Employment law update – Compensation in unfair discrimination cases

October 1st, 2014

By Talita Laubscher and Monique Jefferson

In South African Airways (Pty) Ltd v GJJVV [2014] 8 BLLR 748 (LAC) an airline pilot, Van Vuuren, reached the retirement age of 60 on 5 August 2005. At the same time a collective agreement with the union was being negotiated in terms of which the retirement age would be increased to 63. Agreement on the increased retirement age of 63 was in fact reached on 19 August 2005, but the collective agreement was signed only in November 2005. While the collective agreement was being finalised Van Vuuren was asked to remain at home on standby. When he resumed his duties in December 2005 he received a reduced salary which was lower than that of his younger colleagues who performed the same work. The collective agreement further provided for a reduction in rank and status of pilots over the age of 60 who flew internationally. Van Vuuren approached the Labour Court alleging unfair age discrimination. At the same time, he also referred an unfair labour practice dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) as his period of absence while he remained at home on standby, pending the finalisation of the collective agreement was incorrectly deducted from his accumulated annual leave.

The Labour Court found that in terms of the Employment Equity Act 55 of 1998 (the Act), unfair discrimination is prohibited and the only two permissible defences to unfair discrimination are –

  • the taking of affirmative action measures consistent with the Act; or
  • exclusion on the basis of inherent requirements of the job.

South African Airways (SAA) argued that age was an inherent requirement of the job and that the reduction in salary was justified as it was intended to limit costs. SAA also argued that the reduced salary did not constitute unfair discrimination as the employees all had the choice whether to retire at the age of 60 or to continue with employment on reduced terms and conditions.

The Labour Court, per Shaik AJ, held that the exercise of a choice that results in unfair discrimination cannot render the discrimination fair. A contractual term that violates the Constitution is by definition contrary to public policy and therefore unenforceable. The fact that the discriminatory provisions were contained in a collective agreement was therefore no justification. Thus, the Labour Appeal Court found that the Labour Court had correctly found that Van Vuuren had been unfairly discriminated against.

As regards the relief granted, the Labour Court awarded the difference in the amount that Van Vuuren earned and the amount that he would have earned had the unfair discrimination not taken place. In addition, he was awarded compensation equal to 12 months’ remuneration, approximately R 1,4 million (see 2013 (Dec) DR 45).

SAA took issue with the relief ordered. The Labour Appeal Court, per Coppin AJA, noted that the Act empowers the Labour Court to award both damages and compensation, and thus contemplates patrimonial and non-patrimonial loss. The award of damages is based on the actual financial loss suffered and is aimed at restoring the employee to the position he would have been in had the unfair discrimination not occurred. On the other hand, compensation for the purposes of the Act is awarded for non-patrimonial loss such as injury to human dignity (solatium). Courts are generally more conservative with regard to awarding compensation for non-patrimonial loss. The Labour Appeal Court found that when awarding both compensation and damages there must be a balance of the two to ensure that the total amount is fair to both the employee and the employer, and that there is no duplication of relief. In this case, the employee had sought relief in the amount of R 100 000. However, the Labour Court had awarded compensation of over R 1,4 million, which was in addition to the damages awarded for the difference in salary. The Labour Appeal Court held that there was not a sufficient explanation as to why this relief was granted.

In the circumstances, the Labour Appeal Court found that the compensation that had been granted by the Labour Court was grossly excessive because there was no reasonable relationship to the injury suffered. It also exceeded the amounts awarded in previous similar cases. It was accordingly found that this was an exceptional matter that required the Labour Appeal Court to interfere with the compensation award and determine an appropriate amount afresh as it was in the interests of justice to do so. It was found that compensation of R 50 000 was just and equitable for non-patrimonial loss and the compensation was reduced accordingly. It was also pointed out that, in unfair discrimination cases, it is preferable to award an actual Rand amount rather than to link the amount to a certain number of months’ remuneration.

Admission of telephonic evidence

In Simmers v Campbell Scientific Africa (Pty) Ltd and Others [2014] 8 BLLR 815 (LC) the commissioner in an arbitration allowed a complainant in a sexual harassment case to give evidence telephonically because she was in Australia. The applicant instituted review proceedings in respect of the arbitration award alleging that the admission of evidence via telephone was irregular. The Labour Court considered the fact that the complainant had time to compose herself while giving evidence because of delays and broken connections and that the commissioner was unable to observe her demeanour. Nevertheless, the Labour Court found that these were arbitration proceedings and it would have been extremely expensive to fly the complainant to South Africa to give evidence. Steenkamp J was of the view that the commissioner had dealt with the matter in an appropriate and expedient manner. It was found that the complainant could be cross-examined and therefore it did not prevent the employee from having a fair hearing. Thus, the admission of telephonic evidence did not constitute a reviewable irregularity.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.

This article was first published in De Rebus in 2014 (Oct) DR 51.


De Rebus