Johannesburg, 22 Sep 2016
Prior to the 2014 amendments to the Employment Equity Act, 55 of 1998 ("the EEA"), the adjudication of unfair discrimination disputes was the exclusive domain of the judges of the Labour Court, says Deirdre Venter, Partner, Employment at Webber Wentzel.
The amendment to section 10 of the EEA gives commissioners of the Commission for Conciliation, Mediation and Arbitration ("the CCMA") the power to arbitrate an unfair discrimination dispute where the employee concerned earns less than the threshold as determined by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act, 75 of 1997 ("the BCEA"). The threshold at present is R205 433.30 ("the Threshold").
In terms of section 50(2) of the EEA the Labour Court is given wide powers to determine an appropriate order where unfair discrimination is proved. The order must be just and equitable and may include an order for payment of compensation or payment of damages or both. Unlike section 194(3) of the LRA which caps compensation in an automatically unfair dismissal to 24 months remuneration, there is no prescribed limit to the amount of compensation or damages the Labour Court may order the employer to pay in an unfair discrimination dispute adjudicated under the EEA.
When determining an appropriate remedy a commissioner is granted the same powers as the Labour Court, with one exception. A commissioner may grant an award of compensation or an award of damages or both, however, in terms of section 48(2) of the EEA, an award of damages granted by a commissioner may not exceed the Threshold. A commissioner's power to award compensation is subject only to the limitation that is must be just and equitable.
In SAA (Pty) Ltd v Van Vuuren and others (2014) 35 ILJ 2774 (LAC), the Labour Appeal Court ("the LAC"), considered the distinction between the two concepts of compensation and damages as forms of relief in terms of the EEA.
The LAC held that the term "damages" "connotes a monetary award for patrimonial loss" and the term "compensation connotes a monetary award for non-patrimonial loss (including a 'solatium')". According to the LAC the term "damages" is to be construed in the narrow sense and is an award to compensate an employee for actual or potential monetary loss the employee has or may suffer as a result of the unfair discrimination. Compensation, on the other hand, is to compensate the employee for his/her injured feelings.
The LAC held that the purpose of damages is to place the employee into the position he/she would have been in had the discrimination not taken place, whereas the purpose of compensation is "to assuage by means of monetary compensation, as far as money can do so, the insult, humiliation and indignity or hurt that was suffered by the claimant as a result of the unfair discrimination".
More recently in Arb Electrical Wholesalers (Pty) Ltd v Hibbert [2015] 11 BLLR 1081 (LAC), the LAC in considering the concept of "compensation" under both the LRA and EEA held that an award of compensation is not "aimed at making good the patrimonial loss" the employee has suffered. As such there is no need for an employee to prove any loss in order to be granted compensation. Compensation is a "monetary relief for the injured feelings and humiliation that the employee suffered at the hands of the employer". It is a "monetary offering or pacifier to satisfy the hurt feelings of the employee while at the same time penalising the employer."
According to the LAC determining an amount of compensation that is just and equitable involves the balancing of interests of the employer, employee and the community or society at large. Awards in previous similar cases should be used as a guideline by the courts and commissioners in arriving at a just, equitable and appropriate quantum. The quantum of compensation awarded should be one that society at large would consider fair in the circumstances and should be based on how society values money. In determining the quantum, the impact of the award on future cases is also of relevance.
The LAC in Van Vuuren noted that determining the quantum of compensation is "notoriously difficult", and the award should not be excessive. A conservative approach is preferred. In Arb Electrical the LAC described the determination of the amount of compensation to be awarded as "a difficult horse to ride".
In Van Vuuren the LAC warned that in determining the amount of compensation to be awarded, the preferable approach is to award an actual amount and not to award an amount based on a certain number of months' remuneration as this may result in high earning employees being awarded more compensation that the lower earners notwithstanding the fact that the lower earner's injury could be greater.
In contrast determining the quantum of damages to be awarded to the employee is relatively simple. The employee is only required to produce evidence to prove his patrimonial loss suffered as a result of the unfair discrimination. There is no balancing of interests and no consideration of the value of money or what society may regard as fair. The employee is entitled to be awarded the damages provided he proves the patrimonial loss.
If one considers the distinction between the two concepts of compensation and damages as enunciated by the LAC, one can only wonder why the law makers found it appropriate to cap the quantum of damages a commissioner can grant the employee and to leave an award of compensation at the discretion of the commissioner.
If regard is had to the principles that compensation is to provide relief for "hurt feelings", should not be excessive, that a conservative approach to determining the quantum should be adopted with the views of society at large and the value of money being relevant considerations, would it not have been more appropriate for the legislature to have capped the award of compensation instead of damages? In this way the legislature would have ensured that awards of compensation are not excessive, which is of particular importance as past awards of compensation in past discrimination disputes are to be used as guidelines in determining the quantum of an award of compensation.
An award of damages compensates an employee for actual monetary loss suffered as a result of the unfair discrimination. The monetary loss suffered by an employee could be loss of income and medical expenses such as doctor, psychologist and psychiatrist fees, cost of medication and hospitalisation. In cases of severe long term harassment, victimisation and workplace bullying, the monetary loss an employee may suffer and could prove could be well in excess of the Threshold. However, regardless of whether or not the employee can prove these losses, an employee's claim for damages is capped at R205 433.30.
Section 48(2) of the EEA caps an employee's claim for patrimonial loss to the Threshold regardless of whether the employee can prove patrimonial loss in excess of the Threshold. An award of compensation is not subject to any limitation. Could this have been the intention of the lawmakers?
The limitation of the quantum of an employee's damages claim and the lack of any limitation on the quantum of an award of compensation appears to go against the very principles applicable to these two concepts enunciated by the LAC.
If an employee is in a position to prove actual patrimonial loss in excess of R205 433.30 should he not be awarded the damages he has shown to have suffered. On the other hand, an award of compensation should not be excessive, should be conservative and should be what society at large considers fair. Would it not have been preferable to have limited the award of compensation?
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