Case CCT 279/16 
[2018] ZACC 04
Hearing Date : 10 August 2017
Judgement Date: 27 February 2018

Media Summary of Judgment

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 27 February 2018 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against an order of the Labour Appeal Court.

The applicants were employed by the respondent, CMI Business Enterprise CC from August 2009 until September 2011. They primarily performed technical and mechanical duties on mining related projects. The applicants left their jobs as a result of alleged racial discrimination, which manifested in physical, verbal and mental abuse. On 10 October 2011, the applicants referred their dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) and it remained unresolved.

On 12 February 2013, the Labour Court granted default judgment in favour of the applicants. The Labour Court held that they had been constructively dismissed and that such dismissal was automatically unfair in terms of section 187(1)(f) of the Labour Relations Act 65 of 1995 (LRA) since the dismissal was based on the applicants’ race. The respondent was ordered to pay the applicants the maximum compensation permitted by the LRA, namely, 24 months remuneration.

The respondent applied to the Labour Court for rescission of the judgment. The issue before the Labour Court was whether it had jurisdiction, which turned on the question of whether constructive dismissal based on unfair discrimination had been conciliated before referral to it. The Labour Court had regard to the applicants’ evidence as to what transpired during the conciliation proceedings. It held that the unfair constructive dismissal dispute had been conciliated and as such it had jurisdiction to hear the matter. The Labour Court dismissed the rescission application.

On appeal, the Labour Appeal Court held that the Labour Court erred in having regard to evidence concerning what transpired during the conciliation proceedings. According to the Labour Appeal Court, such evidence was inadmissible. The Court held that in determining the nature of a dispute, a court may only have regard to what is contained in the referral form and the certificate of outcome. On this basis, the Labour Appeal Court held that the Labour Court did not have jurisdiction to hear the matter as the nature of the dispute that was referred to the Labour Court was not the same as what was conciliated.

The applicants lodged an application for leave to appeal in the Constitutional Court against the order of the Labour Appeal Court. The matter was heard on 10 August 2017.

The main issue to be decided in the Constitutional Court was whether evidence relating to discussions held during a conciliation hearing at the CCMA was privileged and could not be relied upon by the Labour Court. This required the Constitutional Court to interpret rule 16 of the CCMA Rules, which governs the admissibility of evidence led at conciliation proceedings. Rule 16 was amended after the Labour Appeal Court decision, but it still applies to a number of cases filed before the amendment. The applicants submitted that the Labour Appeal Court’s interpretation of rule 16 did not promote the spirit, purport and objects of the Bill of Rights as required by section 39(2) of the Constitution.

The first judgment, written by Theron J (Cameron J, Froneman J, Jafta J, Kathree-Setiloane AJ, Kollapen AJ, Madlanga J, Mhlantla J, Zondi AJ concurring) noted that commissioners have three functions: to resolve disputes, to identify the nature of the dispute and to make recommendations to the parties. These functions are not merely clerical and inevitably call for application of the mind, discretion and some adjudication.

Theron J held that the Labour Appeal Court had adopted an overly formalistic approach and failed to take into account the purpose and context of the LRA and the dispute resolution mechanisms for which it provides. In addition, Theron J held that the approach of the Labour Appeal Court was inconsistent with the jurisprudence of the Constitutional Court which has “cautioned against a narrowly textual and legalistic approach”. Theron J held that the purpose of rule 16, to promote frank discussion and early settlement of disputes, was not furthered by interpreting the rule to impose a blanket ban on evidence led at conciliation proceedings. As such, Theron J held that the evidence, that the CCMA conciliated the true dispute, namely, automatically unfair constructive dismissal caused by unfair discrimination and racially discriminatory treatment, was admissible.

In the result, the appeal is upheld and the decision of the Labour Appeal Court is set-aside. No order as to costs was made.

In a dissenting judgment, Zondo DCJ agreed that leave to appeal should be granted but held that the appeal should be dismissed. The judgment argues that the question before the Constitutional Court was whether the Labour Court had jurisdiction to adjudicate a constructive dismissal dispute or an automatically unfair dismissal dispute in this matter.

He pointed out that a well-established principle of the LRA is that disputes must be referred to a conciliation process by the CCMA or the relevant bargaining council before they can be adjudicated or arbitrated. He noted that the applicants had not referred a constructive dismissal dispute or an automatically unfair dismissal dispute to the conciliation process and therefore, such a dispute could not be the subject of either arbitration or adjudication. He said that the Labour Court had erred in adjudicating that dispute.

Zondo DCJ pointed out that the only dispute the applicants had referred to the conciliation process was a dispute they described as “Unfair discrimination S10 of the Employment Equity Act”. He held that as a matter of law, such a dispute did not encompass any constructive dismissal dispute or automatically unfair dismissal dispute. He said that it was clear from the description that it was a dispute that was to be processed under section 10 of the Employment Equity Act whereas a constructive dismissal dispute or an automatically unfair dismissal dispute is required to be dealt with under section 191 of the LRA. A constructive dismissal involves a resignation by the employee or employees and in their referral documents the applicants never mentioned resignation or dismissal to describe their dispute or complaint. Furthermore, section 10(1) of the Employment Equity Act excludes from its ambit and processes dismissal disputes that require to be dealt with under section 191 of the LRA.

Zondo DCJ also stated that, in so far as the applicants sought to pursue a constructive dismissal dispute, the Labour Court had no jurisdiction to adjudicate such a dispute because not only had it not been referred to the conciliation process but also because the LRA requires that, if such a dispute has been referred to conciliation and that process failed, that dispute must be referred to arbitration and not adjudication. To the extent that the applicants may be said to have wanted to pursue an automatically unfair dismissal dispute, the Labour Court did not have jurisdiction because such a dispute was never referred to the conciliation process.

Zondo DCJ held that the dispute that the applicants referred to the conciliation process was a dispute concerning the applicants’ allegations that their employer had subjected them to various acts of racism and unfair discrimination. Zondo DCJ held that that is the dispute that the Labour Court had jurisdiction to adjudicate and that is the dispute it should have adjudicated. However, he said that, there would be nothing wrong if, at the trial of that case, the applicants sought a higher amount of compensation on the basis that as a result of the racism and unfair discrimination, they found continued employment with this employer intolerable and resigned. 

The Full judgment here.