Tension between prescription and labour relations: meaning of ‘debt’ in the context of the Labour Relations Act with its own dispute resolution systems.


Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus (CCT232/15) [2016] ZACC 49 (15 December 2016)


Jafta J, Froneman J, Zondo J


Although three judgments were prepared all of them support the same order but for different reasons.  On appeal from the Labour Appeal Court (hearing an appeal from the Labour Court):  Leave to appeal is granted and the appeal is upheld and the orders of the Labour Court and the Labour Appeal Court are set aside.

The Labour Court’s order is replaced with the following:

The arbitration award issued on 17 September 2009 in favour of Mr Sizwe Myathaza is made an order of the Labour Court.

Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobus is ordered to pay costs in the Labour Court, Labour Appeal Court and this Court, including costs of two counsel where applicable.

CC summary:         

Prescription Act, 1969 — Labour Relations Act, 1995 — dismissal dispute — arbitration award — section 158(1)(c) application — prescription of arbitration award

Prescription of debt — meaning of “debt” — is an arbitration award a “debt” in terms of the Prescription Act — applicability of the Prescription Act to the LRA dispute resolution system

Court summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 15 December 2016 the Constitutional Court handed down judgment in a matter concerning the question whether an arbitration award issued in terms of the Labour Relations Act (LRA) had prescribed in terms of the Prescription Act on expiry of three years from the date on which the award was issued.  The matter came before the Constitutional Court as an application for leave to appeal against a judgment of the Labour Appeal Court.

Mr Sizwe Myathaza (applicant) was employed as a bus driver by the Johannesburg Metropolitan Bus Service (SOC) Limited t/a Metrobus (Metrobus) for a period of seven years.  In September 2007, Metrobus suspended him together with other bus drivers for ticket irregularities.  In April 2008, Metrobus reached an agreement with two unions that represented the suspended employees.  It agreed that it would not take any action against the affected employees if they pleaded guilty to the charge of irregular ticketing and accepted a final warning as a sanction.  The applicant refused to plead guilty and insisted on facing a disciplinary inquiry.

The applicant did not return to work and was charged with unauthorised absenteeism and, as a result, he was dismissed.  The applicant referred the dispute to the relevant bargaining council for conciliation and arbitration.  At the conclusion of the arbitration, the arbitrator held that his dismissal was both substantively and procedurally unfair.  Metrobus was ordered to reinstate him and pay him back pay.  Metrobus failed to pay the amount fixed by the arbitrator and when the applicant reported for duty, he was sent home because Metrobus instituted a review application on 21 October 2009.  But Metrobus failed to obtain a date for the hearing of that application.

In August 2013 the applicant approached the Labour Court requesting that the award be made an order of court.  The application was opposed by Metrobus and they argued that the award had prescribed.  The Labour Court held that the award constituted a debt for purposes of the Prescription Act and that it had prescribed on the expiry of three years from the date it was made.  The applicant appealed to the Labour Appeal Court which upheld the Labour Court’s conclusion.  The applicant appealed to this Court.

#1   In the first judgment (Nkabinde ADCJ, Khampepe J and Zondo J concurring), Jafta J examined both the LRA and the Prescription Act and came to the conclusion that there were fundamental differences between the Acts.

First, the judgment held that the Prescription Act envisaged civil courts as the only forums at which claims or debts may be enforced. In contrast, in terms of the LRA, the Commission for Conciliation, Mediation and Arbitration (CCMA) and bargaining councils are forums that must resolve labour disputes and do so far more expeditiously than the time taken in courts.
Second, the Prescription Act bars creditors who fail to enforce their debts by instituting legal actions within specified periods which are far longer than the periods prescribed by the LRA at pre-arbitration stage.
Third, an arbitration award constitutes an outcome in terms of which a claim or dispute is finally settled between the parties. On the other hand, apart from a judgment debt that prescribes after 30 years, the Prescription Act is designed to extinguish the right to enforce a claim that is still to be determined by a court.
Jafta J concluded that all these differences illustrate that the LRA was inconsistent with the Prescription Act.  The judgment held that the inconsistency did not flow from the fact that the LRA and the Prescription Act prescribed different time periods only, but also arose from the fact that section 158 of the LRA empowers the Labour Court to make an award an order of court for purposes of enforcement.  The application of the Prescription Act to such awards effectively achieves the opposite outcome.  Once prescribed, an award becomes unenforceable and the Labour Court may not exercise its power to make the award an order of court.  In these circumstances the Prescription Act defeats the LRA process that was specifically designed to enforce the right to fair labour practices.  The judgment upheld the appeal and set aside the orders of the Labour Court and the Labour Appeal Court.

#2   A second judgment penned by Froneman J (Madlanga J, Mbha AJ and Mhlantla J concurring), agreed with the first judgment in the need for re-interpreting the Prescription Act, but differed by holding that the provisions of the Prescription Act and the LRA can complement each other and co-exist.  The second judgment found that the building blocks of that re-interpretation were:

(a) The general principle underlying the Prescription Act is that the running of prescription is interrupted from the commencement of adjudicative proceedings until their final conclusion;

(b) The CCMA established under the LRA, is an “independent and impartial forum” that can resolve disputes before it by “the application of law” in terms of section 34 of the Constitution;

(c) The initiation of proceedings before the CCMA under the LRA amounts to the commencement of adjudicative proceedings that interrupts prescription under the Prescription Act; and

(d) The review of an arbitration award under the LRA fulfils the same role in the finalisation of court proceedings as an appeal does in cases heard by the Labour Court.

It also found that the meaning of “debt” must be in closest harmony to the demands of section 34 of the Constitution.  Further, the present case falls under a debt however narrowly interpreted.  This approach does not contradict the majority in Makate, which found other types of obligations may constitute debts, only rejecting the broad construction of “debt” as defined in Desai.

With respect to the third judgment, the second judgment disagreed that the interpretation of legislation in conformity with the Constitution under section 39(2) of the Constitution infringes separation of powers.

In summation, the second judgment agreed with the order proposed in the first judgment.

#3   In a separate judgment (third judgment) in which Jafta J concurred, Zondo J concurred in the first judgment and provided additional reasons why the Prescription Act does not apply to the LRA dispute resolution system concerning dismissal disputes.  He analysed various provisions of the Prescription Act, in particular, sections 11, 14 and 15.  The third judgment highlighted, among others, the following difficulties that arise if one attempts to apply the Prescription Act to the LRA dispute resolution system concerning dismissal disputes.

For Chapter III of the Prescription Act to apply to the LRA dispute resolution system concerning dismissal disputes, one would have to say that the form used to refer a dismissal dispute to the conciliation process is a “process whereby legal proceedings are commenced” and is required to be served on the debtor in order to interrupt the running of prescription because that is what the Prescription Act recognises as the process for interrupting prescription.  It cannot be said that the referral form is a process whereby legal or court proceedings are commenced because it is a first step towards the conciliation process and the conciliation process does not constitute legal or court proceedings.

Furthermore, it is clear from a reading of section 15 that the proceedings recognised by the Prescription Act as capable of interrupting the running of prescription are proceedings that end with a court judgment.  The conciliation process does not end with a judgment.

Accordingly, the third judgment concluded that an arbitration award is not a judgment as contemplated in section 15.  Zondo J held that the LRA dispute resolution system concerning dismissal disputes is a special dispute resolution system with its own prescribed periods within which various steps must be taken by those utilising it and the Prescription Act does not apply to it.