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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

Compensation for substantively unfair dismissals



(134) In determining compensation for a substantively unfair dismissal, an arbitrator should consider the following:
(134.1) the employee's remuneration and benefits at the time of dismissal;
(134.2) the time that has elapsed since the dismissal;
(134.3) whether the employee has secured alternative employment and, if so, when and at what rate of remuneration;
(134.4) what steps the employee has taken to attempt to mitigate his or her losses by, for example, finding alternative employment;57
(134.5) the patrimonial (financial) loss suffered by the employee. While this is a relevant factor in determining compensation, the absence of loss does not prevent an award of compensation;58
(134.6) the employee's prospects of future employment. The employee's chances of finding future employment may be affected by factors such as age, experience, level of education, qualifications and the availability of suitable job opportunities;
(134.7) whether the employee failed to use the opportunity to state a case at a disciplinary investigation or enquiry;
(134.8) whether the resolution of the dispute was unreasonably delayed, and if so, whether the delay was caused by either the employer or the employee (or their representatives).59 A delay in referral may be taken into account even though condonation for a late referral was granted;
(134.9) whether the dismissal was both substantively and procedurally unfair;
(134.10) the extent of unfairness of the dismissal. This involves considering the extent to which the employer transgressed the requirements for a fair dismissal. For example, the amount of compensation might be increased if the employee committed no misconduct, as opposed to an employee committing some misconduct for which dismissal was not a fair sanction;
(134.11) payments received by the employee from the employer, other than amounts due in terms of any law, collective agreement or the contract of employment.60 For example, the amount of compensation may not be reduced by what the employee has received as notice pay, severance pay, or from the Unemployment Insurance Fund, but it may be reduced to take into account amounts which the employer has voluntarily paid over and above its contractual or statutory obligations;
(134.12) whether the employee unreasonably refused an offer of reinstatement. In general, employers should not be penalised if they have offered to reinstate an unfairly dismissed employee. However, an employee may refuse such an offer, and be entitled to appropriate compensation, if the offer is not made in good faith or if the trust relationship between the employee and the employer has broken down as a result of or following the dismissal. Similar considerations may come into play if the employee refuses a reasonable offer of re-employment in circumstances in which reinstatement is not feasible;
(134.13) whether the employee unreasonably refused other attempts by the employer to make substantial redress for the unfair dismissal such as securing employment with another employer or making an offer of payment;
(134.14) whether the conduct leading to the employee's dismissal caused the employer loss and, if so, the extent of that loss;
(134.15) the employer's financial position. The courts have held that the purpose of compensation is generally not to punish employers and an appropriate amount of compensation must be determined with reference to the situation of both the employer and the employee.61 So, for example, the amount of compensation may be reduced if any greater amount would disproportionately prejudice the employer rather than remedy the unfair dismissal. In appropriate circumstances Commissioners should consider ordering compensation to be paid in instalments instead of a single lump sum.


(135) The onus is on the parties to produce suitable evidence of the factors relevant to compensation that support their submissions. Mere allegations are not sufficient.



57 While mitigation is a relevant factor in determining the amount of compensation, it must be borne in mind that there in no legal onus on the employee to seek to mitigate their losses pending the hearing of a dismissal case (Billiton Aluminium SA Ltd t/a Hillside Aluminium v Khanyile & others (CC) at paras 40-43). Accordingly, a failure by the employee to prove that they took reasonable steps to mitigate their loss subsequent to dismissal is not a bar to the employee being compensated.
58 HM Leibowitz t/a The Auto Industrial Centre Group of Companies v Fernandez (LAC) at para 22.
59 Karan t/a Karan Beef Feedlot & another v Randall (LC) at para 17.
60 Section 195 of the LRA.
61 Le Monde Luggage t/a Pakwells Petje v Dunn NO & others (LAC) at para 30.