Article 35/2023

What is the rationale for awarding compensation?

What are the types of factors to be taken into account to determine whether compensation should be awarded?

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In McGregor v Public Health and Social Development Sectoral Bargaining Council and Others (2021) 32 SALLR 33 (CC), the constitutional court, with reference to, inter alia, Rawlins v Kemp t/a Centralmed (2010) 31 ILJ 2325 (SCA), identified the rationale for compensation as follows:

  • it gives meaning to the right not to be unfairly dismissed and discourages a shotgun approach
  • it recognises the right to be heard before any action is taken by the employer
  • it recognises the employee’s worth as a person

In respect of the factors to be taken into account to determine whether compensation should be awarded, the constitutional court, in McGregor, provided the following non-exhaustive list:

  • the courts are more in favour of awarding compensation than not where the dismissal is both substantively and procedurally unfair than where the dismissal is only substantively or procedurally unfair
  • the nature and extent of deviation from procedural fairness requirements also plays a role – the lesser the deviation, the greater chance of no compensation, whereas the more serious the deviation the stronger the chance of compensation
  • the reason for dismissal also plays a role as well as the employee’s guilt or innocence and the appropriateness of the sanction
  • if the dismissal is only procedurally unfair, there is a discretion not to award compensation at all or to award the appropriate compensation

(Johnson & Johnson v CWIU (1999) 20 ILJ 89 (LAC))

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In the scenario where an employer has embarked upon an organisational restructuring exercise and, as part of such exercise, is attempting to adjust and streamline roles and positions that have the consequence that certain jobs are made
redundant, and the employer requires the employees who held such jobs to compete for new jobs in a new organigram, what are some of the important principles governing this scenario?

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