Essence

Prescribed interest rate: no good reason why s143(2) of the LRA and the Prescribed Rate of Interest Act 55 of 1975 should not apply and interest ordered to be paid from date of the arbitration award

Judgment

Billion Group (Pty) Ltd v Mosheshe (JA64/2016) [2017] ZALAC 72 (21 November 2017).  Disallowed employer’s appeal and upheld order of Olivier AJ in the labour court

Judges

Kate Savage AJA (Waglay JP and Sutherland JA concurring)

Significance

Summary

Discussion by GilesFiles
Court summary

Employee employed on a six-month fixed term contract. Dismissal for poor work performance found by CCMA to be procedurally and substantively unfair, with employee awarded four months’ compensation.

On review the Labour Court found the dismissal substantively fair but procedurally unfair and ordered the employer to pay the employee two and a half months’ compensation, being the remainder of the fixed term contract, with interest from the date on which judgment was reserved.

Leave to appeal granted against the quantum of compensation and interest orders only.

On appeal held that Labour Court did not err, save for that interest should properly have been ordered from the earlier date on which the arbitration award issued. Compensation order upheld. Appeal dismissed with costs.

Related legislation
Quotations from judgment

Evaluation

[13] The Labour Court or an arbitrator appointed in terms of the LRA may, in terms of s193(1) of the LRA, where a dismissal is found to be unfair, order reinstatement, re-employment or the payment of compensation to the employee. Reinstatement “must” be awarded in terms of s193(2) where a dismissal is found unfair unless what have been termed the “non-reinstatable conditions” set out in s193(2) are present. Of these “non-reinstatable” conditions include in terms of s193(2)(d) that “the dismissal is unfair only because the employer did not follow a fair procedure”.[14] In the award of compensation for procedural unfairness in terms of s194(1):

‘(1) The compensation…must be just and equitable in all the circumstances, but may not be more than the equivalent of 12 months’ remuneration calculated at the employee’s rate of remuneration on the date of dismissal.’

[15] The power to award a remedy under s193 is one to be exercised judicially,[4] having regard to underlying considerations of fairness to both parties.[5] This provision does not introduce an onus but requires the Court or arbitrator to take into account any relevant factors which apply to the determination.[6] It follows that on review the Labour Court was required to consider whether the commissioner in the exercise of his discretion in terms of s 193(1)(c) to award compensation to the employee took into account such relevant factors and circumstances. Having found the dismissal of the employee procedurally unfair, the commissioner exercised a wide discretion under s193(1)(c) to award compensation to the employee. In its review of that decision, the Labour Court had regard to the nature of the procedural unfairness committed and the impact of that unfairness in the resultant prejudice caused to the employee. This was clearly the basis on which the Court a quo found that the commissioner’s decision to award compensation could not be faulted. The fact that as much is not stated in express terms in the judgment a quo matters not when the Court detailed in critical terms the nature of the unfairness committed and its consequences for the employee.[16] Turning to the quantum of the compensation ordered, the Labour Court properly had regard to the fact that while the employee had only sought that he be paid out until the end of his fixed term contract, the commissioner awarded compensation of four months. While it is so that compensation for procedural unfairness amounts to a solatium for the unfairness committed, the Court cannot be faulted for finding that it was neither just nor equitable to grant relief both beyond the period sought by the employee and in excess of the period which remained on his fixed term contract. Having found as much, neither the employee’s entitlement to cross-appeal without leave nor the merits of such cross-appeal require consideration in this appeal.[17] As to the interest ordered by the Labour Court, s143(2) provides that a money order contained in an arbitration award “earns interest from the date of the award…unless the award provides otherwise.” Section 2(1) of the Prescribed Rate of Interest Act 55 of 1975 states:

‘(1) Every judgment debt which, but for the provisions of this subsection, would not bear any interest after the date of the judgment or order by virtue of which it is due, shall bear interest from the day on which such judgment debt is payable, unless that judgment or order provides otherwise.’

[18] S2A(5) provides that:

‘(5) Notwithstanding the provisions of this Act but subject to any other law or an agreement between the parties, a court of law, or an arbitrator or an arbitration tribunal may make such order as appears just in respect of the payment of interest on an unliquidated debt, the rate at which interest shall accrue and the date from which interest shall run.’

[19] While there was no bar on the Labour Court ordering interest to be paid from the date on which judgment was reserved, I see no reason in this appeal as to why the terms of s143(2) should not be applied and interest ordered to be paid from date of the arbitration award in this matter. In conclusion, it must be noted that the conduct of the appellant’s attorney, Dr Ebersohn, at the disciplinary hearings held, which was correctly criticised by the Labour Court in its judgment, was unacceptable and unprofessional.[20] There is no reason in law or fairness as to why the appellant should not be ordered to pay the costs of this appeal.

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Comment by others

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