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[2023] ZALAC 5
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Toyota SA Motors (Pty) Ltd v Commission For Conciliation, Mediation And Arbitration and Others (DA6/ 2021) [2023] ZALAC 5; (2023) 44 ILJ 1038 (LAC); [2023] 5 BLLR 385 (LAC) (14 February 2023)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, DURBAN
Reportable
Case
no: DA6/ 2021
In
the matter between:
TOYOTA
SA MOTORS (PTY) LTD                       Appellant
and
COMMISSION
FOR CONCILIATION, MEDIATION
AND
ARBITRATION                                             First

Respondent
LISA
WILLIAMS DE BEERNATIONAL
UNION
OF METAL WORKERS
OF
SOUTH AFRICA obo                                     Second

Respondent
KWANELE
THWALA                                           Third

Respondent
Heard:
27 November 2022
Delivered:
14 February 2023
Coram:
Waglay JP
et
Kathree-Setiloane, Savage AJJA
Summary:
Remedy
–
reinstatement not a competent
remedy where expiry of employee’s fixed- term contract precedes
unfair dismissal finding of
arbitrator. In the circumstances,
arbitrator has no discretion to choose between the three remedies
contemplated in section 193(1)
of the LRA but is obliged to order
payment of compensation in terms of section 193(1)(c) of the LRA.
Where
reinstatement is not a competent remedy, section 193(2) of the LRA
has no application and employer is not required to prove
that
reinstatement of the employee was not practicable in terms of section
193(2)(c) of the LRA. substituting it with an award
reinstating him
with retrospective effect.
KATHREE-SETILOANE
AJA
[1]
This is an appeal against the whole of the judgment and order of the
Labour Court (Cele J) in
which it reviewed and set aside the
arbitration award of the second respondent (arbitrator) dismissing Mr
Kwanele Thwala (employee)
and substituting it with an award
reinstating him with retrospective effect.
[2]
The arbitration award was made under the
auspices of the first respondent, the Commission for Conciliation,
Mediation and Arbitration
(CCMA). The National Union of Metal of
South Africa (Union) acts on behalf of the employee in the appeal.
Background
[3]
The employee worked for the appellant,
Toyota SA Motors (Pty) Ltd (employer), since 21 March 2010 as a crane
driver. He was employed
on a three-month fixed-term contract. His
contract was repeatedly renewed until his dismissal on 14 August
2015.
[4]
On 23 March 2015, the employer issued the
employee with a final written warning relating to a charge of
negligence. Within three
months of receiving this final warning (11
June 2015), the employee was again involved in an incident involving
negligence where
he purportedly failed to check that the clamping
device between the tool and the moving bolster on the crane was
removed prior
to lifting the tool. As a result, the employer charged
him with negligence. On 18 June 2015, he was suspended and furnished
with
a notice to attend a disciplinary inquiry.
[5]
On 15 June 2015, three days before
his suspension, the employee signed a further fixed-term contract
commencing on 1 August 2015
and terminating on 31 October 2015. On 14
August 2015, after the disciplinary inquiry, the employee was
dismissed. He unsuccessfully
appealed against his dismissal.
[6]
The employee referred an unfair dismissal
dispute to the CCMA. The conciliation failed and the dispute
proceeded to arbitration.
The arbitrator issued her award on 24 May
2018. She found that the employee’s dismissal was substantively
unfair as he was
not negligent because the employer should not have
expected him to check a clamp of which he had no knowledge.
[7]
The employee sought reinstatement with
backpay. The arbitrator exercised her discretion against reinstating
the employee. In doing
so, she reasoned as follows:
‘
Buthelezi
[witness for the employer] gave unchallenged evidence that he was the
only one who handed out contracts, that he did not
give any permanent
contract to the [employee] and that the [employee] would in fact have
not been eligible for permanent appointment
at that time as he had a
pending disciplinary hearing.
The [employee] has no
signed permanent contract of employment and failed to call the shop
steward to verify the circumstances in
which the blank document was
given to him. As such there is nothing before me to refute
Buthelezi’s version that it was a
mistake for the [employee] to
have the contract; that it was never issued to him and that there was
no offer of employment for
him. I am inclined to accept Buthelezi’s
version in this regard and find that the [employee] was never offered
permanent
employment or in fact permanently employed.
It must further be noted
that the commencement date for the supposed permanent employment was
20 August 2015, however, the [employee]
had already been dismissed on
14 August 2015. In the premises he could not possibly be said to have
been a permanent employee at
the time of his dismissal on 14 August
as he was, at that point, still employed on a fixed term contract.
Reinstatement as a permanent
employee is thus not an option and, his
fixed term contract has long since expired, I cannot order his return
to work on that basis
(i.e., on a fixed term contract).
It
was never the employee’s case that but for his dismissal, his
fixed term contract would have been renewed and no evidence
was led
to prove any kind of legitimate expectation either. In the premises I
am of the view that the only competent relief herein
is
compensation.
[1]
[8]
In
considering whether, in terms of section 194 of the Labour Relations
Act
[2]
, it was just and
equitable to limit the compensation to be awarded to the employee to
the balance of his fixed-term contract (i.e.
2.5 months), the
arbitrator considered the decision of this Court in
Jorgensen
v I Kat Computing (Pty) Ltd and others,
[3]
where it held that compensation for an unfair dismissal (in that
case) had to be limited to the balance of the employee’s

