Where an employee has been unfairly dismissed, the court may order that the employer reinstate the employee retrospectively with back pay. The rationale behind such an order is to place the employee in the position he or she would have been in save for the dismissal.
The question then is whether the back pay is inclusive of any other employee benefits, financial or otherwise, provided for in the employment contract or company policy.
In the case of E Ndlovu v Coca-Cola SA (Pty) Ltd the Labour Court had found that the employee was unfairly dismissed and ordered the employer to reinstate the employee and pay ‘arrear salary’ between the date of dismissal and the date of reinstatement. The employer paid the employee but he contended that the arrear salary fell short of amounts to which he was entitled namely annual increases and incentive bonuses. The employer contended that it had complied with the court order by paying the employee the arrear salary calculated on the salary the employee was earning at the time of the dismissal.
The matter was taken to private arbitration where the arbitrator had to determine whether the phrase ‘arrear salary’ meant an amount calculated on the salary the employee was earning at the time of dismissal, as contended by the employer, or whether it incorporated annual increases and incentive bonuses as claimed by the employee.
The employer also argued that annual salary increases and incentive bonuses were discretionary in nature and that to allow the employee these benefits as entitlements would create a new contract.
The arbitrator held that upon reinstatement, the employment contract continues as if it had never been interrupted. This meant that unless a reinstatement award is qualified, a reinstated employee is entitled to remuneration and benefits he or she would have received had the employee been available to work during the period between the unfair dismissal and the reinstatement, which is a continuation of the original contract. The forced absence of the employee is not an automatic exclusion from any benefits to which an employee is entitled in terms of the employment contract or company policy.
Finally, the arbitrator also considered whether he could find, without evidence, that the employee would have been entitled to the annual salary increases and incentive bonuses. The employer had not questioned the employee’s performance or conduct prior to his dismissal and the arbitrator ruled that the employer could not simply plead that it was unable to assess the employee because there was no performance from the employee to assess.