18 November 2020 by , and Employment Law Alert

Financial strain on the CCMA may mean increased costs for parties to disputes

The Director of the Commission of Conciliation, Mediation and Arbitration (CCMA), Mr Cameron Morajane, announced that the CCMA will be receiving budget cuts amounting to R617 million. As a result, the CCMA will be unable to operate at full capacity and to offer complete services to the public.

Mr Morjane presented at the COSATU Collective Bargaining, Organising and Campaigns Conference on 11 November 2020, where he expressed his concern regarding the financial strain that the CCMA will suffer as a result of budget cuts. Mr Morjane suggested that one of the ways forward is that due to affordability the CCMA will consider not conducting conciliations but disputes will go straight to arbitration. We have also been told that due to budget cuts there has been a temporary suspension of part time commissioners and an unscheduling of cases scheduled for December 2020, presumably those scheduled in respect of part time commissioners.

The CCMA, as a statutory body created in terms of the Labour Relations Act 66 of 1995 (LRA) was designed as a grass roots dispute resolution institution whose purpose was to provide simple and informal processes for dispute resolution. The CCMA’s compulsory statutory functions in terms of Section 115 of the LRA are to resolve disputes through conciliation; arbitrate certain categories of disputes that remain unresolved after conciliation; establish picketing rules and facilitate the establishment of workplace forums and statutory councils. The LRA is built on the spirit of conciliation and resolving labour related issues in a speedily and cost-effective manner for the benefit of employers and employees, more particularly vulnerable employees.

Disputes which commence at conciliation are known to be more informal and it is easier for parties to negotiate the issues surrounding the dispute and to reach settlement with the guidance of the commissioner. The cost implications of conciliation are minimal, as no legal representation is permitted, and the dispute must be resolved within 30 days of referral. Thus, conciliation allows for a simple, quick and efficient procedure to resolve disputes, unlike arbitration proceedings which can become time consuming and expensive. Conciliation is therefore imperative for grass roots level dispute resolution and the speedily resolution of disputes.

Where matters are referred to arbitration without the conciliation process, this will result in a lengthy formal process of dispute resolution, in which parties will be required to hold a pre-arbitration conference prior to the arbitration hearing. The purpose of the pre-arbitration conference is in essence, for parties to limit the issues in dispute in order to ensure arbitration proceedings are as efficient as possible. Parties may be reluctant to negotiate settlement terms at the pre-arbitration conference without the guidance of the commissioner who is not present at such pre-arbitration conferences.

The implications of the financial strain on the CCMA, and the suggested approach to limit conciliation, will have a ripple effect on the administration of the CCMA as a whole as cases will be delayed and there will be a huge backlog in terms of the finalisation of matters.

The suspension of part time commissioners will also pose a huge administrative burden on the CCMA and delays in the resolution of disputes. At present, the CCMA has 772 commissioners - 65% of the commissioners work at the CCMA as part-time commissioners. It is safe to say that there are more part time commissioners than full time commissioners and less matters will be allocated to the majority of the commissioners if the conciliation process is not used at the CCMA and less or no part time commissions are employed.. Moreover, during the lockdown period (April – June 2020), over 23 800 cases were referred to the CCMA, a dramatic increase the number of referrals received prior to lockdown and a pre-COVID-19 economic context. Therefore, the capacity of the CCMA to offer efficient labour services will be compromised owing to the financial strain. Budget cuts and strained administrative services have also unfortunately come at a time of increased unemployment, which currently stands at a rate of 30.8%.

Parties may, as an alternative, opt to use private arbitration services for a quicker and more efficient process to resolve disputes. However, private arbitration services will have higher cost implications for both the employer and the employee. It may also be difficult for parties to determine who will bear the costs of private arbitration. Parties may agree that the unsuccessful party will pay the costs, in which case either the employer or the employee will be prejudiced by the cost implications of a private arbitration, creating an unsustainable set of circumstances for small business and low-level employees.

It is important to bear in mind that if reinstatement is awarded at arbitration, it will be more burdensome for employers to refer matters to the CCMA for arbitration without the conciliation process. Further, employers need be cautious of cost implications of arbitrations versus private arbitration and to seek advice from a legal representative on the preferred method of dispute resolution depending on the complexity of the dispute.

The role of the CCMA in dispute resolution for labour related issues is important because it allows for grass roots dispute resolution through the conciliation process and allows the CCMA to not be overburdened with disputes that are referred to arbitration which can easily be resolved through the conciliation process or through settlement.

The CCMA released a media statement on the 17th of November 2020 in which it stated that the CCMA is unable to respond to all questions from the media regarding the CCMA’s budget constraints and implications thereof on its operation. A further statement will be released by the CCMA.

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