Summary of Judgment

1. Introduction

The proceedings took the form of an application in the Labour Court for payment of arrear remuneration (“back-pay”) said to be owing following the implementation of a reinstatement award. The applicant was L.J. Mashao, and the respondent was PHD Pharmaceutical Health Care.

The matter arose against the background of a CCMA arbitration award dated 30 November 2009 (case number GATW 8437/09) which found the applicant’s dismissal substantively unfair and ordered his reinstatement, together with a defined amount of back-pay for a specified earlier period. The respondent launched a review application in the Labour Court on 8 January 2010, but failed to prosecute it. On 26 August 2016, in a separate Labour Court judgment (case number JR 3605/09), the review was dismissed for unreasonable delay and the arbitration award was made an order of court.

The present dispute concerned whether, following the eventual reinstatement of the applicant in September 2016, the respondent was obliged to pay the applicant additional back-pay for the intervening period between the reinstatement date contemplated in the award and the date on which reinstatement actually occurred, and whether the applicant was also entitled to an amount claimed as accrued leave pay. A further dispute concerned whether the applicant’s failure to report for duty (or tender services) affected his entitlement to the arrear remuneration claimed.

2. Material Facts

It was common cause that the applicant was dismissed on 23 June 2009 while employed as a Replenishment Supervisor. It was also common cause that, on 30 November 2009, the applicant obtained a CCMA award declaring the dismissal substantively unfair and ordering reinstatement.

The award’s operative terms included that the respondent must reinstate the applicant to his previous position effective from 25 June 2009 on the same terms and conditions as before dismissal, and that the applicant was directed to report for duty on 11 January 2010 at 08h00. The award further ordered payment of back-pay of R25 300 calculated as five months’ salary for the period 25 June 2009 to 25 November 2009, and stated that the period between 25 November 2009 and 11 January (as reflected in the award) was to be regarded as unpaid leave. No costs order was made in the arbitration.

It was undisputed that the respondent filed a review application on 8 January 2010, shortly before the reporting-for-duty date stipulated in the award, and that the respondent did not take further steps to prosecute that review. It was also undisputed that the Labour Court (per Molahlehi J) ultimately dismissed the review on 26 August 2016 due to unreasonable delay and made the CCMA award an order of court.

It was common cause that the applicant’s reinstatement actually took place on 12 September 2016, following the dismissal of the review and the making of the award an order of court.

As to payment, it was common cause that the respondent paid the specific amount of back-pay ordered in paragraph 31 of the award, namely R25 300 (less statutory deductions). The respondent did not pay any further back-pay in respect of the period from January 2010 to September 2016, which formed the subject matter of the present application.

A disputed factual issue arose regarding whether the applicant had been advised by the respondent not to report for duty pending finalisation of the review, and whether the applicant in fact reported for duty. The applicant alleged he was advised not to report, while the respondent disputed this and contended that the applicant did not return to work or seek to continue his employment. The court recorded that there was no further evidence at the hearing resolving whether the applicant reported for duty. The court, however, treated that dispute as ultimately irrelevant to the determination in light of the legal effect of the review (as discussed in its reasoning).

Regarding quantum, the applicant claimed arrear salaries in the amount of R546 486.00 for the period in issue and also claimed leave pay of R46 289.16 allegedly accrued during that period. The respondent did not dispute the calculation of R546 486.00 in the papers or at the hearing, while the leave-pay claim was not accepted by the court.

3. Legal Issues

The central legal questions were whether, in circumstances where a reinstatement award was delayed for years due to a pending review application (ultimately dismissed), the employee was entitled to remuneration for the period between the award’s stipulated reinstatement date and the date reinstatement actually occurred, notwithstanding that the award did not expressly quantify back-pay for that entire interval.

A closely related issue concerned the legal effect of the respondent’s filing of a review application before the 2015 amendments to the Labour Relations Act 66 of 1995, namely whether the review application automatically suspended implementation of the award pending the review’s outcome, and how that affected the employee’s obligation to report for duty on the date specified in the award.

There was also an issue of application of law to fact concerning whether the applicant’s alleged failure to report for duty or tender services could lawfully defeat or reduce his claim to retrospective remuneration in the context of a reinstatement order that only took effect years later.

Finally, the court had to determine whether the applicant was entitled, on the facts accepted by the court, to payment of an additional amount claimed as accrued leave pay for the same period, and to determine an appropriate order as to costs, including whether costs should be punitive.

Overall, the dispute largely concerned the application of legal principles (particularly the meaning and consequences of reinstatement, and the effect of a review on enforceability) to largely common-cause procedural facts, together with a limited value judgment in relation to costs.

4. Court’s Reasoning

The court approached the matter by interpreting the reinstatement award and then assessing the consequences of the later Labour Court judgment which dismissed the review and made the award an order of court. The court accepted that the award directed the applicant to report for duty on 11 January 2010, but held that the significance of that direction had to be assessed in the context of the legal regime governing review applications at the time.

A key aspect of the court’s reasoning was its reliance on Constitutional Court authority dealing with back-pay and reinstatement where implementation is delayed pending review. Referring to National Union of Mineworkers of South Africa obo M Fohlisa and 41 Others v Hendor Mining Supplies, the court emphasised that reinstatement entails placing the employee back into the position occupied before dismissal on the same terms and conditions, and that the benefits of the contract include payment of remuneration covering the period between the reinstatement date and the date on which reinstatement actually takes place.

