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Back Pay After Reinstatement

This week’s article will focus on an in – depth analysis of the case of Equity Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and others (CCT 88 07) [2008] ZACC 16 (2008) in  which the main question which the court had to determine was whether section 193 (1) (a) of the Labour Relations Act 66 of 1995 (“LRA”) meant that back-pay payable to employees reinstated in their employment is limited to 12 months’ wages.

Section 193 provides for three remedies a court or arbitrator may order after ruling that a dismissal is unfair. These remedies include reinstatement, re-employment or compensation.

The facts of the case in Equity Aviation were as follows:
Mr Mawele, the Third Respondent, was employed by Equity Aviation Services (Pty) Ltd, the Applicant, as a shift control officer. During November 2000, he was charged with misconduct which related to events that took place on 15 November 2000. Following certain incidents on that date, Mr Mawele was summoned to a disciplinary hearing to answer four charges, namely,
(1)    Leaving the work place without permission on 15 November 2000 and before the end of the shift;
(2)    Failing to perform according to the required standard by failing to provide buses for flights SA 482 and SA 1734;
(3)    Leaving a subordinate in charge with responsibilities that he could not carry out; and
(4)    Bringing the company’s name into disrepute by failing to meet service standards.
After the disciplinary hearing relating to the charges mentioned above, Mr Mawele was found guilty and dismissed on 8 March 2001. Mr Mawele lodged an appeal against the chairperson’s findings. However, his appeal was unsuccessful. Mr Mawele then referred an unfair dismissal claim to the Commission to Conciliation, Mediation and Arbitration (“CCMA”).
The matter could not be conciliated at conciliation and was referred to arbitration. At arbitration, the Commissioner issued an arbitration award on 18 March 2002, stating that the dismissal was both procedurally and substantively fair.
On 2 May 2002, Mr Mawele took the matter on review to the Labour Court in terms of section 145 (1) of the LRA. The relief which was sought was for the dispute between the parties to be referred back to the CCMA for the Commissioner to rehear the matter, alternatively, for the matter to be determined by the Court.  Equity Aviation Services opposed the review application.
The Labour Court found that the charges against Mr Mawele arose from the same incident and that the offence should have been corrected with progressive discipline. The Labour Court set aside the award and replaced it with an Order that Mr Mawele was to receive a final written warning to the effect that should he commit a similar transgression in the next two years, he may be dismissed immediately.
On 2 February 2005, the Labour Court granted Equity Aviation Services leave to appeal to the Labour Appeal Court.
The Labour Court’s decision was challenged for reviewing and setting aside the sanction of dismissal. The Labour Appeal Court observed that the Labour Court did not expressly make an order of reinstatement after setting aside the award. However, the Labour Appeal Court said that there was no doubt that the Labour Court was of the view that the Commissioner ought to have ordered Equity Aviation Services  to reinstate Mr Mawelele.
The Labour Appeal Court also observed that the Labour Court did not consider whether a reinstatement order which the Commissioner ought to have made should have operated retrospectively, and if so, the extent of the retrospectively.
The Labour Appeal Court found that the Labour Court was correct in setting aside the award even though it did not agree with the reasons for the decision.
The Labour Appeal Court found that while an order of reinstatement may be implied in the order of the Labour Court, the retrospectivity of the reinstatement order was not to be implied. Mr Mawelele did not note a cross-appeal against the Labour Court’s failure to make an order backdating the reinstatement to the date of dismissal. The Court therefore did not consider that aspect. The Labour Appeal Court concluded that the reinstatement order that the Commissioner would have made should have run from the date of the issuing of the award. The Labour Appeal Court therefore made the following award:
“3 (c) The arbitration award issued by the Commissioner in this matter is hereby reviewed and set aside and in its place the following order is made:
(i)    ….

