We are again faced with an unintended consequence as a result of the manner in which the various dispute resolution fora have interpreted and applied legislation. Section 193 of the Labour Relations Act, 1995 allows three remedies to a dismissed employee, namely: reinstatement, re-employment and compensation. Section 194 limits the amount of compensation to 12 months for unfair dismissal and 24 months for automatically unfair dismissal.
The second and third remedies have posed few challenges in their interpretation. On the one hand, when an employee is re-employed it is as if it is the employee's first day at the workplace. On the other hand, when compensation is awarded the commissioner or judge will state what an equitable amount is, taking into consideration the statutory limit.
Re-instatement, however, has posed challenges for commissioners and judges alike. This remedy seeks to restore the employee's status quo, i.e. to place employees in the position they would have been in had they not been dismissed. This entails that the employee must resume employment and be paid all the income they would have earned (lost income).
Over the years, the Labour Court has delivered conflicting judgements on whether or not the amount payable for lost income should be limited to 12 months for unfair dismissal or 24 months for automatically unfair dismissal.
In Kroukam v SA Airlink (Pty) Ltd, in its minority judgement, the Labour Appeal Court found that the statutory limit must be applied in re-instatement cases. Later, the Judge President sought to settle the issue in Chemical Workers' Industrial Union v Latex Surgical Products (Pty) Ltd where he confirmed that the statutory limit must be applied. He pointed out the anomalies that would arise should the lost income not be limited. (This article will not deal with the anomalies raised).
This issue was raised before the Supreme Court of Appeal (SCA) in Republican Press (Pty) Ltd / Ceppwawu & Gumede & Others  SCA 121 (RSA)(unreported case number 218/06). The SCA found that it was not the intention of the legislature to impose the statutory limit for the lost income payable to the employee on re-instatement. It stated that the legislature created three separate remedies. Section 194 clearly limits the remedy of compensation, not re-instatement. The court said that the legislature created the limit as it expected that the disputes will be resolved within six months. Therefore, on reinstatement the employee would be paid, at most, six months for lost income. However, the court processes in, among other things, setting down matters, issuing of directives, and the parties' failure to meet timelines, changing legal representatives and/or seeking legal advice late, had caused delays. This in turn had led to this unintended consequence of disputes being finalised after the 12 or 24 months (as in the Republican Press case, which took six years to resolve).
The SCA held that an employee must be given the full amount in respect of lost income when reinstated. The arbitrator is not empowered to limit this amount to either 12 or 24 months’ compensation. However, in awarding re-instatement the arbitrator may take into account any delays in the matter. Accordingly, an employee, although re-instated, may find that he does not recoup all his back pay as a result of any delay in finalising the matter.
Aadil Patel and Yvonne Mkefa