One of the main concerns of employers entangled in an arbitration process is the uncertainty of how much compensation may be awarded, if any. An understanding of the factors which a commissioner may consider before issuing the same, would place the employer in a more informed position when deciding whether to resolve the dispute or let the arbitration run its course.

Section 193(4) of the Labour Relations Act stipulates that a Commissioner has been conferred the discretion to decide on terms which will bind the parties, which may include the primary remedy of reinstatement, re-employment or compensation in order to give effect to this fundamental right.

Although reinstatement is the primary relief, it will not be awarded where a dismissal is found to be only procedurally unfair, circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable, it is not reasonably practicable to reinstate the employee, or the employee does not wish to be reinstated.

Compensation is a payment to reconcile or offset financial loss incurred by the employee as a result of a dismissal. An employee does not need to quantify such loss or prejudice. The following factors, inter alia will be considered when determining compensation:

  • What were the circumstances or context of the dismissal, which may include the employer’s circumstances?
  • Did the employer act in good faith, but was merely misguided?
  • Was the dismissal grossly unfair?
  • Can the employee be blamed for the situation?
  • The deterrent (or preventative) effect which the award would have in future.

Where an employer had made a reasonable offer of reinstatement to a dismissed employee, which would have resolved the dispute, the court should take such an offer of reinstatement into account. However, an offer of reinstatement does not render an unfair dismissal fair, but may serve as a mitigating factor which a Commissioner will consider when determining the relief to be awarded.

Due to the fact that the quantification of compensation is determined on a case-to-case basis, it is difficult to advise employers as to what compensation will be awarded. Risk should be mitigated by applying caution prior to dismissing an employee and thereby avoiding a finding that the dismissal was unfair. This can be done by seeking the insights of an expert in this area of labour law.

Article by: Janeske Greeff
Dispute Resolution Official – Cape Town