Case  CCT31/20
[2021] ZACC 36

Hearing Date: 18 May 2021

Judgement Date: 19 October 2021

Post Judgment Media Summary  

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 Tuesday, 19 October 2021 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment and order of the Labour Appeal Court, hearing an appeal from the Labour Court. The matter related to the interpretation and application of section 193(2)(b) of the Labour Relations Act (LRA), and the question for determination was whether a court or arbitrator is entitled or obliged, in terms of section 193(2)(b), to consider whether a continued employment relationship would be intolerable when considering the remedy of reinstatement in respect of an unfair dismissal.

The applicant, Mr Booi, was employed by the first respondent, Amathole District Municipality. He was charged with misconduct and, following a disciplinary hearing, was dismissed. Aggrieved, the applicant referred a dismissal dispute to the South African Local Government Bargaining Council where the arbitrator found him not guilty of the charges and held that his dismissal was substantively unfair. The arbitrator ordered that he be reinstated retrospectively. The first respondent took the decision on review to the Labour Court, arguing that the arbitrator had, among other things, committed a reviewable irregularity by ordering reinstatement in circumstances where the relationship between the applicant and his supervisor had broken down irretrievably. The Labour Court upheld the arbitrator’s finding that the dismissal was unfair. However, it held that the arbitrator’s decision to order reinstatement was not reasonable since the applicant’s conduct, although insufficient to sustain a finding of misconduct, was completely destructive to the prospect of a continued employment relationship. It accordingly substituted the arbitration award with an order of compensation. Leave to appeal was refused by the Labour Court and the Labour Appeal Court. The applicant approached the Constitutional Court seeking reinstatement.

Only two parties participated in these proceedings: the applicant, Mr Booi, and the first respondent, his employer, which opposed the relief sought and maintained that not only had the applicant perempted his right to bring the appeal, but the fact that his working relationship with his employer had irretrievably broken down meant that the Labour Court’s refusal to reinstate him was unassailable.

In a unanimous judgment, penned by Khampepe ADCJ, the Constitutional Court granted condonation and leave to appeal, and upheld the appeal.

The Constitutional Court found that the application unequivocally engaged the Court’s jurisdiction as the matter concerned the interpretation and application of section 193(2)(b) of the LRA. In terms of this provision, the primary remedy for a finding of unfair dismissal is an order of reinstatement, unless the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable.

The Constitutional Court noted that, because the applicant had instructed his erstwhile legal representatives to secure payment of compensation in terms of the Labour Court’s judgment, this conduct may have created the impression that the applicant had acquiesced in that judgment and would not later seek to appeal it. The Court noted that, on the basis of the doctrine of peremption, this conduct would have been fatal to the applicant’s case but for any overriding policy considerations that might militate against the strict enforcement of the doctrine. The Court found that far from indicating an intention to waive his right to appeal, the applicant’s seeking payment of the compensation in order to finance an appeal demonstrated his persistent intention to pursue an appeal, and his actions were an unfortunate consequence of poor legal advice. The Court stressed that widespread unemployment, poverty and exploitation of employees in South Africa are hurdles that the constitutional project seeks to overcome, and because the matter raised important constitutional issues relating to fair labour practices and job security, the Court was satisfied that the interests of justice could not be served if the doctrine of peremption were to be strictly enforced.

One of the main grounds of appeal in this matter related to the applicant’s averment that the Labour Court, in deciding to order compensation rather than reinstatement, raised the issue of the intolerability of the continued employment relationship mero motu (of its own volition), which was unacceptable since a court can only ever be seized with the arguments litigants place before it. The Constitutional Court was not persuaded by this. Firstly, it found that the question, and quality, of the relationship between the applicant and his supervisor was a feature of the record, was the subject of oral argument before the Labour Court and the applicant himself had alleged that it had soured. Thus, it could not be said that the Labour Court raised the issue mero motu. In any event, the Constitutional Court found, even if the Labour Court had raised the issue mero motu, it would have been justified in doing so since section 193(2)(b) requires a court to consider the intolerability of the working relationship prior to making an order of reinstatement – the relief the applicant himself sought. Raising the question of the intolerability of his relationship with his supervisor, was therefore necessary for the Labour Court to dispose of the matter.

The Constitutional Court found that the matter turned on the proper approach to section 193(2)(b) of the LRA, and the nature of the enquiry when an arbitrator’s decision to order reinstatement is taken on review to the Labour Court. The Court emphasised that, where a dismissal has been found to be substantively unfair, reinstatement is the primary remedy in terms of section 193(1) of the LRA, unless reinstatement would be intolerable because the employment relationship has irretrievably broken down (section 193(2)(b)). However, the language, context and purpose of section 193(2)(b) dictate that the bar of intolerability is high, which is the product of a deliberate policy choice adopted by the Legislature to protect labour rights by ensuring that substantively unfairly dismissed employees are put in the position they would have been in but for the unfair dismissal. The Court emphasised that the conclusion of intolerability should not easily be reached and the evidentiary burden to establish intolerability is certainly heightened where the dismissed employee has been exonerated of all charges. The Court found that if the conduct did not justify dismissal, then it is difficult to understand why, at the same time, it could nevertheless provide a ground to prevent reinstatement.

The Constitutional Court also noted that an important question was whether the Labour Court was even entitled to interfere with the award of reinstatement made by the arbitrator. The Court acknowledged that where an arbitrator acting in terms of section 193(2) has considered all the evidence, found that it does not establish intolerability, and decided to order the primary remedy of reinstatement, then the high bar implied by section 193(2)(b) dictates that the arbitrator’s decision should not readily be interfered with by a review court. Furthermore, a review Court is confined to strict grounds of review, and can only interfere if the decision reached by the arbitrator was not one that a reasonable decision-maker could reach. It found that in substituting the award of reinstatement made by the arbitrator with one of compensation, the Labour Court erred because it had considered itself at large to conduct the enquiry that had been before the arbitrator, afresh, as if it were sitting as a court on appeal, which of course it was not.

On this point, the Court lamented the frequency with which courts treat reviews as appeals. This not only results in a waste of judicial resources but creates backlogs for Labour Courts, which backlogs in turn, impede their ability to adjudicate labour disputes in the swift manner contemplated by the LRA. The Constitutional Court emphasised that arbitration awards are intended to be final and binding. In this case, the arbitrator had properly considered all the evidence and had been alive to the strained nature of the employment relationship, but had nevertheless concluded that this evidence was insufficient to persuade him to deviate from the primary remedy for a substantively unfair dismissal: reinstatement. The reasonableness of the arbitrator’s decision was unassailable. Thus, there was no basis for the Labour Court’s interference with the arbitrator’s exercise of his discretion to reinstate the applicant. In the result, the appeal succeeded.

The Constitutional Court set aside the order of the Labour Court and ordered the first respondent to reinstate the applicant retrospectively. However, because of the effluxion of time since his dismissal, which was largely characterised by delays occasioned by the applicant, the Court limited the retrospectivity of the order to the period between his dismissal and the date of the Labour Court’s order, being 9 December 2015 and 3 November 2017 respectively. The Court held that the amount already received by the applicant pursuant to the Labour Court’s order of compensation must be subtracted from the back-pay to which he was entitled for the overall period.

The Constitutional Court, following the general principle that costs do not follow the result in labour disputes, made no order as to costs. It also set aside the punitive costs order made against the applicant by the Labour Court, which it found was unwarranted..

The Full judgment  here