Prior to the amendments to section 145 of the Labour Relations Act, 1995 ("LRA") in 2015, many employers who were found to have unfairly dismissed an employee would seek to review an arbitration award in order to suspend the operation of the award pending the finalisation of the review application. In addition, delays in finalising the review process (sometimes as a result of deliberate employer actions) meant that the review proceedings were only finalised some years later. If the review application was unsuccessful, the employee would seek to enforce the award. The employee would then be met with the employer's defence that it was no longer open to the employee to enforce the award because it had prescribed. This then resulted in litigation where the courts had to decide whether the Prescription Act, 1969 applied to arbitration awards issued in terms of the LRA, and if so, whether an award constituted a "debt" as defined in the Prescription Act, and whether the institution of the review application interrupted the running of prescription.
In 2015, section 145 of the LRA was amended to address this situation. It did so in two ways. The first was an amendment of section 145(7) of the LRA. This section was amended to provide that the institution of a review application by an applicant does not suspend the operation of the award unless the applicant provides security to the satisfaction of the Labour Court. The second was the insertion of section 145(9) into the LRA. This provides that a review application to set aside an arbitration award interrupts the running of prescription. The prescription period will only start to run again after the finalisation of the review proceedings. These amendments have been in force with effect from 1 January 2015 but only apply to arbitration awards issued subsequent to this date. Delays in finalising review proceedings mean that there are still employees seeking to enforce awards issued prior to the enactment of the amendments. In respect of these awards, the questions referred to above still apply.
In the recent decision in NUM obo Mayime Dalton Majebe v Civil & General Contractors, (the "Majebe case") the Labour Appeal Court ("LAC") dealt with the situation where an employer sought to review an arbitration award that had been issued prior to the 2015 amendments and in which a number employees were found to have been unfairly dismissed. Seven years later, the review process had not been finalised and the union concerned sought to have the arbitration award made an order of the Labour Court. The Labour Court found that the award had prescribed.
On appeal, the LAC had to consider two decisions of the Constitutional Court dealing with this issue.
The first of these was the decision in Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and Others. The employees in this matter had sought to make an arbitration award an order of court but the employer raised the defence that the award had prescribed. The Labour Court and Labour Appeal Court agreed with this argument.
On appeal, the judges of the Constitutional Court were unanimous in their view that the award had not prescribed, but they came to this conclusion adopting differing reasons. Four judges found that the Prescription Act did not apply to disputes regulated by the LRA and that arbitration awards issued in terms of the LRA did not constitute a "debt" as defined in the Prescription Act. Four other judges found that the Prescription Act did apply but that the period of prescription had been interrupted by the referral of the dispute to the CCMA. The debt had therefore not prescribed. There was therefore no binding ratio which courts later could apply from the decision.
The second decision was in Food and Allied Workers Union obo Gaoshubelwe v Pieman's Pantry (Pty) Limited (the "Pieman's case"). In this case, the employees referred an unfair dismissal dispute to the CCMA. The CCMA refused to consider the matter on the grounds that the type of dispute concerned had to be referred to the Labour Court. After unsuccessfully seeking to review the ruling in the Labour Court, the employees referred the dispute to the Labour Court. One of the defences raised by the employer was that the claim had prescribed. Although the judges of the Constitutional Court were again split on the issues of prescription, there was a majority judgment. It found that there was no inconsistency between the LRA and the Prescription Act, that the Prescription Act applied to an arbitration award issued in terms of the LRA and that such an award constituted a "debt" as defined in the Prescription Act, and finally, that in this case, the award had not prescribed because the referral of the dispute to the CCMA had interrupted the running of the prescription period.
The LAC came to the conclusion that the majority decision in the Pieman's case had produced a binding ratio to the effect that the Prescription Act applies to arbitration awards, the review application brought by NUM was "process" as contemplated in section 15(1) of the Prescription Act and it interrupted the running of prescription in respect of the award. Accordingly, the LAC found that the arbitration award (for reinstatement and backpay, which is a "debt" as contemplated in the Prescription Act) had not yet prescribed because NUM's application to review that arbitration award had not been finalised.
The facts in the Pieman's case were slightly different from those in the Majebe case. In the Pieman's decision, the court dealt with a situation where it was argued that a claim for unfair dismissal had prescribed. In the Majebe case, the court dealt with the argument that an arbitration award had prescribed. The LAC nevertheless found that they were similar in material respects.
Although the introduction of section 145(9) into the LRA has lessened the impact of this decision, it remains of importance to the significant number of arbitration awards that were issued prior to section 145(9) coming into effect and which remain the subject of pending review applications.
Reviewed by Peter le Roux, and Executive Consultant in ENSafrica's employment department
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.