This article was written by Mlungisi Khambule, an Associate Designate at Norton Rose Fulbright South Africa

Arbitration awards in favour of employees granting a “sum of money” are bearing more resemblance to monetary debts.  They are no longer just decisions obtained by disgruntled employees which can be ignored and left to lie dead in the inbox or under a stack of papers in the in-tray.  No, they are very much alive and, as the clock ticks, the costly consequences continue to grow.

The treatment of arbitration awards as monetary debts gained momentum following the amendments on 1 January 2015 to section 145(9) of the Labour Relations Act, 66 of 1995 (the LRA) which declared that review applications to set aside arbitration awards do interrupt the running of prescription in terms of the Prescription Act, 68 of 1969.  Arbitration awards issued before the amendment do prescribe after three years and any review application brought before the amendment does not interrupt prescription.

In a recent decision of Ndunakazi / Ezemvelo KZN Wildlife [2016] 1 BALR 21 (P), the commissioner confirmed that employees with arbitration awards granting a “sum of money” are entitled to interest at the legal rate on the sum specified in the award for each successive monthly salary between the date of the award and the date of reinstatement.  This decision ultimately means that, like any debtor, the longer an employer delays in utilising the relevant mechanisms within the LRA to successfully set aside arbitration awards or fully comply, the more expensive the award will become as interest continues to run.

Despite the various enforcement mechanisms contained in the LRA, there remains a tendency for some employers to neglect arbitration awards in the hope that the successful employee party will eventually abandon the debt.  Such neglect is unwise and expensive as it opens employers to a host of costly risks linked to lengthy litigation, execution proceedings, contempt of court proceedings, and the feared joining of a director to the proceedings with possible fines or imprisonment which can be ordered by the courts.  These enforcement mechanisms remain in our law to ensure that unfairly dismissed or suspended employees are properly compensated.

Employers are urged to keep an eye on arbitration awards so that the financial consequences can be mitigated.  This can be done by applying for the rescission or review of the awards with more haste, by reaching settlement or by complying with the award.

It is therefore imperative for employers to deal head-on with arbitration awards so as to avoid not only the increase in backpay but also the interest which has now been confirmed as part of our law.

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