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Labour Relations Act, 1995 (Act No. 66 of 1995)

Commission for Conciliation, Mediation and Arbitration

Guidelines on Misconduct Arbitration

F: How to Approach Remedies

Awarding compensation


(130) The relevant factors to be considered when awarding compensation include: 54
(130.1) the nature and reason for the dismissal;
(130.2) whether the dismissal was automatically unfair;
(130.3) whether the dismissal was substantively or procedurally unfair, or both; and if the dismissal is only procedurally unfair, the nature and extent of the deviation from procedural requirements;
(130.4) whether the employee was guilty or innocent of the misconduct;
(130.5) the consequences to the parties if compensation were or were not to be not awarded; and
(130.6) any conduct of the parties that undermines the objects of the Act.


(131) The amount of compensation awarded to an unfairly dismissed employee—
(131.1) must be just and equitable taking into account all the relevant circumstances of the case, and
(131.2) may not exceed 12 months of the employee's remuneration at the rate applicable at the time of the dismissal.


(132) Arbitrators must ensure that they have sufficient evidence to properly determine the amount of compensation. If the parties do not present the necessary evidence, the arbitrator should request the parties to provide additional evidence by way of oral or documentary evidence. There are different considerations that are relevant when determining compensation for a dismissal that is substantively unfair as opposed to one that is procedurally unfair. Guidance on the exercise of the discretion to award compensation must be sought in the purposes of the LRA and its interpretive principles. The amount of compensation must be determined with regard to the circumstances of both employer and employee. An employee is not necessarily entitled to the full extent of losses suffered as a result of the unfair dismissal.


(133) Compensation for an unfairly dismissed employee must be determined with regard to the extent of the employee's financial loss and the nature of the unfair dismissal. While the purpose of the compensation is generally to make good the employee's loss and not to punish the employer,55 a compensation award may be used to express the arbitrator's displeasure at a seriously unfair dismissal and to that extent may have a punitive element to it .56


54 Dr D.C. Kemp tia Centralmed v Rawlins (LAC).
55 Le Monde Luggage tla Pakwells Petje v Dunn NO & others (LAC) at para 30.
56 CEPPWAVVU & another v Glass & Aluminium (LAC) at para 49.