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The Labour Court adjudicated a case in regard to whether or not the CCMA lacked jurisdiction to entertain an unfair dismissal dispute in circumstances where the parties had previously agreed to refer such dispute to private arbitration in terms of the employees contract of employment.

In the case of Krean Naidoo v Liberty Holdings (JR558/16) [2019] ZALCJHB 56, the Applicant, who was a senior employee, had been dismissed for misconduct and subsequently referred an unfair dismissal dispute to the CCMA despite being required to refer his dispute to private arbitration.

At the arbitration proceedings in the CCMA, the arbitrator found, inter alia, that the employee’s contract of employment incorporated the Employer’s Employee Relations Handbook and therefore the Handbook constituted a term and condition of employment. The Arbitrator also found that the CCMA did not have jurisdiction to hear the case and that the employee was entitled to refer the case to private arbitration in terms of his employment contract.

In subsequent review proceedings before the Labour Court, the employee contended that the employer never furnished him with a copy of the Employee Relations Handbook upon commencement of his employment and that he never agreed to refer disputes to private arbitration, and also that he did not relinquish his right to refer an employment dispute to the CCMA.

The employee further contended that private arbitration meant automatic legal representation and possible arbitration costs as the employer would only pay the initial arbitration costs. The employee further argued that, in terms of section 147(6) of the Labour Relations Act 66 of 1995, as amended, the CCMA arbitrator erred by not directing that the case be referred to private arbitration, but reminded the employee of his election to refer the matter to private arbitration if he chose to do so.

The employer argued that notwithstanding the wording of the Employee Relations Handbook, the employer would according to it’s established practice pay for all the costs associated with the private arbitration, that the presiding chairperson of the disciplinary hearing was one of nine arbitrators and that the parties were in a position to choose an alternative arbitrator, that the rules of natural justice would still apply during the private arbitration and furthermore that the employee would be entitled to apply to the Labour Court to review the decision of the arbitrator if the employee was dissatisfied with the outcome of the private arbitration. Ultimately, the employer argued that the decision to refer the matter to private arbitration in terms of section 147(6) of the Labour Relations Act was solely at the instance of the employee and not the CCMA Arbitrator who was not a party to the employment contract.

The Labour Court held that as a senior employee the applicant should have understood that by signing a contract of employment which incorporated conditions set out in the Employee Relations Handbook bound him to the terms thereof.

The Labour Court held further, that in terms of section 147(6), where the parties are bound by agreement to resolve a dispute by way of private arbitration, the CCMA may refer the dispute to the appropriate person or body for resolution through private arbitration or appoint a commissioner to resolve the dispute in terms of the Labour Relations Act. Therefore, the CCMA arbitrator was correct in finding that the decision to refer the matter to private arbitration (or not to refer a dispute at all), was at the instance of the employee once it was determined that the parties were bound by the private arbitration clause.

This finding of the Labour Court demonstrates that employees are bound to refer an unfair dismissal dispute to private arbitration, if they have agreed to do so in terms of the contract of employment, and senior employees have a higher standard of accountability for their actions.

Furthermore, the CCMA might not have jurisdiction to hear the dispute and the employee has the choice to either refer the dispute to private arbitration or not at all.

It is however important to note that if, at any stage during an arbitration referred to the CCMA or relevant bargaining council, it becomes clear that the case ought to have been referred to private arbitration, the CCMA still has the discretion to either refer the dispute to the relevant private arbitration agency or to appoint a commissioner from its ranks to hear the dispute.

In circumstances where an employee, who earns below the Earnings Threshold of prescribed by the Labour Relations Act, the CCMA must then appoint a commissioner to hear the dispute if the employee was required to pay the costs of the private arbitration or part thereof.

Article published courtesy of RexLex™ Mediations & Arbitrations

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