fixed-term contract. This Court accordingly reduced the amount of
compensation which the employer was ordered to pay on the basis
that
“
there
was no cause to award compensation more than the actual loss of
income”.
Considering
herself bound by that decision, the arbitrator awarded the employee
compensation in an amount equivalent to the amount
he would have
earned for the remainder of his fixed- term contract (two and a half
months) which was R37 325.20.
In
the Labour Court
[9]
On 17 July 2018, the Union, acting on
behalf of the employee, instituted a review application against the
arbitration award, seeking
that the compensation award be reviewed,
set aside, and replaced with an order that the employee be reinstated
with full retrospective
effect.
[10]
The
Labour Court reviewed and set aside the compensation award of the
arbitrator and substituted it with an order that the employer

“
reinstate
the employee from the date of his dismissal with no loss of earning
or benefits as if he was not dismissed”
.
In making the order, the Labour Court reasoned that: “
it
was the employee’s suspension and subsequent dismissal that
prevented him from being offered permanent employment and if
there
was any other reason, no evidence appears to have been led
”.
The Labour Court stated that the only exception from the provisions
of section 193(2)
[4]
of
the LRA that could justify a failure to reinstate or re-employ the
employee is under 193(2)(c) of the LRA and that the question
is
whether it was reasonably practicable for the employer to reinstate
or re-employ the employee. The Labour Court concluded that
the
employer did not adduce any evidence to discharge its onus to prove
that reinstatement was not practical.
[11]
The appeal lies against the judgment and
order of the Labour Court with leave of this Court.
The
Appeal
[12]
It
is necessary at the outset to dispose of the employee’s
reliance, in its heads of argument in the appeal, on the provisions

