The scenario is as follows: an employee is reinstated, not to the date of his dismissal but limiting the employee’s entitlement to remuneration to 24 months. The employee argues that he or she is entitled to interest on the back pay payable for the 24-month period in terms of s75 of the Basic Conditions of Employment Act 75 of 1997. Is the employee, according to Mashaba and Another v Telkom SA Soc Ltd (2020) 31 SALLR 147 (LAC); (2020) 41 ILJ 2437 (LAC), entitled to be paid interest on the back pay from the date of the judgment or, alternatively, entitled to also be paid interest in respect of the periods before the judgment?
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In the Mashaba judgment (supra), the labour appeal court adopted the following approach:
- the claim for retrospective reinstatement and back pay is a claim for an unliquidated amount
- same is only ascertainable once the arbitrator or labour court exercises its discretion with regard to the date of retrospective reinstatement (in terms of s193(1)(a) of the LRA
- s75 of the BCEA is not applicable, seeing that such statutory provision is applicable to mora interest on unpaid wages and salaries and the award of back pay is not equal to unpaid wages
- no mora exists before the judgment or arbitration award (calculated in terms of s2A(2)(d) of the Prescribed Rate of Interest Act 55 of 1997 – once judgment determines the amount of an unliquidated debt, the interest runs from the date of demand or summons, whichever is the earlier date, unless a discretion is exercised to run from another date)
- interest is calculated on a simple basis and not compounded (Land and Agricultural Development Bank of SA v Ryton Estates 2013 (6) SA 319 (SCA))
