The Prescription Act, 68 of 1969 ("Prescription Act") allows for a three-year period for a debtor to claim a debt. In the context of employment arbitration awards, this means that employees have three years from the date the awards were issued to enforce their claims.  

How is the prescription period affected by proceedings to review and set aside an arbitration award?

When the Labour Relations Act, 66 of 1995 ("LRA") was amended, new provisions were included to provide clarity on the interruption of arbitration awards. Under the new provisions, an application to set aside an arbitration award issued after 1 January 2015 will interrupt the running of prescription of the award. Therefore, employees will not forfeit their claims merely because three years have passed since the awards were issued whilst the employer commenced review proceedings.

What about arbitration awards issued prior to the commencement of the Amendment Act?

The Labour Court considered this issue in the recent case of Compass Group SA (Pty) Ltd v Chris van Tonder, Commissioner T D Lynch and CCMA. The Labour Court delivered its judgment on this issue on 2 March 2016.

Compass Group v CCMA

After his dismissal, the employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration ("CCMA"). The commissioner awarded the employee an amount of R 228 000. However, the employer issued a review application in terms of section 145 of the LRA to set aside the award. The employer later argued that the compensation due to the employee had prescribed as three years had passed since the debt became due in terms of the Prescription Act.  

The judgment in Myathaza v Johannesburg Metropolitan Bus Service (SOC) Ltd t/a Metrobus [2015] ZALAC 45 had previously settled the legal position in respect of arbitration awards issued before

1 January 2015 and confirmed that the Prescription Act applies to these awards. The Labour Appeal Court noted, though, that where review proceedings are pending, a debtor (employee) may at any time, after the arbitration award is issued and before it prescribes, bring an application to make such an award an order of court.

In Compass Group v CCMA the employee did not apply for the arbitration award to be made an order of court and accordingly did not interrupt the prescription period.

Points to Ponder

A debt due in terms of an arbitration award issued before 1 January 2015 prescribes after three years unless the award was made an order of court.

Where an arbitration award is issued after 1 January 2015, the Amendment Act applies. This means that the review proceedings interrupt prescription of the debt arising from the award.

Employers are advised to also consider the further obligations contained in the Labour Court Practice Manual relating to diligently prosecuting review applications.