An arbitration award reinstating an employee does not cover the period between the award and its implementation, and the basis for a claim covering such period is contractual and is not to be found in the LRA.
The Labour Appeal Court, in Coca Cola Sabco (Pty) Limited v Harold van Wyk (2014) 25 SALLR 109 (LAC), had the opportunity of considering the following important issues:
(a) In the scenario where an arbitration award orders the reinstatement of an employee retrospectively from a certain date to the date of the award, without any loss of benefits and on terms and conditions of employment that existed no less favourably than prior to the relevant dismissal, does such award cover the period between the date of the award and the implementation of same?
(b) If such reinstatement award does not cover the said period between the date of the reinstatement award ito the implementation of such award, then on what basis can an employee so dismissed institute a claim for remuneration and benefits relating to such period?
This is an unopposed appeal against the judgment of the Labour Court.
Pertinent facts of the case
The respondent was employed by the appellant since 1996. During September 2001, whilst still employed by the appellant, he was seriously, but not permanently, injured in a motor vehicle collision. On 2 January 2002, he returned to work.
Employee dismissed for incapacity ill-health
During June 2003, he was dismissed for incapacity due to ill health. He referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (“the CCMA”). Conciliation failed and he referred the dispute for arbitration.
CCMA award: dismissal procedurally fair but substantively unfair
On 5 August 2004, a Commissioner, acting under the auspices of the CCMA, found that the respondent’s dismissal was procedurally fair but substantively unfair.
Reinstatement retrospectively awarded
The commissioner issued the following award:
“1. The dismissal of the Applicant was substantively unfair and procedurally fair.
2. The Respondent is ordered to re-instate the Applicant retrospectively without any loss of benefits to his former position and on terms that are no less favourable prior to the dismissal.
3. The Respondent is further ordered to pay the Applicant arrears salary in the amount of R33 507.10 calculated at R703.00 per week X 4.333X11 months [for the preceding 11 months].
4. Payment of the above amount to be paid on or before 1 September 2004.
5. There is no order as to costs.”
Review application not successful
The appellant was not satisfied with the outcome and launched a review application against the Commissioner’s award. The review application was dismissed with costs on 16 November 2007.
Application for leave to appeal not successful
On 11 March 2008, an application for leave to appeal suffered the same fate.
Petition for leave to appeal to Labour Appeal Court not successful
The appellant petitioned the Judge President. On 31 July 2008, the Labour Appeal Court refused the appellant’s petition for leave to appeal.
Registrar of court issued writ of execution against the appellant’s movable property
On 19 February 2009, the registrar of the Labour Court issued a writ of execution against the appellant’s movable property.
The respondent reinstated
After protracted negotiations, the respondent was reinstated on 2 March 2009.
The relevant parts of the writ read as follows:
“and to cause to be realised of such movable goods by public auction the sum of:
(1) R33 507.10 (thirty-three thousand five hundred and seven rand ten cents) awarded as compensation to the Applicant in terms of the arbitration award dated 5 August 2004 confirmed under labour court case no: JR2166/04 on 16 November 2007 attached to this writ marked Annexure ‘A’.
(2) R164 489.34 (one hundred and sixty-four thousand four hundred and eighty-nine rand thirty-four cents) (outstanding salary calculated at R703.00 per week x 4.333 x 54 months since 1 September 2004) plus interest. See Equity Aviation Services (Pty) Ltd v Commission for Conciliation Mediation and Arbitration and others (CCT88/07) 2008 ZCAA 16.
(3) Interest on R33 507.10 at the rate of 15.5% per annum (monthly compounded) calculated from 5 August 2004 to date of final payment, obtained and recovered by judgment of the Labour Court dated 11 March 2008 in the case mentioned in the preceding paragraph, plus R387.60 for the taxed costs and charges incurred in issuing this writ. Attached to the writ is the court order dated 11 March 2008 under labour court case no JR2166/04 marked Annexure ‘B’.”
Approach to Labour Court to set aside writ of execution, paragraph 2
The appellant approached the Labour Court with an application to set aside the writ of execution. Paragraphs 1 and 3 of the writ were not contested in the court a quo. The appellant only took issue with paragraph 2 thereof.
Remuneration in respect of preceding 11 months
The court a quo carefully analysed the award of the commissioner and correctly concluded that:
“Despite the inelegant and possibly ambiguous terms of his award, it had the effect of reinstating the first respondent with retrospective effect, on conditions not less favourable than those that pertained prior to dismissal, save that in regard to his salary, and in the exercise of the commissioner’s discretion, the applicant was obliged only to pay the third respondent the amount that he would have earned in the preceding 11 months, i.e. R33 507.10. This is not an award of compensation, whatever labels the first respondent may have affixed to it in paragraph 1 of the writ.”
