A Reinstatement Order does not revive the employment contract

A discussion of a recent Labour Appeal Court judgment which finally explains exactly what an order of “reinstatement with retrospective effect” actually means, and what applicants need to do in the event that a respondent refuses to comply with such an order.

Written by Dr Hilda Grobler, Director of Aequitate Dispute Resolution Services (Pty) Ltd, for LexisNexis South Africa

What does an order to retrospectively reinstate an employee mean?

Does it mean that it revives the employment contract which was terminated when the employee was dismissed?

Does it mean that the employer must unconditionally pay the employee backpay in the amount he would have earned from the date of dismissal to the date of reinstatement -  or does it mean that the employee must tender his services before becoming entitled to that backpay?

Does it mean that the employer finds itself in a position where it has no option but to reinstate an employee following a lawful dismissal?

What does it mean if the employer refuses to reinstate the employee?

The judgment in Mhlupheki Willem Kubeka & Others v Ni-Da Transport (Pty) Ltd
The Labour Appeal Court (LAC) grappled with questions along these lines in the matter of Mhlupheki Willem Kubeka & Others v Ni-Da Transport (Pty) Ltd which was handed down on 24 November 2020.

The Labour Court (LC) found that the dismissal of the 59 applicants was both substantively and procedurally unfair. It ordered the employer on 24 July 2013 “to reinstate the applicants … retrospectively to the date upon which they were dismissed” and to pay them “back pay”. The applicants were ordered “to report for duty within 14 days of the date of this judgment”.

When some of the applicants reported for duty on 29 July 2013, the employer refused to reinstate them. It lodged an appeal against the LC order on the same day. This application suspended the order.

The LC, the LAC, the Supreme Court of Appeal and the Constitutional Court all refused to grant the application. That meant that the original order once again became enforceable on 18 November 2014.

At this point the applicants elected not to tender their services as they no longer sought reinstatement – but they persisted with their claim for backpay. This claim was, however, no longer for the period from the date of dismissal until the date when they were due to have tendered their services following the reinstatement order - they now also claimed for the period during which the appeal was before the different courts.

The employer simply refused to pay the claim of some R19 million. The applicants went back to the Labour Court in an attempt to get their backpay, but the court dismissed the application.

They appealed, but the LAC also dismissed the application. In effect it confirmed that the LC had dismissed the application for the correct reasons.

The LAC held that there were two key issues before it. The first was whether the claim depended on the restoration of the contract of employment, while the second turned on the question as to whether the contracts of employment were restored - or not.

It thereafter analysed the principles which were established in two Constitutional Court judgments, namely NUM obo Fohlisa v Hendor Mining Supplies (2017) and Equity Aviation Services (Pty) Ltd v CCMA (2009).

The LAC concluded that s193(1)(a) of the LRA “does not permit an order resuscitating the contract but only an order directing the employer to reinstate the employee”.

It further concluded that the right to claim arrear wages (“back pay”) does not arise from the order itself - if it did, there would not be an obligation on applicants to tender their services.

With reference to the two Constitutional Court matters, the LAC found that both the judgments agreed that a contract of employment which is terminated by a dismissal resulting in a reinstatement (with retrospective effect) order, only revives when the employee tenders his services, and the tender of those services is accepted by the employer.

Therefore the following principles apply:
The applicant/employee must tender his services, failing which he cannot claim arrear wages.

• If the employer refuses to reinstate the employee, the contract of employment does not revive.
• Once the dismissal became effective, the employment contract is terminated. If the contract is not revived through an act of reinstatement, there exists no claim for backpay if the employee did not tender his/her services in terms of an arbitration award or Labour Court Order.

Does this mean that the applicants were chasing rainbows for about 12 years after their dismissals? No, it does not. Unfortunately for these applicants they had chosen the wrong dispute resolution path to pursue their claim for backpay.  This is highlighted in paragraph [39] of judgment, that the applicants ought to have launched contempt of court proceedings against the employer to compel it to give effect to the 2013 Labour Court order:

• [39]       It is common cause that the respondent did not accept the earlier tender (suspended by the appeals process) of the appellants … after the reinstatement order became enforceable in November 2014. Consequently, their contracts of employment were not revived and they acquired no contractual right to back pay which could be claimed in terms of section 77(3) of the BCEA. As the Labour Court correctly held, in terms of Hendorthey were required to bring contempt proceedings to compel the employer to accept their tender. Their appeals accordingly must be dismissed (My emphasis).

The importance of this judgment is that it finally explains exactly what “reinstatement with retrospective effect” actually means, and what applicants must do in the event that the respondent refuses to comply with such an order.

Dr Hilda Grobler
Director of Aequitate Dispute Resolution Services (Pty) Ltd