When an employee is retrenched, an important question often arises: can the dispute be resolved through arbitration at the CCMA, or must it be referred to the Labour Court?

The Labour Appeal Court addressed this issue in Bracks NO and Another v Rand Water and Another (2010) 31 ILJ 897 (LAC), clarifying that the CCMA has jurisdiction to arbitrate disputes concerning both the substantive and procedural fairness of a dismissal for operational requirements where only one employee has been retrenched.

The court rejected a narrow interpretation of section 191(12) of the Labour Relations Act (LRA), which suggested that the CCMA could only determine disputes where substantive fairness was in issue. Referring to the explanatory memorandum accompanying the 2002 amendment to section 191, the court emphasised that the legislature intended to create a cost-effective and accessible dispute-resolution mechanism for employees who may not have the financial means to litigate in the Labour Court.

The judgment confirmed that an employee who has been retrenched for operational requirements may elect to refer the dispute to arbitration before the CCMA, even where procedural unfairness in terms of section 189 of the LRA is alleged.

Further Clarification from the Labour Court

This interpretation was reinforced in PGC Group of Companies (Pty) Ltd v CCMA and Others [2018] ZALCJHB 460.

In that matter, the Labour Court highlighted the broader purpose of section 191(12), namely to promote the cost-effective and efficient resolution of labour disputes by allowing certain retrenchment matters to be arbitrated at the CCMA rather than litigated in the Labour Court.

The court further clarified that section 191(12)(a) is not limited to the dismissal of a single employee. It may also apply where multiple employees are retrenched, provided that the consultation process related specifically to the employee referring the dispute.

Legal Representation in CCMA Arbitration Proceedings

The issue of legal representation in CCMA arbitration proceedings is governed by section 140 of the Labour Relations Act and Rule 25 of the CCMA Rules.

Section 140 specifically addresses legal representation in arbitration proceedings involving dismissals for misconduct or incapacity. Rule 25(1)(c) similarly limits legal representation in such matters.

As a result, legal representation in misconduct and incapacity arbitrations is not automatically permitted. An arbitrator must consider factors such as the complexity of the dispute and the comparative abilities of the parties before deciding whether legal representation should be allowed.

The position is different in retrenchment disputes.

Where a dispute concerns the retrenchment of a single employee and is arbitrated at the CCMA, legal representation is automatically permissible. This provides employees and employers alike with the opportunity to obtain legal assistance when dealing with often complex operational requirements dismissals.

Conclusion

The decisions in Bracks and PGC Group confirm that employees dismissed for operational requirements have broader access to CCMA arbitration than was previously understood. They also reinforce the legislature’s intention to provide a more accessible and cost-effective dispute-resolution process.

Importantly, where such disputes are arbitrated before the CCMA, legal representation is automatically allowed, ensuring that both employers and employees can properly present their cases in matters that often involve complex factual and procedural considerations.

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