Employment law update – Prescription: The Constitutional Court prescribes the way forward

March 1st, 2017
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Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and Others (CC) (unreported case no CCT232/15,15-12-2016) (Jafta J (Nkabinde ADCJ, Khampepe J and Zondo J concurring)).

In 2016 the Labour Appeal Court (LAC) delivered two judgments, which defined the relationship between disputes under the Labour Relations Act 66 of 1995 (LRA) and the Prescription Act 68 of 1969. In the consolidated matter of Myathaza v Johannesburg Metropolitan Bus Service (SOC) Ltd t/a Metrobus/ Mazibuko v Concor Plant Cellucity (Pty) Ltd v Communication Workers Union on behalf of Peters (2016) 37 ILJ 413 (LAC), the LAC held that arbitration awards are subject to the Prescription Act. In keeping with this principle, the LAC, as recently as 8 September 2016 in Food and Allied Workers’ Union on behalf of Gaoshubelwe and Others v Pieman’s Pantry Pty (Ltd) (2017) 38 ILJ 132 (LAC) (see 2016 (Dec) DR 49) held that all disputes referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) or relevant bargaining councils, are also hit by the provisions of the Prescription Act.

On appeal the Constitutional Court (CC), in the first of the two aforementioned judgments weighed in on the issue.

Background

In September 2009 the applicant received an arbitration award in his favour wherein he was awarded retrospective reinstatement following an unfair dismissal.

In October 2009 the respondent filed a review application to set aside the award. Despite the application being opposed, the matter had not been allocated a date for hearing, which prompted the applicant, in 2013, to launch an application to enforce the award. In opposing the enforcement application, the respondent successfully argued that the award was delivered over three years ago and had, as a result thereof, prescribed. As mentioned, the LAC confirmed this argument in 2016, finding that an arbitration award is a simple debt as contemplated in s 10 of the Prescription Act and thus prescribed three years from when it was delivered.

Section 16 of the Prescription Act

Section 16(1) outlines the scope of the Prescription Act and states that the provisions of the Act shall apply to all debts arising after the commencement of the Act, except in circumstances where such provisions are inconsistent with any Act of parliament, which specifies time frames for when a claim can be made.

The question before the CC, as was before the lower courts, was whether there were any inconsistencies between the LRA and the Prescription Act.

In demonstrating the inconsistencies between the LRA and the Prescription Act the CC made the following observations:

The Prescription Act contemplates civil courts as the only forum disputes are resolved, whereas the LRA provides that disputes be resolved at statutory tribunals (being the CCMA and bargaining councils) in a speedier manner as compared to the normal course of litigation.

Secondly, the prescription periods set out in s 11 of the Prescription Act are at odds with the scheme of the LRA, which provides time lines to ensure labour disputes are resolved speedily. Thus, an employee who in terms of the Prescription Act may lodge an application to enforce an award on the last day of the three year period from when the award was issued, may have his matter dismissed at the Labour Court (LC) for not bringing the application within a reasonable time period.

Thirdly, an arbitration award is final and binding on parties and is delivered after the parties have ventilated their respective arguments, however other than a judgment debt, the Prescription Act extinguishes a claim before it has been determined by a court.

Having set out various other inconsistencies between the LRA and the Prescription Act, the court held:

‘All these differences support the proposition that the LRA is not consonant with the Prescription Act. But the inconsistency does not flow from the fact that the LRA and the Prescription Act prescribe different time periods only. It also arises from the fact that section 158 of the LRA empowers the Labour Court to make an award an order of court for purposes of enforcement. The application of the Prescription Act to such awards effectively achieves the opposite outcome. Once prescribed, an award becomes unenforceable and the Labour Court may not exercise its power to make the award an order of court. In these circumstances the Prescription Act defeats the LRA process that was specifically designed to enforce the right to fair labour practices.’

Considering the fact that the LRA takes precedence over any conflicting legislation, the court upheld the appeal and set aside the order of both the LC and LAC and replaced it with a finding that the arbitration award be made an order of court. The respondent was ordered to pay the costs of proceedings at the LC, LAC and the CC.

In a separate judgment penned by Froneman J (Madlanga J, Mbha AJ and Mhlantla J concurring), the court agreed with the order but for different reasons.

The fundamental difference between the judgments is that unlike the first judgment, the latter judgment did not find inconsistencies between the LRA and the Prescription Act and held that both acts are capable of being interpreted in a manner which protects the right of access to justice while simultaneously ensuring labour disputes are resolved speedily.

What was required, according to the court, was for the Prescription Act to be re-interpreted to give effect to constitutional imperatives.

The starting point was s 15(1) of the Prescription Act, which states prescription is ‘interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt’ (my italics).

In the court’s view there was no reason why a referral to the CCMA, which is a statutory body designed to resolve disputes through the application of law, should not be considered a ‘process’ as envisaged in s 15(1) of the Prescription Act.

As to whether a claim for unfair dismissal constitutes a ‘debt’ contemplated in s 15(1), the court noted that a claim to enforce a legal obligation qualifies as a debt for purposes of the Prescription Act. A legal obligation includes a positive obligation whereby a party is called on to do something. In an unfair dismissal claim the legal obligation sought is either reinstatement, re-employment or compensation; all three of which are positive obligations. Thus, a claim for unfair dismissal qualifies as a debt.

Following the above findings, the court held that referring an unfair dismissal dispute to the CCMA, interrupts prescription.

Once the dispute is referred – how long thereafter would prescription be interrupted?

In addressing this issue the court referred to s 15(4), which states that prescription is interrupted until the final judgment becomes executable.

A judgment is not executable, in general, if it is subject to an appeal. Therefore, as with instances where an appeal raised against a judgment continues to interrupt prescription, so to should a review application at the LC continue to interrupt prescription. This approach is confirmed by s 145(9) of the LRA, which was introduced in 2015, and states that a review application interrupts prescription.

Therefore, until the review is finalised, the award cannot prescribe.

In distinguishing the two judgments further the court held that unlike the first judgment, which found the shorter time periods set out in the LRA are inconsistent with the time periods in the Prescription Act, the court found that the time periods in the LRA are not prescription periods but rather time bars. Thus, referring an unfair dismissal dispute after the 30-day period does not mean the claim has prescribed but rather that it was referred outside the time bar and can be heard with an application for condonation. The court found that there was no reason why time bars and prescription periods could not co-exist.

This article was first published in De Rebus in 2017 (March) DR 36.

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