Employers who find themselves on the wrong side of a Commissioner's arbitration award often seek to take the matter on review. In doing so, employers frequently turn a blind eye to the award. The question is, can they afford to overlook the arbitration award and wait for its enforcement?

The consolidated cases of CCMA v MBS Transport CC and CCMA v Bheka Management Services [2016] ZALAC 34 (MBS and Bheka) required the Court to determine, essentially, whether the employees could by-pass the Labour Court and send the sheriff directly to the employers.

The facts

In MBS and Bheka, each of the respective employees had obtained favourable arbitration awards granting them compensation, in the one case, and back pay in the other. Neither of the employers abided by the awards. The employees, thus, had the Director of the Commission for Conciliation, Mediation and Arbitration (CCMA) certify the awards and had enforcement awards issued. On provision of the enforcement awards, the sheriff paid a visit to each employer. The employers, on being made aware of the enforcement awards, applied on an urgent basis to the Labour Court to stay the respective enforcement awards, pending the outcome of their review applications.

The Labour Court held that that the CCMA does not, statutorily, have the power to issue enforcement awards - this is limited to the Labour Court's jurisdiction.

The CCMA took the decision on appeal to the Labour Appeal Court

The status of a certified award

In considering the matter, the Labour Appeal Court looked at the history of section 143 of the Labour Relations Act, 66 of 1995 (LRA), which deals with the effect of arbitration awards.

Section 143(1) of the LRA, as it was originally enacted, read as follows:

“An arbitration award issued by a commissioner is final and binding and may be made an order of the Labour Court in terms of section 158(1)(c), unless it is an advisory arbitration award.”

However, the Labour Relations Amendment Act, 6 of 2014 amended the section as follows:

“An arbitration award issued by a commissioner is final and binding and it may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued, unless it is an advisory arbitration award ” (emphasis added)

The Labour Appeal Court was required to interpret the amended section 143(1) and accordingly, found that the words 'as if' must be interpreted to mean 'as the case would be if', in order to give effect to the provisions of the section. This creates a legal fiction: the CCMA is deemed to have the status of a court of law, which it would otherwise not have.

As a result, CCMA arbitration awards ordering a party to pay the other a sum of money will only need to be certified by the CCMA, who will then also issue an enforcement award. Thus, there is no longer a need for the employee to have the award made an order of Court before a writ can be issued and the award enforced.

The certified award and enforcement award can now be delivered directly to the sheriff, who will be able to execute on the award.

Is the penny dropping: What does this mean for employers?

This means that an employer no longer has the benefit of being forewarned by the Labour Court application to make the award an order of court before they are made aware of the employee's efforts to enforce compliance.  Like the employers in MBS and Bheka, the first time an employer is likely to become aware of the enforcement is the knock of the sheriff at their door.

Employers who have instituted review proceedings are not left without alternative though. Section 145(7) and (8) have been inserted into the LRA to provide for, on the provision of satisfactory security, the suspension of the arbitration award pending the outcome of the review proceedings. This means that the employer can pre-empt any enforcement of the award by suspending its effect.

The LRA is not prescriptive regarding the manner or form in which security must be provided. Thus, security may be in the form of, amongst other things, a notarial bond, a bank guaranteed cheque, or merely a letter from the employer's bank guaranteeing the availability of sufficient funds to satisfy the award. Although the jury is still out as to what exactly the court will be satisfied with in respect of this new addition.

Now what?

To ensure that employers are not caught off guard, we suggest that they conduct an audit of any arbitration awards issued after 1 January 2015, in terms of which the employer has not complied and which have not yet been enforced.

Forewarned is forearmed: If the employer knows what might be coming its way there may be a much more cost effective way of fending off the sheriff than having to rush off to the Labour Court, on an urgent basis, to stay the enforcement of the award. Provision of security might negate any such need - and may even prevent the inevitable knock on the door from the sheriff if its provided early enough.

Not conducting such an audit may result in an expensive gamble for employers. Either way, employers seem to be in for a penny, in for a pound.