A significant number of disputes that are referred to the CCMA by union/legal representatives on behalf of employees, as well as by employees themselves, are based on fabrication and unsubstantiated allegations. The reason for this is that it is easy for employees to refer disputes to the CCMA as well as to most other dispute resolution bodies, as the referral process is simple and free of cost for the referring party, as opposed to other legal proceedings such as in the Magistrate and High Court.
The CCMA allows for employees to refer and present their cases at conciliation and arbitration on their own, so that they do not have to incur the expense of joining a union, nor to hire a legal representative to assist them. This may make it tempting for dishonest employees to abuse the system in the hopes of receiving some form of undue compensation. The most common motive for the bringing of false claims against employers is due to vindictiveness against an employer based on some unrelated matter and/or because an employee may feel unduly entitled to some sort of compensation from the employer after being dismissed. There are also cases where an employee simply refers a case to the CCMA as a means of evading discipline, as well as many other disputes related to simple misunderstandings instead of employees addressing same through grievance procedures within the workplace itself.
Cost orders in the CCMA are regulated by Section 138 of the Labour Relations Act, and Rule 39 of the CCMA rules, and are for the most part, completely up to the discretion of the presiding commissioner at arbitration. These costs referred to are the expenses incurred by a party to have a dispute resolved through arbitration.
Section 138(10) of the Labour Relations Act provides that a commissioner may make an order for costs according to the requirements of the law and fairness. Cost awards may include disbursements, legal costs, witness expenses, as well as other expenses incurred. The CCMA rules do not expressly provide for an attorney and own client cost scale as is the case in Magistrates/High Court proceedings, but rather makes provision for the actual costs incurred by a party. With that said, employers must take note that commissioners may request proof of said costs which will then have to be provided in order to succeed for an order of costs against the employee party.
Disbursements are the actual expenses incurred by a party in conducting an arbitration, such as photocopying and travel costs. If a commissioner awards disbursement, they must specify the items and the amounts claimed. Legal fees are determined in terms of Rule 39(3) of the CCMA rules, and are at a flat rate of R7 000.00 for the first day of arbitration and R4 700.00 for each additional day of arbitration. Whereas witness costs are limited to R300.00 for each witness that testifies during the arbitration proceedings.
Rule 39 of the CCMA rules provides that, based on the requirements of law and fairness, a commissioner has discretion on whether to award an order of costs against either party during arbitration proceedings based on the following factors:
- The measure of success that either party achieves in an arbitration;
- Considerations of fairness that weigh in favour of, or against, granting an order of costs;
- Any prejudicial offers made during settlement negotiations;
- Whether or not a party acted in a frivolous and vexatious manner (A matter is deemed frivolous if it is entered into without any merit or perused purely to inconvenience and waste the employer’s time, and/or can be related to the conduct of the parties during the arbitration proceedings);
- The effect of the order of costs on the continued employment relationship;
- The terms of any agreement between the parties concerning the basis on which costs should be awarded;
- The importance of the issues raised during the arbitration to the parties as well as to the labour community at large;
- Any other relevant factor that the commissioner may deem appropriate.
Although cost orders aren’t ordinarily granted in the CCMA due to the reluctance of commissioners to penalise a party, and due to the discretionary aspect involved – there is, however, notable and precedent case law in favour of employers regarding costs orders:
- In the case of Weiner v Broekhuysen 2001 (2) SA 715 (C), the court defined costs as “a sum of money a court orders one party to pay to the other party to refund the latter for expenses incurred in the arbitration proceedings.”
- In Ndwalane v The Magic Company (Pty) Ltd (2006, 5 BALR 497), the employee brought no proof of unfairness during arbitration, and the case was found to have been frivolous and vexatious. The employee was ordered to pay part of the employer’s costs.
- In Simane vs Coca-Cola Furtune (2006, 10 BALR 1044), the CCMA agreed that the employee had been guilty of dishonesty, as he had lodged a case for an unfair dismissal knowing that it was not genuine. The CCMA awarded costs against him.
- In Rose Ramchau v Ackerman (NP856-01), the commissioner awarded an order of costs in favour of the employer because the employee had “dragged the company to the CCMA for an utterly hopeless case…”
- In Ntombela v SMT Health Solutions (KNDB10811-08), the commissioner found that an employee who was “argumentative, evasive and less than honest” during arbitration proceedings should get an order of costs against him.
It is therefore noted that the issue of costs is at the discretion of the presiding commissioner, having considered the principles of law and the fairness relating to the circumstances and merits of each case. Costs are ordered at the arbitration stage of CCMA proceedings by the presiding commissioner and are usually argued and addressed at the end of the proceedings during closing arguments. However, in certain circumstances, same may also be argued in conjunction with specific preliminary points raised, such as the CCMA’s lack of jurisdiction to entertain a dispute, and/or where the referring party lacks the necessary locus standi to refer a dispute – which would relate to the frivolous and vexatious referral by the employee and/or union/legal representative and for which costs in favour of an employer could be argued on that basis.
Employers are further advised that cost orders must be specifically requested and argued during arbitration proceedings, they are not automatically considered by the presiding commissioner. We, therefore, advise that employers should contact their nearest CEO office so that we may assist and advise them in dealing with their labour disputes effectively and efficiently.
Article by: Carl Ranger
Dispute Resolution Official – Bloemfontein