Remuneration post reinstatement: months 12 – 54
The court a quo, however, went further and held that:
“an employer’s liability for remuneration post reinstatement falls within the scope of the award of reinstatement and being a judgment ad pecuniam solvendam it can be enforced by way of a writ of execution”.
The court a quo then offered a practical solution to the problem and said the following:
“Where a judgment for payment of monies that are not quantified in the judgment itself but are capable of being quantified without difficulty, it is incumbent on a judgment creditor to prove the nature and extent of the judgment debtor’s liability, for example, by way of affidavit.”
Quantification not properly done
The court a quo concluded that paragraph 2 of the writ of execution was not properly proved. According to the court a quo, the quantification of paragraph 2 should have been done before the registrar by way of affidavit.
Order of the Labour Court
The court a quo issued the following order:
“1. The writ of execution issued on 19 February 2009 is varied by the deletion of paragraph 2 thereof.
2. The first respondent is given leave to apply for the issuing of a fresh writ, on affidavit, in which the first respondent quantifies the applicant’s liability to the first respondent for wages payable consequent on the order of reinstatement.
3. There is no order as to costs.”
Grounds of appeal
This appeal is directed against paragraph 2 of the court a quo’s order. The appellant argued that the court a quo erred in finding that an award for reinstatement “required the payment for the full period up to and including the date of compliance”. It submitted that awards for reinstatement could not extend to a date beyond the date of the award. It further submitted that awards for reinstatement could not serve as a basis for a common law contractual entitlement to automatic payment of remuneration that would have been payable had the employee not been unfairly dismissed.
Findings of the labour appeal court
The issues which the Labour Appeal Court was called upon to decide were, firstly, whether an award of reinstatement automatically entitled an employee, in whose favour such award was made, to amounts post the date of the award until the implementation date or whether the claim in respect of the amounts subsequent to the date of the award should be claimed separately and, secondly, whether such amounts could be claimed by way of issuing a writ of execution accompanied by an affidavit setting out the amount of the claim.
Effect of reinstatement order
In Equity Aviation Services (Pty) Ltd v CCMA and Others 2009 (1) SA 390 (CC), the effect of a reinstatement order was explained as follows:
“ The ordinary meaning of the word ‘reinstate’ is to put the employee back into the same job or position he or she occupied before the dismissal, on the same terms and conditions. Reinstatement is the primary statutory remedy in unfair dismissal disputes. It is aimed at placing an employee in the position he or she would have been but for the unfair dismissal. It safeguards workers’ employment by restoring the employment contract. Differently put, if employees are reinstated they resume employment on the same terms and conditions that prevailed at the time of their dismissal. As the language of section 193(1)(a) indicates, the extent of retrospectivity is dependent upon the exercise of a discretion by the court or arbitrator. The only limitation in this regard is that the reinstatement cannot be fixed at a date earlier than the actual date of the dismissal. The court or arbitrator may thus decide the date from which the reinstatement will run, but may not order reinstatement from a date earlier than the date of dismissal. The ordinary meaning of the word “reinstate” means that the reinstatement will not run a date from after the arbitration award. Ordinarily then, if a Commissioner of the CCMA order the reinstatement of an employee that reinstatement will operate from the date of the award of the CCMA, unless the Commissioner decides to render the reinstatement retrospective. The fact that the dismissed employee has been without income during the period since his or her dismissal must, among other things, be taken into account in the exercise of the discretion, given that the employee’s having been without income for that period was a direct result of the employer’s conduct in dismissing him or her unfairly.”
The effect of a reinstatement order, therefore, was to revive the contract of employment which was terminated by a dismissal.
Date of reinstatement: choices
On the date on which the reinstatement order was made, the commissioner could order that the reinstatement be effective from the date of the order or retrospectively from any date not earlier than the date of dismissal.
Reinstatement cannot run from a date after the issuing of the arbitration award
Importantly, for purposes of this matter, the commissioner could not order that the reinstatement would start from a date after the issuing of the arbitration award.
Remedy available to employee to cover period between date of award and actual implementation
This begged the question: what remedy, if any, did the employee have to claim the money due to him/her for the period between the date of the award and the actual implementation thereof.
Compensation and back-pay
The money paid to an unfairly dismissed employee, consequent to a retrospective reinstatement order, was not compensation.
Compensation and back-pay could only be granted in the alternative and were mutually exclusive.
Back-pay does not cover the period between the date of the award and actual implementation
The back-pay ordered by the Commissioner could, therefore, only refer to the period between the date of dismissal and the date of the order and did not entitle an employee, without more, to remuneration between the date of the award and the actual date of implementation.