of section 186(1)(b)
[5]
of
the LRA in contending that he either had a reasonable expectation of
the renewal of his fixed-term contract on the same or similar
terms,
alternatively employment on an indefinite basis. The employee neither
alleged nor proved at the arbitration proceedings
that he had any
reasonable expectation as contemplated in section 186(1)(b) of the
LRA. I am of the view that the arbitrator correctly
concluded that
“
it
was never the [employee’s] case that but for his dismissal, his
fixed-term contract would have been renewed and no evidence
was led
to prove any kind of legitimate expectation either
”
.
During argument in the
appeal, Counsel for the employee correctly disavowed any reliance on
section 186(1)(b) of the LRA.
[13]
The only defence advanced by the employee
in the arbitration proceedings was that, prior to his dismissal, on
14 August 2015, he
had become a permanent employee of the employer.
He based this claim on a written employment contract
[14]
Mr Buthelezi testified at the arbitration
hearing on behalf of the employer. In essence, his testimony was
that, in mid-2015, the
employer had contemplated converting a number
of employees on fixed-term contracts to permanent employment.
However, the employer
resolved to exclude all employees with pending
disciplinary hearings from consideration for permanent employment.
Although the
Union had produced an employment contract with the
employee’s name on it that accorded with the template that the
employer
had used at the time, no such contract had been offered to
the employee.
[15]
According to Mr Buthelezi, before a
permanent employment contract is concluded with an employee, an offer
of permanent employment
is made to the employee. The employee is then
called to the Human Resources Department where the employee and a
Human Resources
representative would sign the contract. The employer
had not made an offer of permanent employment to the employee, nor
did it
request him to sign a permanent employment contract. Mr
Buthelezi concluded his evidence by stating that no permanent
contract
was concluded between the employer and the employee prior to
his dismissal.
[16]
The employee testified that he had received
the permanent contract from Mr Nthobo Khumalo, a Union Shop Steward,
but that he had
not signed it. The employee was constrained to
concede, under cross-examination, that he did not sign the employment
contract because
the employer had not made an offer of permanent
employment to him due to his pending disciplinary hearing.
[17]
On the basis of the evidence led at the
arbitration hearing, the arbitrator correctly found that no permanent
contract of employment
had been concluded between the parties, as the
employer had never made an offer of permanent employment to the
employee prior to
his dismissal. The Labour Court agreed with the
arbitrator’s assessment of the evidence and held as follows:
‘
The
Commissioner had a legal obligation to assess the probabilities in
this
matter. She
was better positioned to do so as she was steeped in the trial of the
issues serving before her. She found that the
evidence of the
employer, through Mr Buthelezi, was more probable than that of the
[employee] about whether a blank employment
contract was offered to
the [employee] by the company. Mr Buthelezi denied giving the form to
the [employee]. This is true as the
[employee] said he received it
from a shop steward. The truthfulness of the source of the form
depended on the evidence of the
shop steward. It was for the
[employee] to bring the shop steward as his witness. He did not do
so. The evidential assessment of
the Commissioner here is on the
spot.’
[18]
A further factor that the Labour Court
considered in agreeing with the arbitrator’s assessment of the
evidence, is that it
was unlikely that the employer could offer
permanent employment to an employee whom it had just suspended based
on a serious charge
of misconduct. The Labour Court accordingly
concluded that it was the employee’s suspension and subsequent
dismissal that
prevented him from being offered permanent employment.
[19]
Although the Labour Court arrived at this
conclusion, it nevertheless held that the employer failed to adduce
evidence to discharge
the onus which it bore to prove that it was not
reasonably practical to reinstate the employee in terms of section
193(2)(c) of
the LRA and that the arbitrator committed a misdirection
by placing this onus on the employee. It held that the consideration
of
reinstatement came into play when the arbitrator found the
employee’s dismissal to be substantively unfair and not when
the
permanent contract of employment was offered to the employee. As
a result, the Labour Court concluded that the arbitrator
misunderstood
the nature of the inquiry in determining if
reinstatement was an appropriate remedy.
[20]
In
terms of section 193(1) of the LRA, an arbitrator has a discretion to
either order the employer to reinstate, re-employ or compensate
an
employee whose dismissal is found to be unfair. The employee in this
appeal challenges the discretion exercised by the arbitrator
in terms
of section 193(1) of the LRA to order the employer to pay him
compensation instead of reinstating him. In the ordinary
course, when
dealing, on review, with a challenge to the exercise of an
arbitrator’s discretion in terms of section 193(1)
of the LRA,
the Labour Court is required to consider if the arbitrator properly
took into account all the facts and
circumstances
in
coming
to
its
decision,
and
that
the
decision
arrived
at
is
judicially correct.
[6]
[21]
Integral
to the exercise of the arbitrator’s discretion in terms of
section 193(1) of the LRA in deciding whether to reinstate,
re-employ
or compensate the employee, is the nature of the employment contract
and whether it is extant when an employee’s
dismissal is found
to be unfair. The remedy of reinstatement is confined to the
situation where, at the date of the finding that
the dismissal is
unfair, the original employment contract is still in existence.
However, where the employee is employed on a fixed-term
contract, the
expiry of which precedes the unfair dismissal finding, as in this
dispute, then reinstatement or re-employment are
not legally
permissible remedies.
[7]
In
the circumstances, the arbitrator no longer has a discretion to
choose between the three remedies contemplated in section 193(1)
of
the LRA but is obliged in law to order the employer to pay the
employee compensation in terms of section 193(1)(c) of the LRA.
[22]
The arbitrator in this appeal found the
dismissal of the employee to be substantively unfair and ordered the
employer to pay compensation
to the employee as provided for in
section 193(1)(c) of the LRA. In making this order, the arbitrator
took into consideration that
at the point of the employee’s
dismissal on 14 August 2015, he was not a permanent employee but was
on a fixed-term contract
which would terminate some two and a half
months later on 31 October 2015. She was also mindful of the fact
that when she found
the employee’s dismissal to be
substantively unfair, his fixed-term contract had already expired and
that, in the circumstances,
she was legally precluded from ordering
the employer to reinstate the employee.
[23]
Concerning
the quantum of compensation awarded, the arbitrator ordered the
employer to pay the employee compensation limited to
the balance of
his fixed- term contract as it was equivalent to the employee’s
actual loss of income.
[8]
This
was just and equitable as contemplated in section 194 of the LRA.
Notably, the employee does not appeal the quantum of compensation