Against that principle, the court reasoned that Molahlehi J’s 26 August 2016 judgment had the practical effect of reviving the CCMA award and requiring its implementation. Since it was common cause that reinstatement actually occurred on 12 September 2016, the court treated that as the actual implementation date, but held that the operative reinstatement date specified by the award (linked to the reporting date of 11 January 2010) remained material for the purpose of determining retrospective entitlements.

The court then addressed the effect of the respondent’s review application. It reasoned that, prior to the January 2015 amendment introducing section 145(7) of the Labour Relations Act, the filing of a review under section 145 had the effect of automatically suspending the implementation of an award pending the review’s finalisation. The court held that because the award pre-dated the amendment and the review was filed on 8 January 2010, the “old practice” applied and implementation of the award was suspended at that time.

On that basis, the court concluded that it would have been pointless for the applicant to report for duty on 11 January 2010, because the award’s operation was automatically suspended by the review. Accordingly, the factual dispute about whether the applicant reported for duty was treated as irrelevant to his entitlement to retrospective remuneration once the award was later revived and enforced.

Having found that the award was revived and implemented only after the review was dismissed, the court reasoned that the revival of the original reinstatement date could only mean that reinstatement operated retrospectively from the actual reinstatement date back to the award’s stipulated reinstatement framework, yielding an entitlement to remuneration for the intervening period. The court rejected the respondent’s contention that the reinstatement was not retrospective, holding that this could not be sustained in light of the principle articulated in Hendor.

The court further addressed the respondent’s reliance on the applicant’s conduct after the actual reinstatement date. It held that post-reinstatement conduct was not relevant to the applicant’s legal entitlement to retrospective relief for the period before actual reinstatement. It reasoned that if the respondent had concerns about absenteeism after reinstatement, those were matters that could have been managed through the respondent’s disciplinary processes.

Turning to quantum, the court noted that the applicant calculated arrear salaries at R546 486.00, and that the respondent did not dispute this calculation in its papers or at the hearing. The court therefore proceeded on the basis that the amount was accepted as correct for purposes of the application. However, the court refused the claim for leave pay of R46 289.16, reasoning that the claim depended on an assumption that the applicant would not have taken annual paid leave over approximately six years and would instead have worked continuously without taking leave. The court held that this assumption was not reasonable on the facts and could not sustain the leave-pay claim.

On costs, the court considered the long delay since the original award and attributed the delay primarily to the respondent’s conduct in filing the review and then failing to pursue it. The court considered the possibility that the review had been used as a strategy to delay implementation and exhaust the applicant, and treated the respondent’s failure to prosecute the review without explanation as pointing strongly to an improper motive. This supported an adverse costs order in the ordinary course. While the applicant sought punitive costs, the court declined to grant them because it was common cause that the respondent engaged in meaningful settlement negotiations, which the court treated as mitigating the level of blameworthiness.

5. Outcome and Relief

The court granted the application in part. It ordered the respondent to pay the applicant R546 486.00 into the applicant’s nominated bank account on or before 19 August 2017.

The court ordered that interest at 10% per annum would accrue on any outstanding balance from 20 August 2017 until date of payment.

The court refused the applicant’s additional claim for leave pay in the sum of R46 289.16.

The respondent was ordered to pay the applicant’s taxed costs of the application. The court declined to order costs on a punitive scale.

Cases Cited

National Union of Mineworkers of South Africa obo M Fohlisa and 41 Others v Hendor Mining Supplies (A Division of Marschalk Beleggings (Pty) Ltd) [2017] 6 BLLR 539 (CC)

Legislation Cited

Labour Relations Act 66 of 1995 (including sections 143, 145, and 145(7))

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, where a reinstatement award was delayed for an extended period due to a review application that (under the pre-2015 regime) automatically suspended implementation, the eventual revival and enforcement of the award entailed retrospective reinstatement with an accompanying entitlement to remuneration for the period between the award’s effective reinstatement framework and the date reinstatement actually occurred.

The court held further that the dispute about whether the applicant reported for duty on the reporting date specified in the award was immaterial, because the review application—filed before that date—automatically suspended the award’s implementation at the time.

The court held that the applicant was entitled to arrear salaries of R546 486.00 (not disputed in amount by the respondent for purposes of the application), but was not entitled to the additional claimed amount for accrued leave pay, because the claim rested on an unreasonable assumption that no leave would have been taken over the relevant period.

LEGAL PRINCIPLES

Reinstatement in labour law entails restoring the employee to the same job or position on the same terms and conditions as existed before dismissal, and the contractual benefits inherent in reinstatement include remuneration. Where reinstatement is ordered with an effective date earlier than the date on which reinstatement is actually implemented, reinstatement may carry retrospective financial consequences covering the intervening period.

Under the pre-January 2015 position, the filing of a review application under section 145 of the Labour Relations Act had the effect of automatically suspending the implementation of an arbitration award pending the finalisation of the review. In such circumstances, compliance steps contemplated by the award (such as reporting for duty) may be treated as practically and legally inconsequential while the award is suspended, for purposes of determining retrospective entitlements once the award is revived and enforced.

A claim for additional monetary relief ancillary to reinstatement, such as accrued leave pay over an extended period, must be grounded in reasonable assumptions supported by the facts relied upon by the court; speculative assumptions (such as continuous work over many years without taking annual leave) will not sustain such relief.

In the exercise of the costs discretion, a party’s responsibility for protracted delay—particularly where a review is instituted and then not prosecuted—may justify an adverse costs order, while meaningful settlement engagement may mitigate against punitive costs.