Constitutional Court rules on prescription of reinstatement awards - Preparing you for the future of work.

Constitutional Court rules on prescription of reinstatement awards

Over the years, employers have been plagued with uncertainty regarding the intersection between the Prescription Act, 68 of 1969 and the Labour Relations Act, 66 of 1995, specifically, in respect of the prescription of arbitration awards awarding reinstatement.

The question is whether an arbitration award constitutes a debt and therefore is capable of prescribing within three years.

This issue was recently settled by the Constitutional Court in the case of Mogaila v Coca Cola Fortune (Pty) Limited (CCT76/16) [2016] ZACC 6.


Coca Cola employed Mogaila as a stock controller until it dismissed her as a result of her alleged misconduct in 2007. Mogaila referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration. On 29 April 2008, the CCMA ruled that Mogaila's dismissal was procedurally fair, but substantively unfair. Coca Cola was required to re-instate Mogaila by 2 June 2008 and provide her with back pay. When Mogaila returned to work she was informed that Coca Cola was taking her arbitration award on review. Accordingly, Coca Cola declined to reinstate Mogaila.
The Labour Court and the Labour Appeal Court dismissed Coca Cola's review application and subsequent appeal. On 4 November 2013, Mogaila once again attempted to return to work. However, she was informed that the arbitration award had prescribed, as a time period greater than three years had lapsed since the award was issued.

Constitutional Court's consideration and reasoning

In making its determination, the Constitutional Court relied heavily on the decision of Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and Others (CCT232/15) [2016] ZACC 49.
In Myathaza, the Court found that the arbitration award in question had not prescribed. However, in coming to this conclusion, the judges relied on different reasoning. This rendered three judgments each coming to the same conclusion that the award had not prescribed. The parity of votes meant that none of the three judgments secured a majority and therefore no binding decision was reached.
The first Myathaza judgment stated that the Prescription Act did not apply to the LRA because the acts are inherently incompatible. Even if the Prescription Act did apply, an order for reinstatement could not prescribe within three years because it is not a debt, as envisioned by the Prescription Act. The third judgment reiterated the first judgment's stance and added that a CCMA referral cannot be conceived as interrupting prescription because it is not a court process as envisioned in the Prescription Act.
In contrast, the second judgment stated that the LRA and the Prescription Act were compatible provided the correct tools of interpretation were utilised. It stated that the initiation of CCMA proceedings could interrupt prescription. The judgment also stated that the reinstatement of an employee constitutes a debt because it placed a positive duty on the employer to do something.
Due to the absence of a majority judgment in Myathaza, the Court in Mogaila applied each of the Myathaza judgments to the issue before it.
On the basis of the first and third Myathaza judgment, the Court found that the Prescription Act does not apply to the LRA, and even if it did, the reinstatement order does not constitute a 'debt '. It surmised that a 'debt' is an obligation to pay money, deliver goods or render services, which reinstatement was not. As such and in applying these judgments, Mogaila's award did not prescribe.

On the basis of the second judgment, the CCMA proceedings interrupted prescription. Mogaila's claim had not yet prescribed because prescription had been interrupted during the preceding CCMA and court processes.
Based on any one of the judgments, Mogaila's reinstatement order had not prescribed and was still enforceable.

Employer lesson

Employers are well-advised to do an audit of any arbitration awards awarding reinstatement that they have not complied with on the basis of prescription. This judgment is likely the final word, for now, on this topic and may result in ex-employees crawling out of the wood work expecting reinstatement.

Lauren Salt is a Senior Associate and Penjani Mseteka is a Candidate Attorney at Baker McKenzie South Africa.


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