A recent Labour Court decision (Karabo Goliath and Others v African Meter Reading (Pty) Ltd) confirmed that when a dismissed employee is granted reinstatement in terms of an arbitration award, their employment contract is not automatically revived and there can be no contractual claim for things like backpay (arrear wages).

In this case, the applicants (a group of employees) were dismissed in May 2016. They approached the Commission for Conciliation, Mediation and Arbitration ("CCMA"), which ruled that their dismissal had been substantively and procedurally unfair. The employer was ordered to reinstate the applicants and to pay them backpay from the date of their dismissal until the date of their return to work, which was to be 19 September 2016.

The employer paid the applicants this backpay but lengthy litigation ensued when it came to reinstating the applicants. Eventually, on 27 November 2020, the Labour Court found the employer in contempt of court for failing to comply with the 2016 arbitration award, as far as the reinstatement of the applicants was concerned. The Court ordered the employer to reinstate them within two weeks of being served with its order.

At this point, a significant amount of time had passed since the applicants had been dismissed. The employer had (understandably) not remunerated them for the significant period between the date on which they were supposed to return to work (in September 2016) and the date on which the Court finally ordered they be reinstated (December 2020). In order to compel the employer to pay their remuneration for this period, the applicants approached the Labour Court.

Labour Court findings

The Labour Court considered the Labour Appeal Court judgment in Kubeka and Others v Ni-Da Transport (Pty) Ltd which stated that:

"A requirement that back pay is only due and payable on reinstatement is in keeping with the remedial scheme and purpose of s 193 of the LRA. ..if an employee in receipt of a reinstatement order could on the strength of the order alone claim contractual payment for the retrospective part of the order without actually seeking reinstatement (tendering prospective services), it would convert a reinstatement remedy (which requires a tender of services) into a compensation award (which does not), in excess of the statutory limitation on compensation awards."

The Court did not accept the applicants' version that they had tendered their services to the employer between 19 September 2016 and January 2021, and went on to confirm that:

"Prior to the actual reinstatement of an employee, no contract of employment exists and thus also no contractual obligation, as the only obligation at that point is to reinstate. An employee is not entitled to the payment of remuneration in terms of a contract of employment that is yet to be resuscitated. An order to reinstate does not restore the contract of employment and reinstate an employee, it merely orders an employer to do so."

The Court went on to confirm that for reinstatement to take place, not only must the employee actually tender their services, but the employer must also agree to them coming back. In this case, neither of these necessary elements was present; and, although the applicants were successful in enforcing the arbitration award in so far as their reinstatement was concerned, the Court granted them no relief whatsoever in relation to backpay. This was on the basis that there was no tender of services by the employees (and no acceptance by the employer of any tender that there might have been) which meant that their employment contracts never "came back to life" so as to allow any claim in terms of that contract, like a claim for arrear wages.

Conclusion

Employees who have been granted retrospective reinstatement in an arbitration award should bear in mind that in order to claim backpay (other than that which is expressly ordered in the award itself) these employees must have tendered their services in accordance with that reinstatement award and their employer must have accepted this tender.

On the other hand, employers should be aware that the mere existence of an arbitration award against them that grants an employee retrospective reinstatement does not automatically entitle that employee to any backpay other than that which is explicitly provided in the award itself. Absent an accepted tender of the employee's services in accordance with the arbitration award, an employee will have no claim for any backpay to which they would be entitled by virtue of the resuscitation of their employment contract alone.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.