codes 4021, 4026, and 4039. Judge Makhura found that Mahlaba had done the verification work but had not properly recorded what she had done and the conclusions she reached. This difference was key in deciding whether her conduct was ordinary negligence or the gross negligence SARS claimed as grounds for dismissal.
Mahlaba was dismissed on 3 September 2021 after SARS claimed her actions had caused a financial loss of R3,608,006.26. She challenged the CCMA award that upheld her dismissal, which led to the Labour Court review.
The court found she had been negligent, but not grossly negligent
The Labour Court agreed that Mahlaba was negligent for not recording her findings on the three risk codes. However, Judge Makhura found that the commissioner went beyond what the evidence showed by treating the missing records as proof that the audit work had not been done.
The commissioner also suggested that a payment stopper was imposed because Mahlaba had not addressed the identified risks. Judge Makhura rejected this because there was no evidence explaining why the stopper had been put in place. The judge said that SARS’s main issue was not that Mahlaba failed to do the audits or address the relevant risks, but rather that she failed to record her audit findings.
The alleged R3.6 million loss did not materialise
The original disciplinary charge claimed that Mahlaba’s actions had led to a financial loss of R3,608,006.26 to SARS. In the end, the evidence showed that the VAT refund was legitimate, lawfully due, and payable to the Muslim Judicial Council Land Trust. So SARS suffered no financial loss because of Mahlaba’s conduct.
The refund was first paid after another SARS employee lifted a payment stopper, but it was later recalled. The taxpayer then repaid the amount, but SARS ended up paying the refund again in May 2021. Judge Makhura noted that this later payment was not mentioned in the disciplinary enquiry.
The fact that there was no financial loss was an important factor in deciding whether Mahlaba’s negligence should be called gross negligence.
Her long service and continued trust counted
Mahlaba had more than 26 years of unblemished service with SARS, and there was no evidence of dishonesty, bad faith, or wilful misconduct. The incident happened in December 2019, but she carried on doing the same work for more than 18 months before she was dismissed, without any restrictions or further issues.
Judge Makhura found that these facts did not show that trust had broken down completely. SARS’s main witness, Hester Susanna De Sousa, confirmed she still trusted Mahlaba. "This is the only case that I’m aware of where this happened. So yes, I will trust the applicant," De Sousa testified.
De Sousa also told the arbitration that employees who failed to follow SARS’s audit guidelines were usually disciplined gradually, with a warning given in most cases. This evidence made it less likely that dismissal was the right punishment.
Gross negligence had to be proved
Judge Makhura stressed that an employer cannot turn ordinary negligence into gross negligence just by calling it that. "Negligence is not made gross or serious simply because an employer describes it that way," he said.
Whether negligence is gross depends on the facts and evidence of each case. In Mahlaba’s case, her misconduct was only about not recording three audit findings. She had done the verification work, SARS lost no money, and there was no sign of dishonesty or lost trust. The judge therefore found that the negligence did not justify dismissal.
Mahlaba gets her job back
Judge Makhura reviewed and set aside the CCMA arbitration award and decided Mahlaba’s dismissal was substantively unfair. She was given a written warning valid for five months.
The Labour Court ordered SARS to reinstate her from the date of her dismissal, with the same terms and conditions and no loss of benefits. SARS was also ordered to pay her back pay from the date of dismissal until her reinstatement.
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