Arbitration Awards are binding & remain enforceable despite an application to the Labour Court for Review.
Once a CCMA matter has been arbitrated, the Commissioner will issue an Arbitration Award within fourteen (14) days. CCMA Awards are final and binding, and there is no Appeal process regarding Arbitration Awards. They are, however, subject to Review by the Labour Court. This means that a party unhappy with a Commissioner’s decision in an Arbitration Award may apply to the Labour Court in terms of Section 145 of the Labour Relations Act (LRA) to set the award aside. The party who disagrees with the award and alleges a defect must file a Review application with the Labour Court within six (6) weeks of receiving the award.
Once an application is filed and served, the Applicant party must apply for a date for the matter to be heard within six (6) months of delivery of the application. An Arbitration Award could be considered defective if the aggrieved party alleges one or more of the following:
- The Commissioner committed misconduct in relation to their duties as an Arbitrator.
- The Commissioner committed a gross irregularity in conducting the Arbitration proceedings.
- The Commissioner exceeded their powers.
- The Arbitration Award was not properly obtained.
The Constitutional Court confirmed the test for Review, and it is based on whether the decision reached by the Commissioner is one that a reasonable decision-maker could not reach. Applying this test, the Labour Court will not readily interfere with an Arbitration Award. Still, the Court will consider whether the Commissioner considered the principal issue before them and whether they evaluated the facts presented in the Arbitration and came to a reasonable conclusion. Should the Court order that the award was defective for any of the above reasons, the award will be set aside.
Prior to the amendments of Section 145 of the LRA, many Employers who were unsuccessful in Arbitration at the CCMA, specifically in matters regarding unfair dismissal, would seek to Review the award to suspend the operation of the award pending the finalisation of the Review application. Previously, delays in the proceedings (sometimes deliberately by the Applicant party) meant that the proceedings would only be finalised years later. If the Review application was unsuccessful, only then could the Employee enforce the award. The Employee was then met with a defence from the Employer stating that the award had been prescribed and was no longer enforceable. The matter would be litigated further where the Court would have to decide whether the Prescription Act (PA) applied to Arbitration Awards, and if so, whether the award constituted a “debt” as defined in the Act, as well as whether the institution of the Review proceedings interrupted the running of prescription.
Section 145 of the LRA states that the institution of Review proceedings by the aggrieved party does not suspend the operation of an award unless the Applicant furnishes security to the Labour Court. The section also adds that a Review application to set aside an Arbitration Award interrupts the running of prescription in terms of the Prescription Act.
In the case of Rustenburg Local Municipality v South African Local Government Bargaining Council and Others (J779/2017)  ZALCJHB 261; (2017) 38 ILJ 2596 (LC);  11 BLLR 1161 (LC) (30 June 2017), the Labour Court clarified the issues relating to the payment of security to stay an Arbitration Award pending the Review proceedings. The Court emphasised that Section 145(7) and (8) of the LRA, which states that Review proceedings do not stop the enforcement of an Arbitration Award unless the Applicant furnishes security, was introduced to discourage Review applications which had little or no prospects of succeeding at Labour Court.
The amount of security payable to the Labour Court depends on the Arbitration Award. In the case of an order of reinstatement or re-employment, the equivalent of 24 months of the Applicant’s (Employee’s) remuneration is payable. In the case of an order of compensation, security will be equivalent to the amount of compensation awarded.
Should the aggrieved party be unable to furnish security to the Court but wants the operation of the Arbitration Award to be suspended, an application can be made to the Labour Court in terms of Section 145(3) of the LRA. The Applicant will be required to show good cause why the requirement of security cannot be complied with, and the Applicant must show that it would be unduly harmful to be required to pay the prescribed security. All Employers, whether in the public service or the private sector, are subject to the same requirements for providing security.
Should an Employer wish to apply for an Arbitration Award to be set aside by the Labour Court, the Employer should carefully look at their prospects of succeeding in the Review proceedings as well as whether they can furnish the prescribed security, so they are not required to comply with the Arbitration Award before the finalisation of the Review. Without the payment of the security, the other party may still enforce the Arbitration Award. It is essential to keep in mind that the Employee’s claim will not prescribe; this means that even if the Review proceedings continue for years, should the Employer be unsuccessful in their application, the award must still be complied with. Unless there is a blatant defect and the Employer believes there are reasonable prospects of succeeding, it will often be quicker and less expensive to comply with the Arbitration Award.
Article By: Shannen Brown
Dispute Resolution Official – CEO George