The Employer’s Right to Correct an Unfair Dismissal
Employers regularly deal with conflict and altercations in the workplace. Sometimes these interactions might result in an employer unfairly dismissing an employee by failing to follow a proper procedure or to give the employee an opportunity to state their case.
A topic that is not always discussed in depth or in context, is the available remedies when it comes to an unfair dismissal case.
The Legal Framework
There are three main remedies available to an employee for unfair dismissal as prescribed by Section 193 of the Labour Relations Act (LRA), namely reinstatement, re-employment, and compensation.
Reinstatement refers to taking an employee back into employment as if they had never left or were never dismissed. In essence, this would mean returning to work on the same terms and conditions and at the same salary or rate of pay as that which prevailed at the date of dismissal. This includes restoring any previous disciplinary record and an employee’s years of service. Reinstatement can be granted with or without backpay, which compensates the employee for lost income as of the date of their unfair dismissal until they are reinstated.
Re-employment refers to offering employment in a different but sufficiently similar position, potentially with a different salary or rate of pay, and without carrying over the previous disciplinary record and years of service i.e. as if one was employed afresh.
Compensation refers to a monetary amount granted as restitution for the wrongs committed in the unfair dismissal.
A Case in Point
The case of Rawlins v Kemp (483/09) [2010] ZASCA remains a significant ruling in South African labour law, particularly concerning unfair dismissal and the remedies available to employees.
Dr Rawlins, the appellant, was employed by Dr Kemp, the respondent, as a medical practitioner in a private practice in Bloemfontein. Shortly before she was meant to go on maternity leave, Dr Kemp suggested that she should take the opportunity to look for alternative employment in view of the financial difficulty of the practice. Dr Kemp had hoped to find a more junior doctor who would be willing to run the practice at a lower salary. Dr Rawlins was subsequently dismissed, which Dr Kemp later conceded as being unfair, but the dispute centred on the appropriate remedy for the unfair dismissal. Dr Kemp had repeatedly offered to reinstate Dr Rawlins before the case was referred, which she refused citing a breakdown in trust. The litigation focused on whether Dr Rawlins was entitled to compensation and, if so, the amount.
The Judgment
Three key legal issues influenced the judgment:
- Unfair dismissal: The LRA governs unfair dismissals, ensuring that employees receive fair treatment.
- Compensation vs. reinstatement: Courts generally favour reinstatement as the primary remedy unless circumstances justify compensation.
- Financial loss consideration: Dr. Rawlins had secured alternative employment at a higher salary, reducing her financial loss to approximately R40,000.
The Supreme Court of Appeal (SCA) held that while Dr Kemp may have treated Dr Rawlins unfairly when he dismissed her in the manner in which he did, he had “a right to seek to right the wrong” that he had committed by offering to restore the respondent to the same position as an attempt to correct his error.
The SCA found that where a genuine and reasonable offer of reinstatement is refused, the employer should not be liable for compensation that could have been avoided. In the Court’s view, it is very important to affirm the employer’s “right to right a wrong” that he or she has committed in these kinds of circumstances. If an employer wishes to reverse an unfair dismissal and the employee unreasonably refuses reinstatement, the employer has strong grounds to oppose a compensation award.
The Court also reaffirmed that compensation for unfair dismissal under the LRA is generally compensatory rather than punitive i.e. it is intended to address actual financial loss, not to punish an employer for unfair conduct.
Although Dr Rawlins might have genuinely felt that there had been a breakdown in trust, the parties were two professionals who might be expected to resolve any acrimony that might have existed between them. Dr Rawlins however did not advance any objective grounds for why the trust could not be restored, and failed to even explore the possibility, rejecting it out of hand.
Since Dr Rawlins had found alternative employment at a higher salary within a few months and had unreasonably rejected reinstatement, the Court held that she was not entitled to compensation.
The SCA dismissed the appeal, reinforcing the principle that compensation for unfair dismissal is limited to financial loss and does not necessarily cover the full amount. The ruling emphasised the importance of expeditious resolution in labour disputes, as this case had prolonged for more than twelve years.
Practical Lessons for Employers
The judgment has several practical implications for employers, including the following:
- Reinstatement remains the preferred remedy unless trust is irreparably damaged.
- Compensation is not automatic and is assessed based on actual financial loss.
- Labour disputes should be resolved swiftly to prevent unnecessary litigation. It should be noted that an offer to remedy should be made as soon as possible before the case is referred to the appropriate adjudication platform.
This case serves as an important reminder that employers who act swiftly to correct an unfair dismissal may significantly reduce their exposure to compensation claims. By affirming an employer’s right to rectify an unfair dismissal, the judgment underscores the value of prompt action and efficient dispute resolution within South African labour law.
Written by Lee-Ann Lewis
