Enforcement of settlement agreements and arbitration awards

Nicolene Erasmus

(1) The LRA^[1] provides that an arbitration award issued by a commissioner is final and binding and it may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued, unless it is an advisory arbitration award.

(2) If an arbitration award orders a party to pay a sum of money, the amount earns interest from the date of the award at the same rate as the rate prescribed from time to time in respect of a judgment debt in terms of section 2 of the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), unless the award provides otherwise.

(3) An arbitration award may only be enforced in terms of subsection (1) if the director has certified that the arbitration award is an award contemplated in subsection (1).

(4) If a party fails to comply with an arbitration award certified in terms of subsection (3) that orders the performance of an act, other than the payment of an amount of money, any other party to the award may, without further order, enforce it by way of contempt proceedings instituted in the Labour Court.

(5) Despite subsection (1), an arbitration award in terms of which a party is required to pay an amount of money must be treated for the purpose of enforcing or executing that award as if it were an order of the Magistrate’s Court.

(6) Subsections (1), (4) and (5), as amended by the Labour Relations Amendment Act, 2014, takes effect on the date of commencement of the Labour Relations Amendment Act, 2014, and applies to an arbitration award issued after such commencement date.

40. Certification of arbitration awards.—

(1) An application to have an arbitration award certified must be made on—

(a) LRA Form 7.18 in respect of an award by a commissioner;

(b) LRA Form 7.18A in respect of an award in arbitration conducted under the auspices of a bargaining council.

(2) Any arbitration award that has been certified in terms of section 143 of the Act that—

(a) orders the payment of an amount of money may be enforced by execution against the property of the employer party by the Sheriff of the court in the Magisterial district where the employer party resides, or conducts business;

(b) orders the performance of an act other than the payment of money may be enforced by way of contempt proceedings instituted in the Labour Court.

(3) For the purposes of subrule (2), an arbitration award includes an award of costs in terms of section 138 (10), a taxed bill of costs in respect of an award of costs and an arbitration fee charged in terms of section 140 (2).

The CCMA may, in terms of section 142A^[2], by agreement between the parties or on application by a party, make the settlement agreement an arbitration award and such arbitration award may then be enforced in terms of section 143. In terms of section 158(1)(c)^[3], the Labour Court may, on application by a party, make the settlement agreement an order of the Labour Court and such order may then be enforced like any other Labour Court order. If a party fails to comply with a written settlement agreement entered into in respect of a dispute that a party has the right to refer to arbitration or to the Labour Court and the dispute had not been referred to the CCMA when the settlement agreement was entered into, the Labour Court may, in terms of section 158(1)(c) read with section 158 (1A)^[4], on application by a party, make such settlement agreement an order of the Labour Court^[5]. The CCMA does not have jurisdiction to make such settlement agreements awards.

Once an award is certified, it can be executed upon delivery to the Sheriff. There is no need to approach the Labour Court for a writ to be issued first. An award ordering the performance of any other act (i.e. reinstatement), once certified, is to be enforced by way of contempt proceedings^[6] instituted in the Labour Court^[7].

A rescission application will stay the certification process until such time the rescission application has been determined. A review application brought by the other party will not stay the certification of the award. Certification will be stayed only where the other party has brought an application to the Labour Court and the Labour Court has granted an order in terms of section 145 (3) of the LRA staying the enforcement of the award pending a review application.

A rescission application must be entertained even after the award has been certified or made an order of court in terms of section 158 of the LRA.

An application to have the award certified in terms of 143 (3) must be brought within three years. A review application would not make a difference as a pending review is not a bar against certifying an award, unless a court order staying the execution is produced.

An application to have the award made an order of the Labour Court must be brought within three years of the issuing of the award, failing which the right to do so will have prescribed. The running of prescription is interrupted by a review application. The running of prescription can be interrupted by applying for the award to be made an order of court and applying further that the application be heard on the same day as the review application.

^[1] Section 143

^[2] 142A. Making settlement agreement arbitration award.—(1) The Commission may, by agreement between the parties or on application by a party, make any settlement agreement in respect of any dispute that has been referred to the Commission, an arbitration award.(2) For the purposes of subsection (1), a settlement agreement is a written agreement in settlement of a dispute that a party has the right to refer to arbitration or to the Labour Court, excluding a dispute that a party is entitled to refer to arbitration in terms of either section 74 (4) or 75 (7).

^[3] 158. Powers of Labour Court.—(1) The Labour Court may—

(c) make any arbitration award or any settlement agreement an order of the Court.

^[4] (1A) For the purposes of subsection (1)(c), a settlement agreement is a written agreement in settlement of a dispute that a party has the right to refer to arbitration or to the Labour Court.

^[5] Hence, where a settlement agreement provides for an employer to pay an employee R5 000 by a particular date and the employer pays this amount on or before the due date the employee would be foolhardy to approach the Labour Court to make the settlement agreement an order of court, as no purpose would be served by doing so and the Court would refuse to make it an order of court. By the same token, where the settlement agreement provides that the employer “ will re-employ a dismissed employee if he feels like doing so”, and the employer does not re-employ the employee, the employee would be ill advised to approach the Labour Court and seek to make that agreement an order of court, because no purpose can be served by making such an agreement an order of court. It is an agreement that leaves the discretion to employ entirely within the discretion of the employer and he may employ “ if he feels like doing so”. He cannot be forced by a court’s order to be in the mood to employ and there is no enforceable obligation to employ. The purpose of making a settlement agreement or an arbitration award, an order of court is to enforce compliance with the agreement, or the award. The agreement or the award must therefore be unambiguous and unequivocal and not open to any dispute. This does not mean that an award or agreement that provides payment of salary or wages of a certain period is not clear and precise. The parties would know or easily ascertain by having regard to documentation like pay slips or an independent accounting exercise what the amount is [although ideally the amount should be clearly set out to avoid unnecessary delays and expensive exercise to ascertain the exact amount due]. What all this means is that before the Labour Court will grant an order sought in terms of section 158(1)(c) of the LRA it must be satisfied that, at the very least: “ (i) the agreement, is one which meets the criteria set in s 158(1)(c) read with section 158(1A) of the LRA, and if it is an award, that it satisfies the criteria set in section 142A of the LRA; (ii) that the agreement or award is sufficiently clear to have enabled the defaulting party to know exactly what it is required to do in order to comply with the agreement or award; and, (iii) There has not been compliance by the defaulting party with the terms of the agreement or the award.” South African Post Office Ltd v Communication Workers Union obo Permanent Part-Time Employees [2013] 12 BLLR 1203 (LAC)

^[6] 143(4) If a party fails to comply with an arbitration award certified in terms of subsection (3) that orders the performance of an act, other than the payment of an amount of money, any other party to the award may, without further order, enforce it by way of contempt proceedings instituted in the Labour Court.

^[7] “The next question is, is Mr Herridge in wilful and mala fide disobedience of the order? Having received the order, having had the opportunity to verify it, to find out what it meant, he was in a position to obey it. It is quite clear that he regarded the award as ridiculous and its incorporation in the court order as not being something which should be complied with because it conflicts with his views on what the law should be. He does not believe that someone should be reinstated if they were in employment at the date the arbitration award was granted. There is clearly a refusal to reinstate Mr Ntombela in his employment with the CC. In my opinion, on all the facts before me, Mr Herridge is guilty of contempt of this court.” Ntombela v Herridge Hire & Haul CC & another (1999) 20 ILJ 901 (LC)