Mike Chiruma v Delta Bevarages LC/MT/74/18

“I do not  intend  to consider whether  the principles applicable in  quantification of  damages in lieu  of  reinstatement can be imported  to  the  compensation  for loss  of employment  provided  for  in  S12 C (2)  of  the  Act,  a point  which  deserves  serious  thought  but  better  left  for appropriate  argument  should it be  raised  in  future  litigation…”

Introduction

This case involved an application for quantification of damages in lieu of reinstatement. I liked the way the court defined back-pay and how it then used the back-pay period as a yardstick for computing all the damages/claims that were applicable. The legal conclusion reached in determining whether an employee is entitled to cash-in-lieu of notice in the process of quantification damages in lieu of reinstatement is also thought-provoking.

I lament that the court decided not to pronounce on an important question as to whether the principles behind the quantification of damages in lieu of reinstatement can be imported to the compensation for loss of employment provided for in S12 C (2) of Act 5 of 2015. This question has been subjected to controversy and commentators do not entirely agree on this matter. The court had an opportunity to bring clarity to this matter and unfortunately, this was left for another day.

Facts

What is important to note is that an employee was dismissed from Delta Beverages’ employ whereupon an appeal was lodged to the Labour Court. Internal appeals had been unsuccessful. At the Labour Court, the appeal was successful following a default judgement. Reinstatement failed and with the consent of all the parties, an order for payment of damages was granted leading to the current application.

Reasons for Judgment

Back-pay

The court agreed with the respondent’s argument that back pay should be calculated from the date of unfair dismissal and up to the day of order of reinstatement. This means that the backpay cannot be calculated beyond the period of reinstatement. The effect of this period is that all other claims/damages will be calculated using this period of back pay. Cash in lieu of leave, production bonus among others, were computed with this period of back pay in mind.

 When determining what the employee was entitled in terms of all the claims the court did not go beyond the period of back pay. It is submitted therefore that the back-pay period is instructive in terms of the quantum of the damages. The period of back-pay can only be altered after taking into consideration the efforts made by the employee in finding alternative employment to mitigate the loss emanating from the wrongful dismissal.

Cash in lieu of leave

The period of cash in lieu of leave will be determined by the period of back pay. The court noted that the entitlement to cash in lieu of leave emanated from the fact that if it was not for the unfair dismissal the employee would have accrued paid vacation leave.

Cash in lieu of notice

The court argued that the employee was not entitled to any cash in lieu of notice because his employment never revived. It found this claim to be contradictory in the sense that the current application was for quantification for damages because reinstatement had failed. That if he had been reinstated then the application for quantification of damages would have been unnecessary. Having not been reinstated the employee, the court argued, was not entitled to cash in lieu of notice.

Production Bonus

It was agreed that but for the unfair termination, the employee would have been entitled to a production bonus. The court argued that the production bonus to be awarded to the employee should fall within the period of back pay, above.

Compensation for loss of employment

The employee had his employment terminated on the 30th of April 2015 and thus the court did not see merit in the argument that the compensation in terms of act 5 of 2015 would apply to the employee.  It would seem like the court was prepared to accept the argument by the respondent that this compensation would amount to two separate awards, the damages in lieu of reinstatement as well as compensation for loss of employment. The court did not consider it necessary to determine whether compensation for loss of employment can be applied to the principles for quantification of damages in lieu of reinstatement.

Mitigation of loss

The court explored the various efforts made by the employee to secure alternative employment in order to mitigate the losses deriving from the wrongful termination. Such efforts are always taken into consideration to determine whether the period of back pay should be shortened or increased. Issues like the employee’s age, health, qualifications are all important in determining the efforts made by the employee in finding alternative employment.

Medical Aid

The employee wanted to claim the money that would have been payable to his medical aid company. The court did not agree that the employee was entitled to medical aid payments. The courted was quick to mention that the employee would have been entitled to a refund of medical expenses that he had incurred during the period of unfair termination.

Punitive Damages

The court argued that these can be claimed separately and despite the award of other claims. These would not amount to “double damages” a situation where an employee is compensated twice for the same act of unfair termination. From the court’s remarks, these damages are awarded when the employer deliberately and with no reasonable cause made reinstatement impossible.

Non-monetary Benefits

The notable principle here is that an employee is entitled to all the benefits he would have been entitled to, but for the unfair termination.  The court found that the employee was entitled to soap and beverages that he would be entitled to in the course of his employment. The monetary value of such benefits was calculated mindful of the period of back-pay as mentioned above.

Own comment

As mentioned above, I believe an opportunity was lost when the court decided not to determine whether the principles applicable in the quantification of damages in lieu of reinstatement can be imported to the compensation for loss of employment provided for in  S12 C (2) of the Act. When Act 5 of 2015 was promulgated and compensation for loss of employment there was a lot of debate on this subject with some arguing that damages in lieu of reinstatement had been replaced by this compensation. The court should have therefore provided some direction as to how the two are related if they are.

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