We looked at this question in our article How long can a CCMA arbitration award be enforced against an employer. Since then the Constitutional Court has considered the question of the prescription of arbitration awards not once but twice.
The first being the judgment on appeal in Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus (which we reviewed at the stage of the Labour Appeal Court). This judgment was handed down in December 2016 and the second was in early March 2017 in Mogaila v Coca Cola Fortune (Pty) Limited.
Some basics first: This saga arises from the vexed question of whether an arbitration award three years after its issue may be considered non-enforceable on the basis of the legal principle of prescription. There were conflicting judgments of the Labour Court on the point with the LAC settling the point in Metrobus – this was the decision we covered in the previous article.
Regrettably, the judgments of the Constitutional Court in both Metrobus and Mogaila neither produce a clear answer on the application of the principle. You will see why as you read further. But, first let us look at the facts:
In Mogaila the facts briefly were this: Mogaila was employed as a stock controller and dismissed for assault. Aggrieved, she referred an unfair dismissal dispute to the CCMA. The CCMA found the dismissal procedurally fair, but substantively unfair. Coca Cola was to reinstate Mogaila. Mogaila applied for the certification of the arbitration award in terms of section 143(3) of the LRA. When she reported to work, she was informed that Coca Cola intended taking the arbitration award on review. She was not to report for work. The Labour Court in time dismissed the review application. A petition to the LAC was also dismissed. Subsequent to the leave to appeal being refused, Mogaila once again reported to work. Upon her arrival, she was informed that since the arbitration award constituted a "debt" for purposes of the Prescription Act, the award could no longer be enforced by her as it prescribed. Prescription set in three years after the issue of the award. Sound familiar?
Let us recap the facts in Metrobus: Myathaza was employed as a bus driver. After his dismissal he referred a claim to the relevant bargaining council. The arbitrator found the dismissal unfair and ordered reinstatement. Myathaza reported for duty and was informed that Metrobus intended to have the award reviewed. While the review application was pending Myathaza applied to have the award made an order of court. Metrobus opposed the application and also argued that the arbitration award had in any event prescribed. Sound familiar?
The facts in both Metrobus and Mogaila are indeed not novel. On the contrary all seasoned HR/ER practitioners have seen these facts play out in their own workplaces. So you would agree - a clear answer from the courts on this important question is important. Regrettably, this is not the case as the clear response of the LAC in Metrobus that an arbitration award constituted a "debt" for purposes of the Prescription Act was not upheld on appeal to the Constitutional Court.
Now, hold onto your seats as we try to simplify the judgment(s) of the Constitutional Court in Myathaza: The court delivered three judgments. The judgments provide a basis both for and against the application of prescription to arbitration awards. So, let us review the judgment as it is the first main judgment of the Constitutional Court on this subject and will be relied upon in future.
The first judgment held that the Prescription Act was incompatible with the LRA. The result was that Myathaza's arbitration award had not prescribed. The first judgment also held that even if the Prescription Act were to apply, Myathaza's reinstatement award could not prescribe because it did not constitute a "debt" for purposes of the Prescription Act.
The third judgment concurred with the first judgment that an arbitration award did not constitute a "debt" for purposes of the Prescription Act. The third judgment also concurred with the first judgment that the Prescription Act was not applicable to LRA matters. The third judgment, however, did not follow the second judgment that the referral of a dismissal dispute to the CCMA interrupted prescription since prescription could only be interrupted by the service of legal process as specifically contemplated in section 15 of the Prescription Act.
The second judgment held that the Prescription Act was not inconsistent with the LRA, but instead complimentary to it, and found that the provisions of the two pieces of legislation were capable of complementing each other. The second judgment further held, contrary to the third judgment, that commencing proceedings in the CCMA interrupted prescription in accordance with section 15 of the Prescription Act.
In determining whether a claim for unfair dismissal constituted a "debt" for the purpose of the Prescription Act, the second judgment held that a dismissal claim sought to enforce three possible kinds of legal obligations, namely reinstatement, re-employment and compensation. These legal obligations ultimately constituted a "debt". The second judgment reasoned that since the service of process initiating the CCMA dispute resolution process interrupted prescription, prescription remained interrupted until the finalisation of the entire review application process (inclusive of appeals). The second judgment, like the first and third judgments found that Myathaza's arbitration award had not prescribed. The LAC judgment was ultimately overturned.
Phew - if you made it thus far this is the most simplified analysis of the judgment.
In short and on a serious note, there is regrettably no clear authority in Metrobus. So, it was hoped that the Constitutional Court would in Mogaila provide better clarity following Metrobus. To avoid you going through the analysis we set out above (relative to Mogaila), in short – sadly the court did not provide the requisite clarity.
The end point is that the question of the application of prescription remains open to further argument as is currently the case in the Labour Court. We have, for instance, since judgment in the Constitutional Court had three matters come before the Labour Court on the question of prescription of the particular awards. The current situation is not satisfactory and hopefully in time there will be better clarity on this matter.