It is extremely dangerous for any employer to dismiss an employee unfairly. This is because South African labour law strongly protects employees. The forums provided by the Labour Relations Act (LRA) to carry out labour dispute resolution include:

  • The Centres for Dispute Resolution attached to the numerous bargaining councils established in South Africa
  • The Commission for Conciliation, Mediation and Arbitration (CCMA)
  • The Labour Court
  • The Labour Appeal Court.

Many employers, via bitter experience, will already be aware that going to any of these forums can be extremely costly. Such employers will be aware that, should things go wrong with a dismissal, they may have to pay the following:

  • A settlement amount in order to avoid having to go to court or arbitration
  • Legal fees to be represented at arbitration or court
  • The legal fees of the employee
  • Retrospective back pay to employees who the courts or arbitrators have reinstated
  • Compensation to employees who they have been found to have dismissed unfairly.

Most employers will however be unaware that, in addition to the hugely expensive costs listed above, they may also have to pay arbitration fees to the CDR or CCMA).

I will deal with each of these in more detail:

Out Of Court Settlements
The first stage of labour dispute resolution is conciliation. Here a CDR or CCMA commissioner attempts to mediate an out of court settlement between the employee and employer. Especially where the employer comes to realise that it messed up the dismissal it lands up agreeing to pay a substantial settlement amount to make the problem go away. Due to the fact that such settlements are made by agreement there is no legally prescribed maximum limit to the amount thereof.

Legal Fees And The Employee’s Legal Costs
Should the employer’s case be found to be frivolous and/or vexatious it may have to pay, in addition to its own legal fees, a significant portion of the employee’s legal fees. This may occur when the court/arbitrator finds that the employer was clearly in the wrong and/or defended the case unreasonably.

Retrospective Back Pay
Where the arbitrator or court finds that the dismissal was unfair it may require the employer to take the employee back and to pay the employee remuneration lost between the date of dismissal and the date of the reinstatement order. (Such back pay is limited to a maximum of 12 months for ordinary unfair dismissals and 24 months for automatically unfair dismissal)

Even where reinstatement is not ordered the employer may be required to pay the employee compensation in recompense for unfairly depriving him/her of his/her job. (Such compensation is limited to a maximum of 12 months for ordinary unfair dismissals and 24 months for automatically unfair dismissal)

Arbitration Fees
In terms of the little known section 140(2) of the LRA the arbitrator may charge the employer an arbitration fee where it is found that a dismissal for misconduct or incapacity was procedurally unfair. For example, in the case of Martini and others vs Galata Eksport Chain cc (2006, 8 BALR 836) the employees were dismissed after 20 oriental carpets worth R 800 000 went missing. The arbitrator found that the employer had good reason to dismiss the employees but that, because the employer had failed to give the employees a fair hearing, the dismissal had been procedurally unfair. He/she therefore ordered the employer to pay the CCMA an arbitration fee in terms of section 140(2) of the LRA. It is uncertain what the intention of this fee is. Perhaps it is for wasting the CCMA’s time by failing to follow procedures that every employer ought to be aware of.

In the light of the above employers are advised to:

  • Make sure that they know and fully understand all aspects of labour law
  • Use that knowledge to comply with the law when dealing with employees.

Learn how to address current labour law challenges from Ivan Israelstam at our next Labour Law Seminar. Find out more here.