awarded to him.
[24]
Significantly, because reinstatement on the
facts of this case is not a competent remedy, section 193(2) of the
LRA has no application.
Thus, contrary to the finding of the Labour
Court, the employer was not required to prove that reinstatement of
the employee was
not practicable in terms of section 193(2)(c) of the
LRA.
[25]
The Labour Court reviewed and set aside the
compensation order of the arbitrator and replaced it with,
inter
alia,
an order that the employer
reinstate the employee with full retrospective effect, on the basis
that, but for the disciplinary process,
the employer would have
offered the employee permanent employment. The Labour Court erred in
making this order as it was not established
on the evidence that, but
for the disciplinary process, the employee would have been offered
permanent employment. Nor was it the
employer’s case that, but
for his dismissal, the fixed-term contract would have been renewed or
converted into a permanent
contract. What the Labour Court ignored
was that, at the time of his dismissal, the employee remained on a
fixed-term which terminated
two and a half months later.
[26]
The
Labour Court’s reinstatement order sought to create a permanent
contract of employment between the employer and employee
when no such
contract existed. Since reinstatement involves the original contract
of employment, which in this case was one of
limited duration that
had terminated by the effluxion of time, it was legally impermissible
for the Labour Court to create a new
contract through ordering
reinstatement.
[9]
Costs
[27]
I consider it fair and just not to order
costs in the appeal and the review.
Conclusion
[28]
For all these reasons, the appeal succeeds.
[29]
In the result, it is ordered that:
Order
1.
The appeal is upheld with no order as to
costs.
2.
The award of the arbitrator is confirmed.
3.
The order of the Labour Court is set aside
and replaced with the following order:
“
1.
The application for review is dismissed with no order as to costs.”
F
Kathree-Setiloane AJA
Waglay
JP and Savage AJA concur.
APPEARANCES:
For
the Appellant:                   Mr

PHN Schumann
Instructed
by:                         Cox

Yeats Attorneys
For
the Respondent:               Mr
B Pillemer SC
Instructed
by:                          Purdon

& Munsamy Attorneys
[1]
Judgment
of the Labour Court at paras 21 - 24.
[2]
Act
66 of 1995, as amended.
[3]
(2018)
39 ILJ 785 (LAC) at para 145.
[4]
Section
193(2) provides:
‘
The
Labour Court or the arbitrator must require the employer to
reinstate or re-employ the employee unless –
(a)
The
employee does not wish to be reinstated or re-employed;
(b)
the
circumstances surrounding the dismissal are such that a continued
employment relationship would be intolerable;
(c)
it
is not reasonably practicable for the employer to reinstate or
re-employ the employee; or
(d)
The
dismissal is unfair only because the employer did not follow a fair
procedure.’
[5]
In
terms of section 186(1)(b) of the LRA dismissal means,
inter
alia
,
that:
‘
(b)
an
employee
employed
in
terms
of
a
fixed-term
contract
of
employment
reasonably
expected
the
employer –
(i)
To renew a fixed-term contract of
employment on the same or similar terms but the employer offered to
renew it on less favourable
terms, or did not renew it; or
(ii)
to retain the employee in employment on an
indefinite basis but otherwise on the same or similar terms as the
fixed-term contract,
but the employer offered to retain the employee
on less favourable terms or did not offer to retain the employee.’
produced
by the Union which apparently bore the signature of the
employer’s Human Resources Manager, Mr Buthelezi. The contract

was, however, not signed by the employee.
[6]
Kemp
t/a Centralmed v Rawlins
(2009)
30 ILJ 2677 (LAC) at paras 55 - 56
[7]
This
dispute falls within the category of cases discussed by Zondo J (as
he then was) in his dissenting opinion in
Toyota
SA Motors (Pty) Ltd v CCMA and Others
(2016)
37 ILJ 313 (CC) at para 145;
Tshongweni
v Ekurhuleni Metropolitan Municipality
(2010)
31 ILJ 3027 (LC).
[8]
Jorgensen
v I Kat Computing (Pty) Ltd and others
supra
at para 145.
[9]
J
Grogan,
‘
Dismissal
Discrimination
and
Unfair
Labour
Practices’
(Juta
2005)
at
p
499
cited
in
Tshongweni
v Ekurhuleni Metropolitan Municipality
(2010)
31 ILJ 3027 (LAC) at para 23.