By Sharusha Moodley, Bregman Moodley Inc Attorneys

Once a dismissal is found to be unfair an arbitrator may order reinstatement,  re-employment or compensation to an employee in terms of section 193(1) of the Labour Relations Act 66 of 1995 (LRA).

Section 193 of the LRA states that inter alia that, “The Labour Court or the arbitrator must require the employer to reinstate or re-employ the employee unless-

(a)    the employee does not wish to be reinstated,

(b)     if the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable,

(c)     it is not reasonably practicable for the employer to reinstate or re-employ the employee, or

(d)   the dismissal is unfair only because the employer did not follow a fair procedure.”

The arbitrator in Toyota SA Motors (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration & others (DA6/2021) [2023] ZALAC 5 (14 February 2023) found the dismissal of the employee to be substantively unfair and ordered the employer to pay compensation. The compensation was the balance of the employee’s fixed-term contract being the amount equivalent to the employee’s actual loss of income.

The arbitrator considered that at the time of the employee’s dismissal on 14 August 2015, he was not a permanent employee but was on a fixed-term contract that would expire two and a half months later on 31 October 2015.

Furthermore, the arbitration was heedful of the fact that when she found the employee’s dismissal to be substantively unfair, his fixed-term contract had already expired. Consequently, the arbitrator was legally precluded from ordering the employer to reinstate the employee.

The employee in this appeal challenged the discretion exercised by the arbitrator in terms of section 193(1) of the LRA who ordered the employer to pay him compensation instead of reinstatement.

On appeal, the Labour Appeal Court held that reinstatement was not a competent remedy for the employee, as his fixed-term contract had expired and was not in existence at the time of the dismissal. The court noted that reinstatement was a remedy for unfair dismissal only when the contract of employment was still in existence at the time of the order.

As a result, where an employee’s fixed-term contract expires prior to an arbitrator’s finding of unfair dismissal, reinstatement is not a competent remedy. In these circumstances, an arbitrator has no discretion to select one of the three remedies contemplated by section 193(1) of the LRA but must order payment of compensation.