Does the Prescription Act apply to unfair dismissal disputes in terms of the LRA?
Section 16(1) of the PA provides that the prescription periods set in the PA will apply “to any debt” unless the provisions of the PA are “inconsistent” with any Act of parliament that prescribes a specified period within which, inter alia, a claim is to be made or an action is to be instituted. The question is whether the LRA, which provides for time periods within which various claims must be made, and/or actions instituted, is inconsistent with the provisions of the PA.
In Myathaza v Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobus and Others, a decision that dealt with an attempt to enforce an arbitration award issued by a Commission for Conciliation, Mediation and Arbitration (“CCMA”) commissioner, the Constitutional Court was divided on this question. In two lengthy and detailed decisions, four judges found that the PA was inconsistent with the provisions of the LRA and that it did not apply to the enforcement of arbitration awards. In a third lengthy and detailed decision, four other judges found that it did apply. The same difference of opinion was exhibited in Mogaila v Coca Cola Fortune (Pty) Limited.
In the recent decision in Food and Allied Workers Union obo Gaushubelwe v Pieman’s Pantry (Pty) Ltd, the Constitutional Court had to consider the question whether the PA applied to unfair dismissal claims that can be brought in terms of the LRA.
In this matter, the Food and Allied Workers Union (“FAWU”) referred an unfair dismissal dispute to the Labour Court for adjudication in terms of section 191 of the LRA about three and a half years after a certificate of non-resolution was issued by the CCMA. Pieman’s Pantry (Pty) Ltd (“Pieman’s”) filed a statement of defence in which it contended that FAWU’s claim had prescribed. Both the Labour Court and Labour Appeal Court held that the Prescription Act applies to claims under the LRA. FAWU then appealed to the Constitutional Court.
Once again, a differently constituted Constitutional Court adopted differing approaches in three lengthy and detailed judgments. In the first judgment, Zondi AJ (with whom Mogoeng CJ, Zondo DCJ and Jafta J concurred), argued that the provisions of the LRA are inconsistent with the provisions of the PA in that there are material differences between the two statutes – they set different time periods within which litigation must be instituted. Also, the failure to comply with the time periods stipulated by the LRA is not fatal and may be condoned on good cause shown, whereas a creditor loses the right to enforce its claim once the claim has prescribed. Such differences, the court held, are sufficiently material to constitute inconsistency as contemplated in section 16(1) of the Prescription Act and that “to try to apply the Prescription Act to the litigation under the LRA is just like trying to fit square pegs into round holes, ignoring clear structural differences between the two Acts”. The applicants’ claim had therefore not expired.
In the second judgment, Zondo DCJ concurred with the first judgment, but adopted a different approach. In essence, he argued that the provisions of the LRA dealing with unfair dismissals were a “package deal” negotiated by the relevant parties within the National Economic Development and Labour Council. The dispute resolution system created by the LRA is a self-standing system that was carefully crafted with a view to striking a fair balance between the interests of workers and those of employers. If the PA applied to litigation in terms of the LRA, this balance would be disturbed. The PA imposes a disadvantage on employees by giving employers two “sledge-hammers” (time periods in the LRA and PA) that they can use to “kill” the employees’ claims. This is unwarranted and fails to appreciate the world of equity and fairness that the LRA strives for in regulating the interests of employers and employees.
The majority decision took a different view. Kollapen AJ (with whom Cameron J, Froneman J, Kathree Setiloane AJ, Madlanga J, Mhlantla J and Theron J concurred) came to the conclusion that there is no inconsistency between the LRA and the PA. More than a mere difference is required to establish inconsistency. Although the two Acts both deal with time periods, they focus on different aspects of their application in one litigation process.
The two Acts achieve the same result in different ways; the LRA provides specific time frames for initiating and proceeding with litigation in terms of the LRA and provides a mechanism to seek an indulgence in the form of condonation if these time frames are not met. It does not set an outer limit to the litigation process for extinction but a claim is extinguished if the employee cannot prove good cause. On the other hand, a claim is extinguished through prescription if the relevant time period set in the PA lapses. As a result, there is no inconsistency. The same result is achieved but it is arrived at through different routes. There would have been an inconsistency if the LRA provided for a specific prescription period.
The majority decision emphasised the role that time limits play in bringing certainty and stability to social and legal affairs and maintaining the quality of adjudication.
The majority decision therefore found that the PA applied to litigation under the LRA and that prescription had been interrupted by the referral of the matter to conciliation. Section 15(1) of the Prescription Act provides for the interruption of prescription “by the service on the debtor of any process whereby the creditor claims payment of the debt”.
It held that the commencement of proceedings before the CCMA constitutes the service of a process as envisaged in this section.
A majority decision of the Constitutional Court has now accepted that the PA does apply to litigation in terms of the LRA and the controversy in this regard has been laid to rest. However, the decision ameliorates the position for potential applicants in that prescription will be interrupted by a referral to the CCMA for conciliation. It should also be noted that the application of the PA in the context of the enforcement of arbitration awards has, since 1 January 2016, been regulated by section 145(9) of the LRA. This provides that, in respect of awards issued after this date, prescription is interrupted if an application is made to review and set aside an award.
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