Employment law update – Reinstatement – not an option

May 1st, 2023
Toyota SA Motors (Pty) Ltd v CCMA and Others (LAC) (unreported case no DA6/2021, 14-2-2023) (Waglay JP, Kathree-Setiloane and Savage AJJA concurring)

The third respondent’s member, Mr Thwala, commenced his employ with the appellant, Toyota SA Motors as a crane driver, beginning March 2010 on a three-month fixed term contract. His contract had been continuously renewed until his dismissal on 14 August 2015.

It was common cause that on the date of his dismissal, the employee’s fixed term contract would have expired on 31 October 2015.

Unhappy with the dismissal, National Union of Metal Workers (NUMSA) on behalf of Thwala, referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration, seeking retrospective reinstatement.

The arbitrator, in her award dated 24 May 2018, found Thwala’s dismissal substantively unfair. In respect of remedy, the arbitrator rejected Thwala’s version that he was to be made a permanent employee and instead considered the fact that at the time of his dismissal, Thwala was on a fixed term contract, which had expired on 31 October 2015. On this score the arbitrator held:

‘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 (ie, on a fixed term contract)’.

Regarding the quantum to compensate Thwala, the arbitrator relied on Jorgensen v I Kat Computing (Pty) Ltd and Others (2018) 39 ILJ 785 (LAC), to limit the compensation to two and a half months, that being from date of dismissal to the date the fixed term contract would have expired, but for his dismissal.

On review, NUMSA sought to set aside the remedy of compensation and replace it with reinstatement.

Section 193(2) of the Labour Relations Act 66 of 1995 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.’

In granting an order in favour of the union, the Labour Court (LC) held that in terms of s193(2)(c), it behoves an employer to establish that it was not practical to grant reinstatement. In this case, Toyota failed to adduce any evidence to discharge such an onus. The court found that the arbitrator misdirected herself in placing the onus on Thwala to prove that reinstatement was practical.

On appeal the Labour Appeal Court (LAC) acknowledged the fact that when awarding a remedy, an arbitrator exercises a discretion. However, in this case, and on the basis that the fixed term contract had expired prior to Thwala’s dismissal being found unfair; the arbitrator’s discretion was removed. The LAC held:

‘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. 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.’

Thus, the arbitrator, in accordance with the above, was legally precluded from awarding reinstatement – following which, the LC erred in finding that under these circumstances, Toyota bore the onus to prove reinstatement was not practical.

The appeal was upheld with no order as to costs.

Moksha Naidoo BA (Wits) LLB (UKZN) is a legal practitioner holding chambers at the Johannesburg Bar (Sandton), as well as the KwaZulu-Natal Bar (Durban).

This article was first published in De Rebus in 2023 (May) 44.