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IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NUMBER: JR1155/2005
In the matter between:
EDGARS CONSOLIDATED LTD Applicant
and
CLARKE, LISA First Respondent
MUDAU, ROBERT N.O Second Respondent
COMMISSION FOR CONCILIATION,
MEDIATION AND ARBITRATION Third Respondent
___________________________________________________
JUDGEMENT
___________________________________________________
NGALWANA AJ
[1] This is an application for leave to appeal against the judgment of this court dated 2 July 2007. I directed the parties to submit written argument. I received only the applicant’s written submissions and so have had no benefit of the first respondent’s argument. Nevertheless, I think it would be inappropriate holus-bolus to grant leave by reason only of the first respondent’s unexplained failure to file written submissions. I shall thus deal with the applicant’s grounds for leave to appeal.
[2] In the short written submissions filed on the applicant’s behalf a view is expressed that the application “be heard orally”. If I were that way inclined I am sure I would have directed thus.
[3] Of the grounds of appeal advanced on the applicant’s behalf in its written submissions, there are, in my view, only two specific issues on which I consider another court could reasonably reach a conclusion that is different from that to which this court came. The first is whether determination of an appropriate sanction is the sole preserve of the employer. While I hold a different view (that the so-called “reasonable employer test” now advocated by the applicant does not form part of our law), it is conceivable that another court may come to a different conclusion (see Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and Arbitration (2006) 27 ILJ 2076 (SCA) at paragraphs [36]-[47]). But that issue was recently considered by the Constitutional Court in an appeal from the SCA in the Rustenburg Platinum Mines case and judgment is pending. Subsequent to the SCA’s decision in Rustenburg Platinum Mines the Labour Appeal Court handed down a well-reasoned and comprehensive judgment that traces the development of our labour law on the issue of “reasonable employer test” and came to the conclusion that this test does not form part of our law (see Engen Petroleum Limited v CCMA and Others, unreported, LAC case number JA12/2005). As it felt bound by the SCA’s decision in Rustenburg Platinum Mines, however, it deferred to it. Because the issue is still pending judgment in the Constitutional Court, it should receive consideration by the Labour Appeal Court with the benefit of the Constitutional Court’s judgment.
[4] The second issue is whether section 194 of the LRA, properly construed, has the effect of limiting the retrospective re-instatement (in contra-distinction to re-employment) of the first respondent to 12 months remuneration. In my respectful view, that section places a limit on compensation within the meaning of section 193(1)(c) of the LRA (in contra-distinction to re-instatement or re-employment) in unfair dismissal cases and has nothing whatever to do with retrospective re-instatement. In order to determine the true meaning and scope of section 194, it must be read with section 193(1). Section 193(1) provides for three alternative remedies: it is either re-instatement (s 193(1)(a)) or re-employment (s 193(1)(b)) or compensation (s 193(1)(c)). No pair of them can properly be granted at the same time. Thus, compensation (s 193(1)(c)) cannot be granted where re-instatement is ordered.
[5] As Davis AJA pointed out in Kroukam v SA Airlink (Pty) Ltd (2005) 26 ILJ 2153 (LAC) at 2212H-I (and in which Willis JA concurred),
“Once a distinction is drawn between reinstatement and compensation, the meaning and scope of s 194(3) becomes clear. This provision caps the award of compensation, not the amount which may be awarded pursuant to the alternative order of reinstatement, as envisaged in s 193(1)”. (My emphasis)
[6] The effect of re-instatement (in contra-distinction to re-employment) is that the employee is treated as if he were never dismissed in the first place. He is placed in the position he would have been in had the dismissal not occurred in the first place. That means all the remuneration to which he was entitled during the period of his dismissal must be repaid to him.
[7] But the majority view on this issue in Kroukam was obiter inasmuch as there were suggestions that the employee had for a period obtained alternative employment after dismissal. For that reason, the majority (per Davis et Willis AJJA) considered it just and equitable to limit the amount to be paid pursuant to retrospective re-instatement to 12 months remuneration. But that does not detract from an assessment that another court, on a right set of facts, could conclude that section 194(3) (read together with section 193(1)) does not limit the amount payable pursuant to retrospective re-instatement.
[8] Zondo JP’s minority view in Kroukam v SA Airlink (Pty) Ltd (2005) 26 ILJ 2153 (LAC) at paragraphs [121]-[129] that the section limits also the amount of back-pay in instances of retrospective re-instatement was upheld by the LAC in Chemical Workers Industrial Union and Others v Latex Surgical Products (Pty) Ltd (2006) 27 ILJ 292 (LAC) at paragraphs [112]-[116].
[9] In my respectful view, the subjection to a section 194 limitation of the amount ordered to be paid pursuant to a re-instatement order would result in grave injustice to an employee who is arbitrarily dismissed, remains unemployed for a few years while the employer strings him along in expensive litigation in circumstances where, invariably, the employer has more considerable resources than the employee to press on unceasingly with litigation. To then order re-instatement but limit to 12 months salary the amount paid retrospectively in order to place the employee in the position he would have been in had he not been arbitrarily dismissed is, in my respectful view, to rub the employee’s face in the very conduct that the commission or court has found to have been unfair. If the idea of re-instatement is to place the employee in the status quo ante the unfair dismissal, as Nicholson JA suggests in CEPPWAWU and Another v Glass & Aluminium 2000 CC (2002) 23 ILJ 695 (LAC) at 710H-I, then surely the limitation placed on the amount paid pursuant to re-instatement hardly achieves that result. The limitation would fail to send a strong message to employers that arbitrary dismissals are frowned upon; in fact it has the opposite effect. In these cases, a proper balance ought to be found between the employer’s financial risk, on the one hand, and the employee’s financial risk on the other. I am, with respect, not convinced that section 194 was intended to limit back-pay consequent upon a retrospective re-instatement order (s 193(1)(a)). It was intended to limit the secondary remedy of compensation (s 193(1)(c)). The wording of the section when read with section 193(1) does not, in my respectful view, readily lend itself to the interpretation that back-pay falls to be limited by the section. Such limitation as there may be is that which a court may in its discretion consider to be just and equitable, bearing in mind the respective positions of the employee and employer. Too much focus on the employer’s financial risk in unfair dismissal cases at the expense of the employee has the same effect as legislation that prescribes as a penalty for breach of its provisions a fine that makes it worthwhile for potential offenders to take a chance.
[10] In the result, it is my view that another court may reasonably come to a conclusion that is different from that reached by this court on the meaning and scope of section 194 of the LRA and application of the “reasonable employer test” in South African labour law.
____________________
Ngalwana AJ
Appearances
For the applicant: Mr S Gule
Instructed by: Deneys Reitz Attorneys
Date of judgment: 06 September 2007
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