Can your notice of dismissal be regarded as a winning lottery ticket?

Article by Michael Buitendag – Senior Labour Advisor

Introduction

We’ve all heard the sayings – “money makes the world go round” and “the love for money is the root of all evil”. Well, these days, the majority of the working class most certainly don’t work pro bono and most certainly count every “penny” on pay day.

Some employees have developed the expectation that once they have been dismissed, whether it was for a fair reason or not, the employer must write them a “big fat cheque”.

This is most certainly not the case, there are only a few instances where an employer is obligated to pay an employee at the time of dismissal. The most common instances are where an employee was retrenched due to the employer’s operational requirements, where there was no reasonable alternative to avoid retrenchment. The employer will then have to pay severance pay to the employee. The other is where an employee was unfairly dismissed, either for misconduct, incapacity or operational requirements “retrenchment”, where the employer contravened the provisions of Schedule 8 of the Labour Relations Act 66 of 1995 (hereinafter referred to as the “LRA”), where a dismissal was effected for no fair reason or in accordance with a fair procedure.

In this article, we will focus on what compensation can reasonably be expected to be awarded by the MIBCO DRC or CCMA, in the event of an employee that was unfairly dismissed for alleged misconduct.

The award of compensation in unfair dismissal cases for alleged misconduct

Compensation as referred to in Section 193 of the LRA, is regarded as solatium – payment to console an employee who was unfairly dismissed, not a form of payment for damages or loss suffered by the employee. This form of payment to an employee is not based on a specific calculation of monetary value, wherein parties have to prove a specific financial loss such as in civil cases.

It is further important to note that the LRA does not require the compensation amount to be based on rules or guidelines except that the amount must:

1. Not exceed twelve months where there has been an ordinary unfair dismissal;
2. The compensation awarded to a successful applicant must be fair and equitable in all circumstances.

Further to the above, it’s important to note that the LRA provides that the presiding commissioner has the discretion to award compensation as referred to herein above.

The constitutional Court’s view on determining compensation

In Hoffmann v South African Airways (CCT17/00) [2000] ZACC 17; 2001 (1) SA 1; 2000 (11) BCLR 1211; [2000] 12 BLLR 1365 (CC) (28 September 2000) the Court held that the following objectives should be considered by a Judge or Commissioner when determining the appropriate relief, in order to balance the various interests that might be affected by the remedy:

• To address the wrong resulting from the infringement;
• To deter future violations;
• To make an order that can be complied with;
• Fairness to all affected; and
• To take into account the nature of the right infringed and the nature of the infringement itself

Having perused numerous Labour Court Judgments, it can be said that many orders contain some explanation of how the judge arrived at the compensation amount but on the contrary, I have noticed that many arbitration awards (CCMA or MIBCO DRC) contain minimal to no reason for the amount of compensation awarded. It begs the question, how did the arbitrator apply his/her mind in making the award “just and equitable”?

In the matter referred to herein above, the Court referred to the following rationale to be considered by a Judge or Commissioner when granting compensation:

• The circumstances and consequences of the dismissal;
• Whether or not the dismissal was grossly unfair;
• The employer’s circumstances;
• Any loss that the employer might have suffered due to the employee’s misconduct that gave rise to the dismissal;
• The employees’ circumstances;
• The seniority of the employee;
• The employee’s actual income or other specific amount lost;
• The need to punish the employer or to deter employers from dismissing employees unfairly;
• Whether or not the employer acted in good faith or was misguided; and
• The blameworthiness of the employee.

In Maroveke v Talane N.O. and Others (CCT 187/20) [2021] ZACC 20; (2021) 42 ILJ 1871 (CC); [2021] 9 BLLR 851 (CC); 2021 (10) BCLR 1120 (CC) (6 July 2021) the Constitutional Court held that the purpose of compensation to is to restore an employee’s financial means to the position they would have been in had it not been for the unfair dismissal, not to enrich or impoverish either party.

Conclusion

It is clear from the above case law that even in cases where employees were successful with their application or claim at the CCMA, DRC or Labour Court, the presiding officer will only award compensation that is deemed to be just and equitable. For example, if you were unfairly dismissed and re–employed at another company shortly after your dismissal, it will most definitely affect the award of compensation awarded by the presiding officer.

Your notice of dismissal cannot be regarded as a winning lottery ticket, only in exceptional circumstances will a presiding officer award a substantial amount of compensation, after they have considered the factors referred to above.

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