Employment law update – Is awarding reinstatement discretionary?

June 1st, 2024

In Pinn v CCI Call Centre (Pty) Ltd and Others [2024] 4 BLLR 422 (LC), the employee referred an unfair dismissal dispute against CCI Call Centre (the company). After having found that the employee’s dismissal was substantively unfair, and despite the employee having requested reinstatement, the arbitrator awarded the employee one month’s remuneration as compensation. The arbitrator reasoned that it would not be prudent to award reinstatement on the basis that the employment relationship between the employee and his superior had broken down completely.

Disgruntled by the outcome, the employee took the award on review and sought to substitute the award for an order that he be reinstated retrospectively. The employee argued, among other things, that the arbitrator had committed a gross irregularity and exceeded his powers by failing to order reinstatement in circumstances where he was statutorily enjoined to do so. The company opposed the review, and while it had sought to bring a counter-review to declare the dismissal to be substantively fair, it had failed to comply with the rules and consequently, its application was not properly before the court.

Section 193 of the Labour Relations Act 66 of 1995 (the LRA) regulates the remedies for unfair dismissal and unfair labour practice. In this regard, once an arbitrator finds that a dismissal is unfair, s 193(1) provides that the arbitrator ‘may’ order the employer to reinstate the employee, to re-employ the employee or to compensate the employee. Section 193(2) of the LRA, however, provides that an arbitrator ‘must’ require the employer to reinstate or re-employ the employee unless –

  • the employee does not wish to be reinstated or re-employed;
  • the circumstances surrounding the dismissal are that a continued employment relationship would be intolerable;
  • it is not reasonably practicable for the employer to reinstate or re-employ the employee; or
  • the dismissal is only procedurally unfair.

In the present matter, the Labour Court (LC) noted that while s 193(1) of the LRA confers a discretion on an arbitrator to choose between the available remedies, s 193(2) employs the term ‘must’, indicating a mandatory and non-discretionary requirement. Consequently, an arbitrator is obliged to order reinstatement or re-employment on determining that a dismissal was substantively unfair, unless one of the exceptions outlined in s 193(2) is present.

The issue to be determined by the LC was accordingly whether one or more of the exceptions contained in s 193(2) were present to justify a failure to reinstate or re-employ the employee.

The arbitrator in this case had stated that it would not be prudent to order reinstatement as the employment relationship had broken down. The court noted that the irretrievable breakdown of an employment relationship is not just mere say-so. Evidence and facts must demonstrate that there has been an irretrievable breakdown of the relationship. While friction arising from disciplinary and arbitration proceedings is insufficient to warrant a finding of an irretrievable breakdown, it may be inferred from the hostile manner and attitude demonstrated by the parties. The test is an objective one and must demonstrate that the employment relationship would be intolerable and cannot be retrieved.

In this regard, the company argued that the breakdown could be inferred from the fact that the employee had sworn at his superior and, after apologising, had done so again, and that the employee had himself regarded the employment relationship as destroyed. The company had also sought to rely on remarks made by the employee’s attorney during settlement negotiations, however, this evidence had been ruled inadmissible by the arbitrator, and rightly so. The employee, on the other hand, pointed out that his superior had stated that if he had apologised, he would have forgiven him (and the employee had, indeed, apologised). In addition, the superior stated that if the employee were to be reinstated, he would ‘try to move forward’.

In the circumstances, the court found that the company had failed to provide cogent reasons and evidence to support that the employment relationship had irretrievably broken down. The evidence had in fact demonstrated that the employee’s immediate superior was open to mend the relationship and move forward.

In view of the lapse of time from the date of the dismissal, the court also considered the exception of whether it was reasonably practicable to reinstate the employee. The court held that the period which had lapsed since the dismissal to the date of judgment on its own is not a bar to reinstatement. The circumstances must show that it is not feasible to reinstate the employee, for example, the company is under liquidation, or the position no longer exists. The inconvenience that will be caused by reinstatement does not qualify as a valid reason. As this was not factually the case, and in the absence of the other exceptions listed in s 193(2), the court held that the arbitrator had no discretion but to reinstate the employee. Moreover, the arbitrator’s decision to award only one month’s compensation induced a sense of shock and was unjustifiable in the circumstances.

