In the recent case of Myathaza v Johannesburg Metropolitan Bus Services (SOC) LTD t/a Metrobus [CCT 232/15] the Constitutional Court handed down a watershed judgment in relation to the prescription of arbitration awards in employment disputes. The Court held that the Prescription Act, the legislation which prescribes a general 3-year time period after which most civil debts are considered extinguished if enforcement proceedings have not been initiated, does not apply to arbitration awards handed down by arbitral forums in the employment law context.
The case involved an employee who had an arbitration award granted in his favour in September 2009, awarding him reinstatement to his previous position. His employer, Metrobus, an organ of state, had frustrated this reinstatement by instituting review proceedings in respect of the arbitration award, which proceedings had not been timeously concluded; in the meantime, applying the general 3-year Prescription Act period to the arbitration award, Metrobus successfully argued in the lower courts that the award had prescribed and was no longer enforceable by the employee.
The Constitutional Court, overruling a number of previous decisions of the Labour Court and Labour Appeal Court including in the matter to date, held that this interpretation was incorrect and that the Prescription Act was not applicable to the arbitration award.
The effect of this judgment is that employers who have adverse awards against them cannot avoid complying with the awards by relying on the general 3-year prescription period. More significantly, there are a substantial number of employers who have previously succeeded, either in the Labour Courts or the Labour Appeal Court, by relying on the prescription of arbitration awards. These employers may find former employees and trade unions applying to have the old arbitration awards made orders of court, or for the rescission of judgments in which the awards were held to have prescribed. In such proceedings, former employees and trade unions may argue that the judgments were erroneously given. Employers would be well-advised to seek appropriate advice as soon as possible, and before employees and trade unions take any steps following this judgment.