Private arbitration and the jurisdiction of the CCMA.
#LC24112019 Krean Naidoo vs Liberty Holdings (2019)
Often employers insert into the contract of employment a provision that binds the parties to private arbitration for any dispute that may arise out of or the termination of employment. Private arbitration has its benefits, but may also be costly. Often employee’s who are dismissed would still refer a dispute to the CCMA to resolve. Does the CCMA have jurisdiction to attend to a dispute in circumstances where the parties agreed to private arbitration?
In Krean Naidoo vs Liberty Holdings, the employee was employed as a senior manager-Group Tax. In terms of the contract of employment the employee agreed to be bound by the employer’s terms and conditions of employment, which incorporated the employers Employee Relations Handbook. The said Employer’s Relations Handbook provides that dismissal disputes are to be dealt with via private arbitration.
Upon being dismissed for misconduct the employee filed an unfair dismissal dispute at the CCMA as he did not want to go the route of private arbitration. The CCMA ruled that it does not have jurisdiction to hear the matter, and that the employee may elect to instead refer the matter to private arbitration. The review before the labour court is to review this jurisdiction ruling.
The employee argued that private arbitration would mean automatic legal representation, arbitration costs after the first R30 000 that would be covered by the employer and leeway for the arbitrator to order other costs. The employee further argued that the Commissioner erred in finding in favour of the employer and had he considered the cost involved, that he would have found that given the circumstances, he would have warrant the CCMA to hear the matter.
The employer argued that the employee agreed to private arbitration when signing his contract of employment, that it is common practise in the company to make use of private arbitration and that they would have covered all the cost and not only the first R30 000, even though the Employee Relations Handbook states that the employer will only cover the first R30 000.
In addition, the rules of natural justice would still apply, and that the employee would have recourse to review any award at the labour court. The employer further argued that the decision to refer the matter to private arbitration or to not to refer a dispute at all as set out in section 147 (6) of the LRA, lies solely with the employee and not with the Commissioner.
The court ruled that the employee ought to have understood that by signing the contract of employment that he was agreeing to be bound by the terms in the Employee Relations Handbook. The Commissioner’s ruling was based on the agreement between the parties, that there would have been no financial prejudice to the employee and that a private arbitrator would have the same powers as a CCMA Commissioner and that the rules of natural justice would apply.
Section 147(6) of the LRA states that:
(6) If at any stage after a dispute has been referred to the Commission, it becomes apparent that the dispute ought to have been resolved through private dispute resolution in terms of a private agreement between the parties to the dispute,
the Commission may –
(a) refer the dispute to the appropriate person or body for resolution through private dispute resolution procedures: or
(b) appoint a commissioner to resolve the dispute in terms of this Act
The court found that the Commissioner correctly adhered to that the decision to refer a matter to private arbitration (or not refer a dispute at all), lies with the employee. Once the route is determined to be that of private arbitration, the CCMA steps aside and the aggrieved party has the recourse of private arbitration.
The court ruled that the CCMA has no jurisdiction in this matter
What we learn from this case is that the CCMA does not have automatic jurisdiction to entertain a dispute in circumstances whereby the parties agreed to private arbitration. What should also be noted is that in section 147 (6A) its states that the CCMA must appoint a Commissioner to resolve the dispute if (a) an employee earning below the earnings threshold is required to pay any part of the cost, or (b) where the person or body appointed to resolve the dispute is not independent to the employer.
It is advisable for employers to ask for the assistance of a professional Labour Relations Specialist when facing employment law difficulties. Tobie Nel is the Senior Labour Relations Specialist for Ulwazi Labour Relations and has over 15 years’ experience in Labour Law. You can contact him, by phone: 0824479512 or visit:www.ihconsult.co.za/labour/