Brief Summary

Labour Law — Unfair Dismissal — Prescription of wage claims — Appellant dismissed respondents for participating in an unprotected strike; Labour Court found dismissals unfair and ordered reinstatement from 1 January 2007. Respondents sought payment of arrear wages from reinstatement order until actual reinstatement on 29 September 2009. Appellant contended claims had prescribed under the Prescription Act as they were contractual claims. Labour Court ruled claims not prescribed, ordering payment of arrear wages. On appeal, it was held that claims for wages from 23 April 2007 to 28 September 2009 were distinct from the unfair dismissal claim and prescribed three years from the date the judgment became executable. Appeal upheld with costs.

Comprehensive Summary

Summary of Judgment

Introduction

The matter was an appeal in the Labour Appeal Court against a judgment of the Labour Court (Gaibie AJ). The appeal concerned whether an employer was liable, pursuant to a prior retrospective reinstatement order, to pay employees arrear wages for the period after the date on which the employees were ordered to report for duty and until the date on which the employer actually reinstated them, and whether any such wage claims had prescribed.

The appellant was Hendor Mining Supplies (a division of Marschalk Beleggings (Pty) Ltd). The first respondent was the National Union of Metalworkers of South Africa (NUMSA), and the second to further respondents were Moses Fohlisa and 41 others (employees), with certain respondents having died by the time of the later proceedings.

The dispute arose from dismissals for participation in an unprotected strike. In earlier proceedings, the Labour Court (Cele AJ) found the dismissals substantively unfair and ordered reinstatement retrospectively from 1 January 2007, with the employees to report for duty on 23 April 2007. The appellant unsuccessfully pursued appeals, culminating in the dismissal of its petition for leave to appeal to the Supreme Court of Appeal. The appellant then reinstated the respondents but did not pay arrear remuneration for the period between the retrospective reinstatement date and actual reinstatement. Attempts by the respondents to execute on the reinstatement order by writ were set aside, which led to a later application seeking quantification/payment of arrear wages. Gaibie AJ granted relief ordering payment. This appeal lay against that order.

The general subject-matter was the legal character of arrear wage claims following a retrospective reinstatement order (whether they were enforceable as a judgment debt or as a contractual wage claim) and the resulting consequences for prescription.

Material Facts

It was common cause that the appellant dismissed the respondents on 18 August 2003 for participating in an unprotected strike. In subsequent unfair dismissal proceedings, the Labour Court (Cele AJ) ordered that the respondents be reinstated from 1 January 2007, and required them to report for duty on 23 April 2007.

The appellant appealed. This Court dismissed the appellant’s appeal on 19 June 2009, and the appellant’s petition for leave to appeal to the Supreme Court of Appeal was dismissed on 15 September 2009. The respondents were ultimately reinstated by the appellant on 29 September 2009 (the judgment also refers to 28 September 2009 in describing the date of reinstatement in the context of the Gaibie AJ order).

It was also common cause that when the appellant reinstated the respondents, it did not pay arrear wages for the period from the retrospective reinstatement date (1 January 2007) to the date of actual reinstatement.

Following non-payment, the respondents caused a writ of execution to be issued. On 23 July 2011, the Labour Court (Van Voore AJ) set aside the writ on the basis that it was not founded on an underlying judgment sounding in money, and directed the respondents to deliver a declaration setting out the grounds and amounts claimed.

On 19 September 2012, the respondents applied to the Labour Court for an order quantifying and compelling payment of arrear wages and sought substitution of executors for deceased respondents under Labour Court Rule 22(5).

In the Labour Court proceedings before Gaibie AJ, the appellant raised, among other grounds, prescription, contending that arrear wages accruing after the report-for-duty date constituted contractual claims for wages that accrued weekly/monthly and prescribed in three years under section 11(d) of the Prescription Act 68 of 1969. The appellant conceded that arrear wages for the period 1 January 2007 to 23 April 2007 (as framed in its argument) amounted to a judgment debt and had not prescribed; it also conceded that arrear wages for the narrow period 19 September 2009 to 29 September 2009 had not prescribed given the application date of 19 September 2012. The contested period for prescription purposes was 23 April 2007 to 28/29 September 2009, and, more particularly in the appeal court’s reasoning, the period up to 18 September 2009.

Legal Issues

The central legal questions were whether the employees’ claims for arrear wages after the reporting date, arising from a retrospective reinstatement order, were enforceable as part of a judgment debt created by the reinstatement order, or whether they constituted a distinct contractual cause of action for unpaid wages under the revived contract of employment.

A further central question was the proper application of the Prescription Act: if the claims were contractual, whether they were “debts due” subject to the three-year prescription period in section 11(d), and when prescription began to run, including the relevance of sections 12(3) and 15(4).

