Malatji v Minister of Home Affairs and Another (2018) 39 ILJ 2684 (LAC)Often when a litigant is successful at the arbitration of their labour dispute the arbitrator may award the litigant a sum of money as compensation. In certain labour disputes, such as those where it is found that an employee was unfairly dismissed the arbitrator makes a ruling that they be compensated a certain sum of money. Most employees often do not know that they are also entitled to interest from their monetary award.
The entitlement to interest from monetary awards is found in s 143(2) of Labour Relations Act 66 of 1995. The section provides that: ‘If an arbitration award orders a party to pay a sum of money, the amount earns interest from the date of the award at the same rate as the rate prescribed from time to time in respect of a judgment debt in terms of section 2 of the Prescribed Rate of Interest Act, 1975 (Act No 55 of 1975), unless the award provides otherwise.’
However, the issue of how much interest the employee is entitled to and when the interest begins to accrue is often not simple to determine, as it seems in terms of s 143(2). It is often common that the employer reviews the arbitration award at the Labour Court (LC). In the past, the LCs have had to determine when the interest in monetary arbitration awards subject to review become due. The leading case on the issue of the accrual of interest in matters subject to review at the LC is the case of Malatji v Minister of Home Affairs and Another (2018) 39 ILJ 2684 (LAC).
In Malatji it was held by the LAC that: ‘Mora interest can only be levied and would accrue once the amount of compensation is ascertained or easily ascertainable. To my mind where the award is subject to review, it cannot be said that the quantum is readily ascertainable and that the time for performance by the debtor is fixed. This is so because there is no obligation on the debtor, under those circumstances, to pay the debt.’
In Malatji it was further held at para 19 that: ‘In conclusion, the judgment creditor would only be entitled to the payment of interest a tempore morae on the unliquidated claim from date of the award, if the award is not challenged through the review process, or from date of the judgment on review pursuant to the court’s determination of the quantum of the claim.’
The case of Top v Top Reizen CC (2006) 27 ILJ 1948 (LC) dealt with the issue of payable interest in an arbitration award being made an order of the court. At para 21, Van Zyl AJ held that: ‘The effect of s 143(2) is that an award of any sum of money automatically attracts post-award interest at the rate set by the statutory instruments made under the Prescribed Rate of Interest Act, unless the arbitrator specifies that the award shall not carry interest. It is clear that s 143(2) does not depart from the common-law position in that interest commences to run from the date on which the debtor’s claim was ascertained.’
The legal authority set in the cases of Malatji and Top to simplify the legal position as to when interest begins to accrue in arbitrations awards where a sum of money is awarded to an employee. In simple terms, if the award is not subject to a review, then the awarded sum accrues interest from the date of the award at the then applicable legal interest rate until final payment. However, if the arbitration award is subject to a review it is only once the review is no longer pending before court that the interest begins to accrue at the then-current legal interest rate.
In conclusion, litigants need to ensure that they approach a legal practitioner that will be able to assist them insofar as determining the correct interest rate they are entitled to in their monetary arbitration award. The process and the determination of payable interest might appear simple. However, it is often complicated by lengthy litigation proceedings, which often make it difficult to determine when the interest begins to accrue. An example of this is when the review of an arbitration award becomes deemed withdrawn. It can be difficult to determine when the interest, under those circumstances, begins to accrue.
Siboniso Kunene LLB (UKZN) is a legal practitioner and legal manager at Totalgaz a division of TotalEnergies in Cape Town.
This article was first published in De Rebus in 2023 (April) DR 27.