(ii)    (Equity) is ordered to reinstate the employee, Mr Mawelele in its employ on terms and conditions no less favourable to him than the terms and conditions which governed his employment immediately before his dismissal;
(iii)    The order in (ii) above shall operate from the date of the hearing of this award.”
The order in paragraph 3 (c)(iii) above is the subject matter of this appeal.
On 28 November 2007, Equity Aviation Services lodged an Application for leave to appeal against  paragraph 3 (c )(iii) of the order of the Labour Appeal Court. Equity Aviation Services contended that the Labour Appeal Court failed to exercise its discretion properly when ordering reinstatement to operate from the date of issuing of the award. Equity requested that the matter be referred back to the Labour Appeal Court for that Court to hear further evidence to determine the date from which the reinstatement order should operate.
On behalf of Mr Mawelele it was contended that Equity’s interpretation of section 193 (1) (a) – that no court can order reinstatement beyond 12 month’s – has no merit, and that there are no prospects of success on appeal.
The issue that the Court had to deal with related to:
(a)    The proper interpretation of section 193(1) (a) read with section 194, more specifically, whether these sections, limited the payment of back-pay where a court orders reinstatement or re-employment to a maximum of 12 months wages as contended for by Equity;
(b)    Whether the Labour Apeal Court exercised a discretion in relation to the retrospectively of the order and if so, whether it failed to exercise its discretion properly; and 
(c)    Whether remittal of the case to the Labour Appeal Court will constitute appropriate relief.
In considering whether Leave to Appeal should be granted, the Court had to determine whether it was in the interests of justice for the court to hear the merits of the case. The Constitutional issue raised in this case related to the interpretation of section 193(1) (a) which gives content to the right to fair labour practices that is underpinned by section 23 (1) of the Constitution of South Africa, Act 108 of 1996.  The Court stated that:
“the primary rule in interpreting legislation is to determine the meaning of the words used in the relevant statute according to their natural, ordinary or primary meaning and also in the light of their context, including the subject matter of the statute and its apparent scope and purpose.”
The Court went on to state that :
“the provisions of the Labour Relations Act must be purposively construed to give effect to the right protected by section 23(1) of the Constitution that is enjoyed by both employers and employees.”
The Court looked at the word “reinstate” and pointed out that the meaning of the word is to put the employee back into the same job or position he or she occupied before the dismissal, on the same terms and conditions. Reinstatement is aimed at placing an employee in the position he or she would have been but for the unfair dismissal. 
The ordinary meaning of the word ‘reinstate” means that the reinstatement will not run a date from after the arbitration award. Ordinarily then, if a Commissioner of the CCMA ordered the reinstatement of an employee that reinstatement will operate from the date of the award of the CCMA, unless the Commissioner decided to render the reinstatement retrospective. The Court noted that “the fact that the dismissed employee has been without income during the period since his or her dismissal must, among other things, be taken into account in the exercise of the discretion, given that the employee’s having been without income for that period was a direct result of the employer’s conduct in dismissing him or her unfairly.”
The issue in this case related to the question of reinstatement for the period between the date of the arbitration award and the Labour Appeal Court order. It does not relate to the period between the date of dismissal and the date of the arbitration award. 
The Supreme Court in the case of Republican Press (Pty) Ltd v CEPPWAWU & others 2008 (1) SA 404 (SCA)  , it was held that back-pay to which the dismissed employee ordinarily became entitled to, when an order for reinstatement was made, cannot be equated with compensation, thus allowing for the limitation contained in section 194 not to be applied in relation to back-pay. The Court agreed with this view as adopted in the Republican Press casu supra.
In  determining whether the Labour Court correctly reviewed the award, the Labour Appeal Court interpreted the order of the Labour Court and rightly found that the order reinstating Mr Mawelele was correct.
The Labour Appeal Court concluded that properly interpreted the order of the Labour Court meant that reinstatement should operate from the date of the award. It then made an order reflecting that position as it was not open to it to deal with the extent of the retrospectivity of the reinstatement. Accordingly, the Appeal failed.
We trust that the above case analysis will help our readers understand the concept of reinstatement and back- pay and employees rights’ to claiming back - pay where an employee has been reinstated. As stated in the Republican case supra, it is evident that back - pay payable to employees reinstated in their employment is not limited to 12 months’ wages.
For further information on the different forms of relief, please do not hesitate to contact us on 011 612 3717.


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