If an employee refers an unfair dismissal dispute to the CCMA and is successful after arbitration, the employee is entitled to either reinstatement (with or without back-pay), re-employment or compensation in terms of section 193 of the Labour Relations Act (No 66 of 1995).
In terms of s193(1) of the LRA, the remedy that an employee whose dismissal is found to be unfair may be entitled to is reinstatement, re-employment, or to be paid compensation. Section 193(2) then further provides that the Labour Court or an arbitrator ‘must’ order the employer to reinstate or re-employ an employee whose dismissal was found to be unfair unless certain exceptions set out in that subsection apply or the reason for the unfair dismissal was only a failure by the employer to follow a fair procedure. Compensation will also be granted where it is the only form of relief sought by the Applicant or where reinstatement and re-employment are not appropriate in the circumstances.
In the case of unfair dismissal, the maximum amount of compensation that can be awarded is 12 months’ salary and 24 months in the case of an automatically unfair dismissal. There is no hard and fast rule when deciding how much compensation will be awarded. The commissioner will consider what is just and equitable in the circumstances and can exercise their discretion in this regard.
The employee need not prove the actual loss he/she suffered as a result of the dismissal. The courts apply the principle of solatium when determining compensation. In ARB Electrical Wholesalers (Pty) Ltd v Hibbert N.D  (LAC) the Labour Appeal Court it was held that compensation is not strictly a payment for the loss of a job or the unfair labour practice, but is, in fact, the monetary relief for the injured feeling and humiliation that the employee has suffered at the hands of the employer.
When considering what a just and equitable amount is, the commissioner may consider the following factors: nature and seriousness of the injustice; the unique circumstances of the matter; the extent of the employee’s humiliation; the relationship of the parties and the employers attitude after dismissal.
There may be circumstances in which compensation will be the only appropriate award. In United National Transport Union obo Schrenk v Levy NO and Others, an employee was dismissed after relaying an idiom that compared his subordinates to baboons. The employee’s defence was that the employees did not understand an Afrikaans idiom. The commissioner found that the use of the idiom was inappropriate but accepted the employee’s explanation for the use of the idiom and found the dismissal to be substantively unfair.
The commissioner found that it would not be practical to reinstate the employee into the workplace and he was, therefore, awarded one months’ remuneration as compensation. When determining whether or not to reinstate the employee, the commissioner considered the fact that the employee was already on a final warning for using crude and insulting language, which had resulted in him going for training for people management which had not had an effect on the employee’s continued conduct. The employee also seemed to suggest that the employment relationship had broken down as he had said that he had felt betrayed.
The employee took the matter on review as he was of the view that the compensation was unreasonable. The Labour Court held that a number of factors need to be taken into account to determine the quantum of the compensation. In this case, the dismissal was procedurally unfair, as well as substantively unfair as the employee was not found guilty of the charge for which he was dismissed. Furthermore, he had a very long service at the employer. The award was accordingly set aside and replaced with an order for compensation equal to six months’ remuneration.
From the above, it should be apparent that attempting to forecast quantum of compensation will be challenging. The facts of each case will determine what is just and equitable compensation.
Article by: Gordon Flanagan
Dispute Resolution Official – East London