A subsidiary issue (which the Court found it unnecessary to decide for dispositive purposes) concerned the validity and approach to substitution applications under Labour Court Rule 22(5) in respect of deceased respondents.

The dispute concerned a mixed question of law and the application of law to largely common-cause facts, particularly the classification of the claim (judgment debt versus contractual wage claim) and the consequent prescription consequences.

Court’s Reasoning

The Court began by locating reinstatement within the remedial framework of section 193 of the Labour Relations Act 66 of 1996 (LRA). It reiterated that reinstatement is the primary remedy for unfair dismissal and is directed at restoring the employee to the position he or she would have occupied but for the unfair dismissal by restoring the contract of employment. In this regard the Court relied on the Constitutional Court’s articulation of reinstatement in Equity Aviation Services (Pty) Ltd v CCMA and Others.

The Court emphasised that section 193(1)(a) permits reinstatement to operate retrospectively from a date not earlier than the dismissal date, and that retrospective reinstatement is not compensation under sections 193(1)(c) and 194. However, it cautioned against conflating the retrospective effect of reinstatement with an employer’s obligation to pay wages on an ongoing basis. Referring to Coca Cola Sabco v Van Wyk, the Court held that the LRA does not provide for prospective relief beyond the date of reinstatement, and that a reinstatement order does not itself constitute an order compelling payment of prospective remuneration from the date of the reinstatement judgment until the date the employer actually implements reinstatement.

On the facts, Cele AJ’s order restored the employment contracts from 1 January 2007, but required the respondents to report for duty only on 23 April 2007. The Court held that Cele AJ had applied his mind to retrospectivity in the manner contemplated by section 193(1)(a). The Court reasoned that, because of this structure, the employer was required under the retrospective terms of the reinstatement order to pay wages for the period 1 January 2007 to 22 April 2007. That portion, in the Court’s view, constituted a judgment debt, described with reference to authority as a judgment from which it can be gathered what money or thing the debtor must deliver. As a judgment debt, it was treated as having the characteristics of an independent cause of action with a 30-year prescription period (as referenced in the judgment).

The Court then addressed the effect of the appellant’s pursuit of appeal remedies. It held that pending appeal, execution of the judgment was suspended under common law and Uniform Rule 49(11) (noting that the rule had later been repealed, with section 18 of the Superior Courts Act 10 of 2013 now applying). The appellant bore the risk of prejudice arising from delayed implementation caused by its unsuccessful appeal attempts. Once the petition for leave to appeal was refused on 15 September 2009, the suspension ended and the reinstatement order became operative and enforceable, with the consequence that the reinstated employment contracts entitled the respondents to claim arrear wages up to the date of actual reinstatement.

Crucially, however, the Court stressed that Cele AJ made no order for payment of wages prospectively from the date of his judgment until actual reinstatement, and that such an order would not have been competent under the LRA. The Court illustrated the significance of treating post-order wages as contractual by observing that contractual defences could arise, such as death of an employee after the order or supervening impossibility of performance. Accordingly, the Court concluded that the respondents’ claims for wages from 23 April 2007 until reinstatement were founded on a distinct cause of action from the unfair dismissal claim: they were contractual wage claims arising from the employment contract that had been restored. The Labour Court’s jurisdiction to determine such contractual matters was located in section 77(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA).

Having classified the relevant portion of the claims as contractual, the Court held that, on 15 September 2009 (the date the judgment became executable), the respondents’ arrear wage claims from 23 April 2007 became a “debt due” under the Prescription Act and were subject to the three-year prescription period in section 11(d). The Court further held that prescription commenced to run afresh in terms of section 15(4) on the day the judgment became executable, and that the respondents had knowledge of the identity of the debtor and the facts giving rise to the debt as contemplated by section 12(3). The Court rejected the contention that the debt only became due when the employer refused to pay, or on the date of actual reinstatement, or when the debt was quantified by a court.

The Court addressed reliance on Billiton Aluminium SA Ltd t/a Hillside Aluminium v Khanyile, distinguishing it on the basis that in Billiton the employee’s entitlement to arrear wages under the restored contract was not disputed, whereas in the present matter the issue was whether the reinstatement award itself constituted an order for payment of wages prospectively from the date of the court order. The Court’s analysis maintained that while employers often pay arrear wages following reinstatement, such payment does not transform the reinstatement order into a money judgment for the post-order period.

On the dates, the Court concluded that the respondents’ claims for arrear wages from 23 April 2007 until 19 September 2009 (the institution date of the Labour Court application) had prescribed, and that the Labour Court (Gaibie AJ) erred in concluding otherwise.

Because of the prescription finding, the Court held it unnecessary to decide the substitution issue. It nevertheless stated that deceased respondents could not have sought substitution relief themselves, and that the Labour Court erred in not dismissing such substitution applications on that basis.

