In a landmark decision the Labour Appeal Court has decided that when awarding “just and equitable” compensation in terms of the Labour Relations Act 66 of 1995 it is incorrect to base the award on the remuneration of the employee.   The provisions in the LRA referring to 12 and 24 months remuneration serve only to cap the amount of the award and should not be used to determine the actual amount of the compensation.

On 2 June 2009 Davis JA in the Minister of Justice & Constitutional Development v Tshishonga (JA6/07) reduced an award of 12 months remuneration as compensation in respect of an “occupational detriment” suffered by the employee in terms of the Protected Disclosures Act 26 of 2000 to R277,000.00.

The learned judge stated in para [15]

“In summary, once it has been found that an employee has been subjected to occupational detriment on account of having a protected disclosure, a court must determine what compensation is just and equitable in the circumstances, which amount is capped at 12 months remuneration.   In the present case [Pillay J] appeared to conflate the award of compensation with an amount of remuneration.   As already noted section 194(4) of the LRA employs remuneration purely as a means of capping the amount of the award so ordered.   By contract [Pillay J] employed remuneration as the basis for the quantification of the award.   Accordingly the court a quo erred in its interpretation of s 194(4) of the LRA and this court is thus at large to determine the appropriate amount of compensation”.

This decision confirms what Landman J decided some years ago in Mashaba v Cuzen & Woods Attorneys [2000] 6 BLLR 691 (LC) at para 25:

“[t[he limit of 24 months must not be used as a yardstick against which to measure compensation.   Rather it is in the nature of a guillotine for it cuts off the quantum of [the applicant’s] claim when it reaches an amount equivalent to 24 months remuneration”.

See also Du Toit et al  Labour Relations Law: a Comprehensive Guide LexisNexis, 2006 5th ed at p 475.