South Africa: Time stands still for arbitration awards

August 1, 2017

After much conflicting decisions, the relationship between the Prescription Act, 1969 and the Labour Relations Act, 1995, came under the scrutiny of the Constitutional Court in Myathaza v Johannesburg Metrolitan Bus Services (SOC) Ltd t/a Metro Bus [2017] 3 BLLR 213 (CC).

The Constitutional Court was required to determine whether the Prescription Act applied to arbitration awards issued by the CCMA or statutory bargaining councils.
Both the Labour Court and the Labour Appeal Court held that the Prescription Act applied to the Labour Relations Act and the launching of a review application did not interrupt prescription. However, prescription was interrupted by an application to make the arbitration award an order of court. Consequently arbitration awards not made orders of court within the three year period would prescribe.

Split judgments

In deciding this matter, the judges of the Constitutional Court delivered two separate judgments, differing in reasoning and therefore creating uncertainty around whether arbitration awards prescribed or not.
On the one hand, Jafta J held that the provisions of the Prescription Act, specifically the prescription periods were at odds with the scheme of the Labour Relations Act and therefore could not be applied to the Labour Relations Act.

Whilst Froneman J held the provisions of the Prescription Act and the Labour Relations Act were capable of complimenting each other in a way that best protected the fundamental right of access to justice. On this basis, Froneman J held that the running of prescription was interrupted from the commencement of adjudicative proceedings until their final conclusion. Thus, the initiation of review proceedings would have the effect of interrupting prescription.

The Constitutional Court was however in agreement that, in the circumstances of the Myathaza case where the arbitration award was the subject of a review application, it did not prescribe.

Recent judgment of the LAC

The issue of which judgment should be relied upon in the wake of the split Constitutional Court has finally been resolved by the Labour Appeal Court in the recent decision of Chris Van Tonder v Compass Group (Pty) Ltd (Case no: JA58/16).

The Labour Appeal Court was again faced with determining the relationship between the Prescription Act and the Labour Relations Act in considering an application to review and set aside an arbitration award dated 14 September 2012, which ordered Compass Group to pay Mr Van Tonder compensation in the amount of R228 000.

In handing down his judgment, Davis JA admits that the split by the Constitutional Court justices in the Myathaza case had left what the reasons for holding that arbitration awards do not prescribe somewhat uncertain. Davis JA confirmed that in normal circumstances, when faced with such a split in reasoning, judges of the Labour or Labour Appeal Court would follow the decision of the LAC. However if LAC judges believed that the Myathaza judgment in the LAC was wrong, they would be free to adopt what they considered to be the correct approach.

The LAC in this matter has confirmed that, as the Constitutional Court was in agreement that the Myathaza LAC order should be set aside, in circumstances similar to Myathaza, the Labour and the Labour Appeal Court are bound by the Constitutional Court’s order.

Conclusion

Employers or employees bringing or opposing review applications of arbitration awards older than three years are no longer able to pick and choose which judgment they would like to rely upon in the wake of the split in the Constitutional Court.

The LAC held that irrespective of the reasoning relied upon, the unanimous order prevents the injustice of depriving a former employee of the implementation of an arbitration award in his favour by instituting a review application and then claiming that the award has prescribed after three years.

Arbitration awards issued post January 2015

The Myathaza judgment only applies to arbitration awards issued prior to January 2015 and are currently the subject of review applications or applications to make them orders of court.

For arbitration awards issued after January 2015, section 145(9) of the LRA provides that an application to set aside an arbitration award interrupts the running of prescription in terms of the Prescription Act.

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