Consequently, the arbitrator’s award was set aside and substituted with an order than the employee be reinstated retrospectively.

Coerced into signing an early retirement agreement?

In Mara v Tems Meat Wholesalers (LC) (unreported case no JS 25/2021, 19-1-2024) (Mahosi J), the employee was employed by Tems Meat Wholesalers (the employer) as a driver. While at work and offloading a truck, the employee sustained injuries which rendered him unfit for work. Following several medical evaluations, the employee returned to work a few months later.

On his return to work, the employee and the employer entered into a mutual separation agreement titled ‘Early Retirement’ in full and final settlement of any claims. The employer paid the employee in terms of the agreement and the employee withdrew his funds from the retirement fund. Dissatisfied by the amount received, the employee referred an automatically unfair dismissal dispute to the applicable bargaining council. In his referral, the employee claimed that the employer had dismissed him because of his age and alleged that the employer offered him early retirement and severance pay that was less than what he was entitled to. Following conciliation between the parties, the matter remained unresolved.

The employee then instituted an automatically unfair dismissal claim in the Labour Court (LC) in terms of s 187(1)(f) of the Labour Relations Act 66 of 1995. Before the LC, the employee alleged that he was in fact coerced into signing the early retirement agreement by his employer. In this regard, he contended that on being furnished with a copy of the agreement, the employer denied him the opportunity to obtain advice from his children, told him that he had no time, shouted at him, and pointed him to where he was required to sign. The employer denied any dismissal and contended that the employee had voluntarily entered into the early retirement agreement.

The LC was accordingly required to determine whether the early retirement agreement entered into between the parties was valid and binding. It is an established principle under our law that contracts are binding on parties and are, therefore, enforceable unless it can be shown, inter alia, that the contract was invalid ab initio, contrary to public policy, or unlawful.

Referring to the Labour Appeal Court judgment of Gbenga-Oluwatoye v Reckitt Benckiser SA (Pty) Ltd and Another (2016) 37 ILJ 902 (LAC), the LC noted that a contract may be vitiated by duress where intimidation or improper pressure renders the consent of the party subjected to duress not true consent. Intimidation may be exercised by way of physical force, or indirectly by way of a threat of harm. In order to obtain an order setting aside a contract on the grounds of duress, actual violence or reasonable fear must be shown. The fear must be caused by the threat of some ‘considerable evil’ to the person concerned or to their family. The burden of proving the existence of duress rests on the party raising it.

In the current matter, the employee contended that he signed the agreement under duress as the employer told him that he had no time and he was not allowed to consult his children. When asked if he complained about the settlement amount before signing the agreement, he explained that his relationship with the employer was that of a ‘boy and boss’. The picture painted by the employee did not show actual violence or reasonable fear caused by considerable evil to him. He had a choice to leave the employer’s office without signing the agreement, but he chose not to.

In addition, the employee did not immediately refer the dispute to the bargaining council. Instead, he only raised concerns about the agreement when he was unhappy with the pay-out from the retirement fund. Moreover, he did not raise his complaint about allegedly being coerced into signing the agreement at the bargaining council. The only reasonable conclusion that the court could draw from the employee’s conduct was accordingly that the employee had understood the contents of the agreement prior to signing it.

The employee accepted the conditions of the agreement to be in full and final settlement of all claims that he may have against the employer. On a consideration of all the evidence, the court found that the employee had failed to prove the existence of duress or coercion. The early retirement agreement was accordingly binding on the parties and the employee’s claim was dismissed.

Nadine Mather BA LLB (cum laude) (Rhodes) is a legal practitioner at Bowmans in Johannesburg.

This article was first published in De Rebus in 2024 (June) DR 41.