Reinstatement after fixed term contract expired
CASE:
Toyota SA Motors (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (DA6/ 2021) [2023] ZALAC 5 (14 February 2023)
BACKGROUND:
The employee worked for Toyota SA Motors (Pty) Ltd (employer), since 21 March 2010 as a crane driver. He was employed on a three-month fixed-term contract. His contract was repeatedly renewed until his dismissal on 14 August 2015. On 23 March 2015, the employer issued the employee with a final written warning relating to a charge of negligence. Within three months of receiving this final warning (11 June 2015), the employee was again involved in an incident involving negligence and he was ultimately charged for misconduct.
On 15 June 2015, three days before his suspension, the employee signed a further fixed-term contract commencing on 1 August 2015 and terminating on 31 October 2015. On 14 August 2015, after the disciplinary inquiry, the employee was dismissed.
The employee referred an unfair dismissal dispute to the CCMA. The arbitrator issued her award on 24 May 2018. She found that the employee’s dismissal was substantively unfair as he was not negligent. The employee sought reinstatement with backpay. The arbitrator exercised her discretion against reinstating the employee. In doing so, she reasoned as follows:
“Buthelezi [witness for the employer] gave unchallenged evidence that he was the only one who handed out contracts, that he did not give any permanent contract to the employee and that the employee would in fact have not been eligible for permanent appointment at that time as he had a pending disciplinary hearing.
The employee has no signed permanent contract of employment and failed to call the shop steward to verify the circumstances in which the blank document was given to him. As such there is nothing before me to refute Buthelezi’s version that it was a mistake for the employee to have the contract; that it was never issued to him and that there was no offer of employment for him. I am inclined to accept Buthelezi’s version in this regard and find that the [employee] was never offered permanent employment or in fact permanently employed.
It must further be noted that the commencement date for the supposed permanent employment was 20 August 2015, however, the employee had already been dismissed on 14 August 2015. In the premises he could not possibly be said to have been a permanent employee at the time of his dismissal on 14 August as he was, at that point, still employed on a fixed term contract. Reinstatement as a permanent employee is thus not an option and, his fixed term contract has long since expired, I cannot order his return to work on that basis (i.e., on a fixed term contract).
It was never the employee’s case that but for his dismissal, his fixed term contract would have been renewed and no evidence was led to prove any kind of legitimate expectation either. In the premises I am of the view that the only competent relief herein is compensation”
In considering whether, in terms of section 194 of the Labour Relations Act it was just and equitable to limit the compensation to be awarded to the employee to the balance of his fixed-term contract (i.e. 2.5 months), the arbitrator considered the decision of this Court in Jorgensen v I Kat Computing (Pty) Ltd and others, where it held that compensation for an unfair dismissal (in that case) had to be limited to the balance of the employee’s fixed-term contract. This Court accordingly reduced the amount of compensation which the employer was ordered to pay on the basis that “there was no cause to award compensation more than the actual loss of income”. Considering herself bound by that decision, the arbitrator awarded the employee compensation in an amount equivalent to the amount he would have earned for the remainder of his fixed- term contract (two and a half months) which was R37 325.20.
The Labour Court reviewed and set aside the compensation award of the arbitrator and substituted it with an order that the employer “reinstate the employee from the date of his dismissal with no loss of earning or benefits as if he was not dismissed”. In making the order, the Labour Court reasoned that: “it was the employee’s suspension and subsequent dismissal that prevented him from being offered permanent employment and if there was any other reason, no evidence appears to have been led”.
The Labour Appeal Court differed from the LC. Integral to the exercise of the arbitrator’s discretion in terms of section 193(1) of the LRA in deciding whether to reinstate, re-employ or compensate the employee, is the nature of the employment contract and whether it is extant when an employee’s dismissal is found to be unfair. The remedy of reinstatement is confined to the situation where, at the date of the finding that the dismissal is unfair, the original employment contract is still in existence. However, where the employee is employed on a fixed-term contract, the expiry of which precedes the unfair dismissal finding, as in this dispute, then reinstatement or re-employment are not legally permissible remedies. In the circumstances, the arbitrator no longer has a discretion to choose between the three remedies contemplated in section 193(1) of the LRA but is obliged in law to order the employer to pay the employee compensation in terms of section 193(1)(c) of the LRA. Reinstatement is therefore not a competent remedy where expiry of employee’s fixed- term contract precedes unfair dismissal finding of arbitrator.