On costs, while the appellant sought costs (including costs of two counsel), the Court concluded that a costs order was not warranted.

Outcome and Relief

The appeal was upheld, and no order as to costs was made in the appeal.

The Labour Court’s judgment was set aside and substituted with an order declaring that the applicants’ claims for payment of arrear wages from 23 April 2007 to 18 September 2009 had prescribed, and dismissing the application, with no order as to costs.

Cases Cited

Billiton Aluminium SA Ltd t/a Hillside Aluminium v Khanyile [2010] 5 BLLR 465 (CC).

Equity Aviation Services (Pty) Ltd v CCMA and Others [2008] ZACC 16; 2009 (1) SA 390 (CC); 2009 (2) BCLR 111 (CC).

Coca Cola Sabco v Van Wyk [2015] 8 BLLR 774 (LAC).

Republican Press (Pty) Ltd v CEPPWAWU and Others [2007] SCA 121 (RSA); 2008 (1) SA 404 (SCA).

NUMSA and Others v Fibre Flair CC t/a Kango Canopies [2000] 6 BLLR 631 (LAC).

Kroukam v RSA Airlink (Pty) Ltd [2005] 12 BLLR 1172 (LAC).

McNutt v Mostert 1949 (3) SA 253.

De Crespigny v De Crespigny 1959 (1) SA 149 (N).

EA Gani (Pty) Ltd v Francis 1984 (1) SA 462 (T).

Bulsara v Jordan & Co Ltd (Conshu Ltd) [1995] ZASCA 106; 1996 (1) SA 805 (SCA).

Kilroe-Daley v Barclays National Bank Ltd [1984] ZASCA 90; [1984] 2 All SA 551 (A); 1984 (4) SA 609 (A).

Performing Arts Council of the Transvaal v Paper Printing Wood and Allied Workers Union and Others 1994 (2) SA 204 (A).

Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA).

Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsh (Pty) Ltd [1990] ZASCA 136; 1991 (1) SA 525 (A).

Legislation Cited

Labour Relations Act 66 of 1996, section 193.

Basic Conditions of Employment Act 75 of 1997, section 77(3).

Prescription Act 68 of 1969, sections 11(a)(ii), 11(d), 12(3), 15(4).

Superior Courts Act 10 of 2013, section 18.

Rules of Court Cited

Labour Court Rule 22(5).

Uniform Rule 49(11) (noting in the judgment that it was repealed with effect from 22 May 2015).

Held

The Court held that a retrospective reinstatement order under section 193 of the LRA restores the employment contract, but does not itself amount to an order sounding in money for the payment of prospective remuneration from the date of the reinstatement judgment until the employer’s eventual compliance.

The Court held that arrear wage claims for the period after employees were required to report for duty, and until actual reinstatement, are contractual claims arising from the restored contract of employment (falling within the Labour Court’s contractual jurisdiction under section 77(3) of the BCEA), and are therefore subject to three-year prescription under section 11(d) of the Prescription Act.

The Court held that prescription for such contractual wage claims began to run (in the circumstances of this case) when the reinstatement judgment became executable, namely 15 September 2009, and that the employees’ claims for arrear wages for the period 23 April 2007 to 18 September 2009 had prescribed by the time proceedings were instituted on 19 September 2012.

LEGAL PRINCIPLES

A finding of unfair dismissal under the LRA limits remedies to reinstatement, re-employment, or compensation (section 193), with reinstatement being the primary remedy aimed at restoring the employee to the position they would have occupied but for the dismissal by restoring the contract of employment.

A reinstatement order may operate retrospectively from a date not earlier than the dismissal date (section 193(1)(a)), and retrospective reinstatement is conceptually distinct from statutory compensation under the LRA.

A reinstatement order does not, without more, constitute a money judgment for the payment of remuneration prospective from the date of the reinstatement order to the date of actual compliance; remuneration claims for that period arise as contractual wage claims under the restored contract, to which ordinary contractual defences may apply.

A judgment debt (to the extent that the judgment itself determines what must be delivered or paid) is distinct from a contractual debt for wages. Where a wage claim is contractual, it constitutes a “debt due” subject to three-year prescription under section 11(d) of the Prescription Act 68 of 1969.

Where prescription has been interrupted and final judgment is obtained, section 15(4) provides that prescription commences to run afresh when the judgment becomes executable; and in assessing when a debt is due, section 12(3) links that to the creditor’s knowledge of the debtor’s identity and the facts giving rise to the debt.

Hendor Mining Supplies (A Division of Marschalk Beleggings (Pty) Ltd) v National Union of Metalworkers of South Africa and Others (JA55/2014) [2015] ZALAC 49; (2016) 37 ILJ 394 (LAC); [2016] 2 BLLR 115 (LAC) (26 November 2015)