As an employer, it’s crucial to grasp the complexities surrounding employee dismissals and the potential legal ramifications. The landscape of employment law in South Africa presents a unique interplay between common law and the Labour Relations Act 66 of 1995 as amended (“LRA”), particularly when it comes to calculating damages an employee may claim following termination of the agreement.
Under the LRA, an employee can claim compensation for unfair dismissal, which includes a range of potential remedies such as reinstatement, re-employment, or financial compensation. The crux of the matter lies in determining whether an employee can claim common law damages that exceed the compensation limits set by the LRA.
LRA Remedies
The LRA outlines specific procedures and remedies for unfair dismissal:
1. Referral to CCMA or Bargaining Council: Under Section 191, disputes are referred to the Commission for Conciliation, Mediation, and Arbitration (“CCMA”) or an accredited bargaining council. If conciliation fails, the dispute may proceed to arbitration or the Labour Court, depending on the nature of the case.
2. Reinstatement and Re-employment: Section 193 stipulates that an employee who has been unfairly dismissed must be reinstated to their original position or re-employed in a new position unless specific exceptions apply, such as the employee not wanting reinstatement or the working relationship being intolerable.
3. Compensation: Section 194 limits compensation at 12 months’ remuneration for unfair dismissal and 24 months for automatically unfair dismissal. The compensation must be fair and equitable, considering both the employer and the employee’s circumstances.
Common Law Remedies
Despite the comprehensive framework of the LRA, common law remedies for breach of contract still hold relevance. The Supreme Court of Appeal in Fedlife Assurance Ltd v Wolfaardt affirmed that common law rights to enforce contractual terms remain intact, even with the existence of statutory remedies under the LRA. It, therefore, implies that employees can claim damages beyond the LRA’s limits if the dismissal constitutes a breach of a fixed-term contract.
The Constitutional Court reinforced this stance in Baloyi v Public Protector and Others, asserting that the contractual rights of dismissed employees exist independently of the LRA. This dual system creates a scenario where employees can pursue common law damages in the High Court or compensation through the LRA’s mechanisms, potentially leading to varied outcomes based on their financial capability to afford litigation.
Implications for Employers
The coexistence of common law and LRA remedies presents several challenges:
Employees with the means to litigate may prefer pursuing common law claims in the High Court to secure higher damages, creating a disparity.
Furthermore, the prescription period for common law claims is three years, significantly longer than the 30-day period for lodging LRA claims, resulting in prolonged dispute resolution.
Finally, the system may inadvertently favour wealthier employees who can afford legal representation, while those with limited resources are confined to the LRA’s procedures and compensation caps.
Conclusion
Understanding the nuances of common law and LRA remedies is vital for employers to navigate employee dismissals and mitigate potential legal risks. The dual system of remedies necessitates a careful approach to termination procedures and highlights the importance of seeking legal counsel to navigate this complex legal terrain. Contact an expert at SchoemanLaw Inc. for assistance.
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