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EMPLOYERS: DO YOU FACE A DOUBLE PENALTY IF YOU CONTRAVENE TWO ACTS?

Article © CA(SA)DotNews by DotNews

Retired Employee“Will you still need me…..when I’m sixty four?” (Beatles)

A recent Labour Appeal Court case highlighted the need, when planning to terminate an employee’s services, to ensure that the correct legal procedure is followed. More interestingly, it answered the question of whether, if the termination transgresses two Acts, the employer is separately liable for each transgression.

“When I’m Sixty Four” – a case of age discrimination

A senior employee who was a founding shareholder of a business left the business after twelve years and continued to render his services through a labour broker.

At the age of 56 he rejoined the business which set up a pension fund that the employee choose not to join due to his age. Retirement in terms of the pension fund was set at 60 but the company could elect to allow selected employees to continue working until they turned 65.

Subsequently, the employee’s performance proved unsatisfactory and management informed him that he would retire at the age of 64.

The employee resisted this and the matter ended up in the Labour Court and from there in the Labour Appeal Court.

As there was no evidence that the employee had agreed to this early retirement, the Court found in his favour that he had been dismissed simply because he attained the age of 64. That meant, held the Court, that he had been both automatically dismissed unfairly in terms of the Labour Relations Act and unfairly discriminated against on the basis of his age in terms of the Employment Equity Act. Critically however, both breaches arose from only one wrongful action.

Could the judgment have been different?

Undoubtedly it could have been. The employer was deferential in its treatment of the employee because he was a founder of the organisation and was one of its senior employees. Thus, the performance issues were skirted around and the employer attempted to save face all round by getting the employee to retire. Had the employer correctly followed the law in terms of taking corrective action to address the employee’s poor performance, it is very possible the issue could have been settled without the unpleasantness and court cases that followed.

Did the company have to pay twice?

No. The Court found that there is nothing unusual in an employee claiming compensation under two separate Acts and that the employee was entitled to compensation for the attack on his dignity under both Acts. However it would be unfair to penalise the employer twice for the same wrongful act and accordingly a court will not award compensation separately under each Act. In the end result the Labour Appeal Court confirmed a “just and equitable” total compensation award of R420,000 (12 months earnings).

It is always worthwhile seeking expert advice when cases like this occur. Good advice early on would have saved both parties costs and time.

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