ARB Electrical Wholesalers (Pty) Ltd v Hibbert (DA3/13) [2015] ZALAC 34

ISSUE

Whether an employee can claim compensation under both the Labour Relations Act 66 of 1995 (“LRA“) and the Employment Equity Act 55 of 1998 (“EEA“) in respect of an act by an employer which breached both Acts?

SUMMARY

A court must ensure that the employer is not penalised twice for the same wrong. Where a court is satisfied that compensation should be awarded under the LRA and EEA, the court must determine what amount is just and equitable. In making this determination, the court must not consider separate compensation under each Act, “but what is just and equitable for the indignity the employee has suffered”.

COUNCIL’S DECISION

In ARB Electrical Wholesalers (Pty) Ltd v Hibbert (DA3/13) [2015] ZALAC 34 (21 August 2015), the Labour Appeal Court (“LAC“) found that the employee had been subject to an automatically unfair dismissal as he had been dismissed simply because he attained the age of 64. In terms of section 193(1) of the LRA, there are three possible remedies for an employee whose dismissal is found to be unfair, namely reinstatement, re-employment or compensation. If a court awards compensation in cases where the dismissal was found to be automatically unfair, the LRA limits the amount that may be awarded to an amount equal to 24 months remuneration. In this regard, the LAC noted that compensation awarded under the LRA is essentially payment for the impairment of the employee’s dignity. Thus, while being limited to 24 month’s compensation, the court may award an amount that is “just and equitable”. In determining what would constitute a “just and equitable” amount in terms of the LRA, the LAC found the following factors to be relevant:

•     The nature and seriousness of the infringement;
•     The circumstances in which the infringement took place;
•     The behaviour of the employer;
•     The extent of the employee’s humiliation or distress;
•     The abuse of the relationship between the parties; and
•     The attitude of the employer.

Having found the employee’s dismissal to be automatically unfair in terms of the LRA, the LAC then went on hold that the employer’s conduct also constituted an act of unfair discrimination in terms of the EEA. The LAC then had to determine whether the employee was entitled to additional compensation under the EEA.  In other words, could the employee claim under both the LRA and EEA in a single action. The LAC also had to determine whether the employee was entitled to separate remedies under both the LRA and EEA for what is effectively a single wrongful act by the employer.

The LAC held that there is no bar to an employee instituting two claims in one action. In fact, the LAC emphasised a clear preference for this course of action. The LAC also noted that both the LRA and EEA make provision for “just and equitable” compensation, but unlike the LRA, the EEA does not limit such compensation. The LAC held that it must ensure that the employer is not penalised twice for the same wrong. The LAC stated that:

“Where a dismissed employee seeks reinstatement or re-employment and is granted that relief, that employee will still be entitled to “compensation” for the claim formulated under the EEA because reinstatement or re-employment is to undo the effects of an unfair dismissal and has nothing to do with the discrimination itself. However, where compensation is the relief sought for the unfair dismissal, then the position is entirely different because, firstly, compensation sought under the two Acts is for a single wrongful conduct by the employer and secondly, the meaning ascribed to compensation under the LRA is, ……the same as would apply to the concept of compensation under the EEA.”

Where a court is satisfied that compensation should be awarded under the LRA and EEA, the court must determine what amount is just and equitable. In making this determination, the court must not consider separate compensation under each Act, “but what is just and equitable for the indignity the employee has suffered.” In making this determination, the court may take into account the six factors listed above and additional factors, including:

•     The position held by the employee within the employer’s establishment;
•     The remuneration earned;
•     How reprehensible and offensive the employer’s conduct was;
•     How, if at all, did the employer’s conduct affect the employee; and
•     What motivated the wrongful conduct by the employer to act as it did.

In the present instance the LAC upheld the Labour Court’s ruling that the employee was entitled to the amount he would have earned over a 12 month period of employment.

IMPORTANCE OF THIS CASE

A single wrongful act by an employer may constitute a breach of more than one Act. However, where an employee is entitled to compensation for a breach of the LRA and EEA for the same wrongful act, the court will not award compensation separately under each Act but will award an amount that is just and equitable as compensation for the damage to the employee’s dignity. What constitutes a just and equitable amount will depend on the circumstances of each case and the court will take multiple factors into account to make this determination. Therefore, the employee’s right to claim under both the EEA and LRA is recognised by the court and given effect to while at the same time the employer is not penalised twice for the same wrong as a single determination is made as to what is just and equitable compensation.”

Written by Jacques van Wyk, Director; Andre van Heerden, Associate; and Brittany Feldman, Candidate Attorney at Werksmans Attorneys