The Labour Relations Act (LRA) gives the Labour Court and Labour Appeal Court strong decision-making powers. Section 158 of the LRA gives the Labour Court the power to make, amongst others, orders:
- Granting urgent relief and interdicts
- Remedying wrongs and determining disputes
- Clarifying legal circumstances (declaratory orders)
- For compensation and damages
- For legal costs to be paid by the loser to the winner of a case
- Enforcing compliance with the provisions of the LRA
- Enforcing arbitration awards
- Condoning the late filing of disputes or documents with the Court
- Reviewing decisions made or acts performed by the State
- Reviewing awards and rulings made by Arbitrators.
These orders may deal with various dispute types including unfair dismissals for misconduct, poor performance, illness and operational requirements.
In addition, the Basic Conditions of Employment Act (BCEA) gives the Labour Court the power to determine disputes relating to employment contracts. And the Employment Equity Act (EEA) empowers the Labour Court to make orders relating to unfair discrimination disputes.
The Labour Appeal Court, being senior to the Labour Court, has higher powers than the Labour Court and can hear appeals against the decisions made by that court. In addition, it has the power when required, to deal directly with any of the matters normally dealt with by the Labour Court under the LRA.
It is clear that, between them, these two courts have very substantial powers. And they are not normally reluctant to exercise their powers strongly even if it results in a very severe financial burden to the party on the receiving end. For example, in the case of Evans vs Japanese School of Johannesburg (2006, 12 BLLR 1146) the Labour Court found that the employer had unfairly dismissed and unfairly discriminated against the employee. The Court, therefore, ordered the employer to pay the employee compensation and damages totalling R377 000. Some years ago the Labour Court awarded a one million rand compensation amount against the Ministry of Labour.
While these courts have extensive powers they do not seem to be sure of the exact extent thereof. That is, there seems to be strong disagreement between the different courts as to the maximum amount they may award to unfairly treated employees.
In order to illustrate this point, it is necessary to explain the difference between two types of awards the Labour Court may make. That is, the Court may make compensation awards and it may back-pay awards. Compensation awards are made where the unfairly dismissed employee is not reinstated. The Court then awards the employee financial compensation for the loss of his/her job. However, under the LRA the Court is required, where feasible, to reinstate the employee rather than award compensation. When reinstatement is ordered the Court usually requires the employer, in addition, to pay the employee for the period between the dismissal and the date of the reinstatement order. This is to make up for the employee’s loss of earnings prior to reinstatement.
The LRA specifically lays down the maximum amount that the Court may award by way of compensation when the dismissed employee is not reinstated. This limit is 24 months’ remuneration in the case of an automatically unfair dismissal and 12 months’ remuneration in all other unfair dismissal cases. However, the LRA is silent as to whether there is any maximum limit on the amount of back-pay the Court may award in tandem with a reinstatement order. It has, for a very long time, been assumed that the amount of the back-pay is only limited by the number of months between the date of dismissal and the date of the reinstatement. In 2005 the Labour Appeal Court upheld this view. For example, in the case of Kroukam vs SA Airlink (Pty) Ltd (2005, 26 ILJ 2153 as reported in CLL, January 2007) the Labour Appeal Court held that the amount of back-pay could be calculated back to the date of dismissal even if this exceeded the limits for compensation payments.
However, soon after the Kroukam decision, in CWIU & Others vs Latex Surgical Products (Pty) Ltd (2006, 27 ILJ 2018 as reported in CLL January 2007) the Labour Appeal Court held that the amount of back-pay ordered must be subject to the same limits as are laid down for compensation orders. Then, in SACCAWU and others vs Primserv ABC Recruitment (Pty) Ltd (2006, 27 ILJ 2162 as reported in CLL January 2007) the Labour Court held that the amount of back-pay orders are not limited to the maximum’s set for compensation orders. It should further be noted that, in the Kroukam case, one of the three judges on the Labour Appeal Court bench disagreed with the majority finding.
It is most disturbing that there is such little agreement within the courts as to the law as this makes decisions for employers very unclear. In light of this confusion, the only solution for employers is not to end up in the Labour Courts. They can only achieve this by ensuring that, before they take any decision affecting employees, they get labour law and practical, strategic advice from a reputable labour law expert.
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