Dec 5,2013 / News / E-Bulletin

Once an employee has proven that he or she was unfairly dismissed then an arbitrator may make an award for compensation or reinstatement. An employer may then take the award on review. If the award is for a compensatory amount and has not been made an order of court, then there is authority which suggests that such a claim will prescribe after three years (see our November 2013 case update).

However, a recent Labour Court case has departed from prior precedent, stating rather that prescription will not run on such awards.

COURT’S DECISION

In the recent case of Cellucity (Pty) Ltd v CWU obo Peters (C 39/2013) [2013] ZALCCT 43 (14 November 2013) the employee had been awarded compensation at arbitration, her dismissal having been found to be substantively unfair. The employer launched a review application in the Labour Court.

After three years the employer asked to Court to declare that the award had prescribed. It argued that the cause of action which gave rise to the matter (the issuing of the award) had arisen on 9 September 2009 and that the employee should then have instituted proceedings to claim and recover the debt. The employer relied on the Prescription Act 68 of 1969 (“Prescription Act”) which states that any claim prescribes after three years of the date on which the cause of action arose. The employer further argued that this time period is unaffected by the certification of the arbitration award. A certified award, it argued, is not a court order and therefore the prescription period remains three years rather than 30 years (which would apply in regard to court orders).

The Court noted that the Labour Relations Act 66 of 1995 (“LRA”) includes specific time periods for referrals of labour disputes, while the Prescription Act deals with prescription in general. It pointed out that parties could apply for condonation should such periods be exceeded. The Court reasoned that if the Prescription Act applied to claims under the LRA, it would create inequalities between parties using different routes to resolve their disputes. The Court emphasised the distinction between the time periods applicable to parties using conciliation and arbitration as opposed to adjudication in the Labour Court. Additionally, the Court stated that public policy considerations such as the right to equality and access to courts militated against the Prescription Act applying to compensation awards.

IMPORTANCE OF THE CASE

Whether or not the Prescription Act applies to compensation awards under the LRA is now unclear.  A cautious approach should be adopted in respect of this defence until the Labour Appeal Court has pronounced on this issue.

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