Key changes to the labour laws in 2015 – part 3: ARBITRATION, THE LABOUR COURT AND REVIEW

PRIVATE ARBITRATION

Where an employer and employee have made no other agreement about resolution of disputes between them, their disputes are generally conciliated and, if not required to go to the Labour Court, arbitrated by the CCMA or a bargaining council, in terms of the Labour Relations Act, in what is known as “compulsory arbitration”. However some employers and employees agree up-front in employment contracts to bypass the system of compulsory arbitration, and rather have disputes resolved by way of private arbitration. Private arbitration services are provided by private companies, as opposed to compulsory arbitration which is provided by the CCMA, set up by statute, or bargaining councils, set up by industry-wide agreements.

In the past, if the CCMA accepted a dispute referral but then realised that the parties had agreed to private arbitration, the CCMA would generally decline to hear the matter, and insist that it be referred instead to the relevant private arbitrator as per the parties’ agreement.

The legislature identified abuse of the scope for private arbitration, however, and has amended the Labour Relations Act this year to require the CCMA to hear disputes, even where they ordinarily would not have the power to do so owing to a private arbitration clause in an agreement. This amendment applies (1) when an employee who earns less than R205 000* per year (*subject to change)  is required by the agreement to pay any part of the costs of the private arbitration, and (2) when the private arbitrator nominated in the agreement is not independent of the employer.

THE LABOUR COURT AND ARBITRATION

Where the Labour Court receives a referral of a dispute which ought to have been referred to arbitration, the court may either refer the dispute to arbitration or continue with the proceedings and make only an order which an arbitrator would have been empowered to make. In the past, the Labour Court could only continue with the proceedings with the consent of all the parties. As of 2015, the parties’ consent is no longer necessary, and instead the court can determine that it is expedient to continue and do so regardless of any objection by either party.

MORE RESTRICTIONS ON REVIEW APPLICATIONS

While the majority of review applications are no doubt brought in good faith, as mentioned in a previous post, they have also been much abused as delaying tactics and for employers in particular to evade compliance with awards despite there being no real prospect of overturning the awards. Some review applications have languished in court files for years, and employees have lacked the knowledge or means to force matters along effectively.

In a further attempt to tighten the reins on abuse of review applications, and resultant unnecessary delays and cost increases in proceedings, the legislature has determined that, as of 2015, no review may be brought of any decision or ruling made during conciliation or arbitration until the issue in dispute has been finally determined. The exception shall be when the court is of the view that it is just and equitable to hear the review at an earlier stage. This will prevent many a party from abandoning arbitration hearings on the first day, and holding the process hostage by filing reviews of minor determinations made by an arbitrator before even hearing evidence on the main issue.

Key changes to the labour laws in 2015 – part 2: MORE SCOPE FOR RESCISSION, TIGHTENING UP OF REVIEW

For a party aggrieved by an arbitration award handed down by the CCMA, there is no appeal. An award is final and binding, unless there are grounds for rescission or review.

In most legal fora, a party can get out of a ruling made in their absence by way of a rescission application if they can show “good cause”. This generally means: 1. there is an acceptable explanation for their absence, 2. they are seeking rescission in good faith, and 3. they have a defence, with reasonable prospects of success.

This has not been the case in the CCMA, however, where the grounds for rescission have thus far been even narrower. As of 2015, the CCMA’s awards may now also be rescinded on “good cause shown”. This is good news for parties who, even through no fault of the CCMA or of either party, are absent from arbitration hearings but have a good defence to put forward. In the past they may have been stuck with the resulting award, but now that they can apply to have the award set aside and an arbitration hearing called afresh.

Review applications, in terms of which awards may be set aside as being broadly unreasonable, have been much abused. Reviewing parties have sometimes relied upon the process being drawn-out, complex and costly, to avoid complying with an award even when the basis for review is sketchy at best. The 2015 amendments seek to put an end to such abuse. A reviewing party is now required to apply for a hearing date within six months of commencing review proceedings. If there are good reasons why this cannot be done, they must apply to the court for condonation. Despite applying for review of an award, the award must still be implemented pending the determination of the review, unless the reviewing party supplies security to the court, equal to the compensation awarded or equal to 24 months’ remuneration in the case of an award of reinstatement or re-employment.

This will be a bitter pill to employers. Where the employer cannot afford to pay the necessary security, they are stuck with taking a reinstated employee back into service until the review application has been decided. Where compensation has been awarded, the employee can go ahead with execution proceedings against the employer’s assets pending the outcome of the review, in the event that no security has been paid.

Review applications interrupt prescription of the award, which extends the period in which the successful party may enforce the arbitration award once the review application has been disposed of.

Key changes to the labour laws in 2015 – part 1: EASIER ENFORCEMENT OF CCMA AWARDS

The long-awaited Labour Relations Amendment Act came into effect, in large part, on 1 January 2015. It brought about a number of changes in both individual and collective labour law. In this series, we consider the key changes affecting individual labour law, and of which employees and employers alike should take note.

Prior to 2002, an employee who succeeded at the CCMA but whose employer ignored the CCMA’s award, had a steep hill to climb to get satisfaction. The employee would need to approach the Labour Court and have the award made an order of court, before having a writ of execution issued and handed to the sheriff of the court. This involved a full application to court supported by an affidavit, to be served under the rules of court, and awaiting and responding to any notice of opposition and answering affidavit from the employer. The employee would need to appear before a judge to secure an order against the employer. It was a complex and intimidating process for a layperson, time-consuming, and could increase costs drastically.

In 2002, the law was changed in order to assist employees in enforcing awards. Instead of approaching the Labour Court with a full application on notice and on affidavit, the employee returned to the CCMA to have the award certified. Once the award was certified, the employee went to the Labour Court to have a writ of execution against the employer issued over the counter. This was handed to the sheriff of the court for enforcement. This was a much simpler, cheaper, quicker process. However many employees still found the process, in particular dealing with two institutions, confusing and frustrating.

As of 2015, the process for enforcement is even more streamlined. Our law now states that an arbitration award may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued. An employee battling with a recalcitrant employer must still have the award certified at the CCMA as previously, but then can take her certified award directly to the sheriff of the court for execution. There is no longer any need to involve the Labour Court, provided the award requires the employer to pay over money (as opposed to doing something – such as taking the employee back into employment. Where the award requires the employer to do something, other than pay over money, contempt proceedings in the Labour Court remain appropriate.)

The new law only applies prospectively, to arbitration awards issued after 1 January 2015.

The tariffs and procedures for enforcement and execution will be those that apply in the magistrates courts, which seems appropriate given that in almost all cases the amounts of money involved in awards will fall within the monetary jurisdiction of the magistrates courts (R300 000,00 or less).