LRA does not provide a cause of action
The Labour Relations Act 66 of 1995 (“the LRA”) did not cater for such relief. Ordinarily an employer, who complied with an order of retrospective reinstatement and back pay, would not only pay the back pay but also the remuneration that the employee was entitled to between the date of the order and the implementation date, if the employee tendered his services during that period.
Since the LRA did not cater for relief between the date of the award and the date of implementation, how then should a reinstated employee recover that money if he tendered his services, during that period?
Labour Court’s viewpoint
According to the court a quo, such money could be recovered by simply quantifying it and filing an affidavit with the registrar.
In National Union of Metal Workers of South Africa and Others v Hendor Mining Suppliers, a Division of Marchalk Beleggings Pty Ltd  JOL 32068 (LC), the learned acting judge was also of the view that the reinstatement order was the cause of action on which the judgment debt was claimed.
She further said the following:
“ It is apparent, in citing the dicta in the Equity Aviation matter, that the Constitutional Court in the Billiton matter reinforce the notion that the reinstatement order arises from the confines of the Labour Relations Act and is reinforced in terms of an order of court. To the extent that the employer or company appeals that decision, it does so with the risk that the order of reinstatement continues pending a reversal, if any, of that order by a higher court …  In other words, the possibility of paying additional back pay, pursuant to an appeal process to one or more of the higher courts, is a risk inherent in the process. The company’s argument in this court – that the prospective part of the labour court order commencing from the period after 16 April 2007 and terminating on 28 September 2009 is subject to a properly pleaded contractual claim … is not only odd but perverse.”
Labour Court’s viewpoint not correct: it is a contractual claim
It seems to the Labour Appeal Court that the court a quo and the learned acting judge in Hendor Mining Suppliers conflated the reinstatement order and the contractual duty to pay an employee for work done. The reinstatement order – as stated above – only served to revive the contract of employment. The rights and obligations of the parties would, therefore, as in the beginning, again be governed by the contract of employment.
In Johannesburg Municipality v O’ Sullivan 1923 AD 201, it was said that:
“In other words, so long as the employee is bound to devote his whole time and attention to the council’s service and is consequently not free, when there is no work for him to do, to dispose of his labour elsewhere, so long is the council bound to pay him his weekly wage.”
Therefore, if the employee, after the reinstatement order and during the time that the employer exercised its review and appeal remedies to exhaustion, tendered their labour they did so in terms of the employment contract. They were, accordingly, entitled to payment in terms of the contract of employment.
The claim was, therefore, a contractual one wherein the employee would have to set out sufficient facts to justify the right or entitlement to judicial redress.
What the employee is required to prove
The employee would, inter alia, have had to prove that the contract of employment was extant; that they tendered their labour in terms thereof and that the employer refused or was unwilling to pay them in terms of that contract. The employer, on the other hand, would have all the contractual defences at its disposal.
The court a quo was, in the view of the Labour Appeal Court, incorrect in its conclusion that “awards of reinstatement, by their very nature, required the payment for the full period up to and including the date of compliance”. All that an award for reinstatement did was to revive the contract of employment. A reinstatement award/order could not extend to a date beyond the date of the order nor could it serve to form the basis of a common law contractual entitlement.
Route to be followed by employee
It was only after a contractual claim in the civil courts or under section 77 of the Basic Conditions of Employment Act (“the BCEA”) had been instituted and pronounced upon that it could be said that the employer was a judgment debtor against whom a writ could be issued.
Section 77 of the BCEA read as follows:
“77 Jurisdiction of Labour Court
(1) Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except where this Act provides otherwise, the labour court has exclusive jurisdiction in respect of all matters in terms of this Act, except in respect of an offence specified in sections 43, 44, 46, 48, 90 and 92. …
(3) The labour court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract …”
The order of reinstatement was not a judgment dealing with the consequent damages for the breach of the contract.
The risk that an employer took, relating to the accumulated financial burden caused by delays in the review and appeal process, had nothing to do with the cause of action. The risk to the employer remained and the rewards to the employee would also be intact if the claim was prosecuted properly and timeously.
In summary, a reinstatement award did not cover the period between the award and its implementation. Should an employer refuse to pay an employee for the said period, then the employee had a contractual claim – which was a totally different cause of action – against the employer.
The Labour Appeal Court, therefore, made the following order:
• the appeal was upheld;
• paragraph 2 of the court a quo’s judgment was deleted; and
• there was no order as to costs.
Dr Brian van Zyl is a Director of labour law firm Van Zyl Rudd and Associates, www.vanzylrudd.co.za.
This article appeared in the June 2017 issue of HR Future magazine.