Food & Allied Workers Union v L Ngcobo N O (M Ndlela) and M Mkhize

Ndlela and Mkhize were long-serving employees of Nestlé South Africa (Pty) Ltd (Ndlela from 1981, Mkhize from 1982) who were dismissed in May 2002 as part of a restructuring exercise. Although not initially members of FAWU, they joined the union after learning of the proposed retrenchments. They approached FAWU for assistance, and FAWU undertook to represent them before the Commission for Conciliation, Mediation and Arbitration (CCMA) and, if necessary, the Labour Court. A conciliation hearing took place on 18 June 2002 and a certificate of non-resolution was issued. FAWU failed to refer the dispute to the Labour Court within the prescribed 90-day period or thereafter. FAWU also failed to inform the respondents of this failure or to apply for condonation. Eventually, in June 2004, FAWU informed the respondents it would not proceed with their claims. The respondents then instituted actions for damages in the High Court for breach of the mandate. The KwaZulu-Natal High Court (Swain J) found in their favour, awarding each respondent damages of R107,232 plus interest. FAWU appealed.

• Whether a trade union accepting a mandate to represent employees in unfair dismissal proceedings before the CCMA and Labour Court owes a contractual duty to the employees
• Whether a trade union is liable in damages for breach of that mandate by failing to timeously refer a dispute to the Labour Court
• Whether the employees' failure to themselves apply for condonation for late filing bars a claim for damages against the union
• What the proper measure of damages is in such circumstances
• Whether compensation awarded under section 194 of the LRA should be calculated under the pre-amended or amended version of the section
• The distinction between compensation for unfair dismissal and damages for breach of contract

The appeal was dismissed with costs. The cross-appeal by the respondents (seeking double the compensation awarded) was also dismissed but with no order as to costs in respect of the cross-appeal. The award of the High Court in favour of each respondent of R107,232 plus interest at 15.5% per annum from 28 August 2004 to date of payment was confirmed.

A trade union that accepts a mandate to represent employees in unfair dismissal proceedings before the CCMA and Labour Court is bound to perform that mandate faithfully, honestly and with care and diligence, regardless of whether it receives remuneration. Where the union breaches that mandate by failing to timeously refer a dispute to the Labour Court and then repudiates the mandate, the affected employees are entitled to claim damages without themselves having to apply for condonation for late filing. The principle that no person can take advantage of their own wrong (nullus commodum capere potest de injuria sua propria) excuses the employees from taking steps that would have been the union's responsibility under the mandate. The measure of damages is the compensation that would have been awarded by the Labour Court had the dispute been properly referred. In determining that compensation under section 194 of the LRA (as amended), the court must consider what is just and equitable in all circumstances, taking into account factors such as the extent of procedural deviation, length of service, age, prospects of alternative employment, and severance packages received, though the latter do not necessarily preclude compensation as it is in the nature of a solatium.

The majority noted that even if one were to approach the matter on the basis of the pre-amended section 194 of the LRA (which created an 'all or nothing' regime for procedural unfairness), the weight of relevant factors would still favour compensation at 12 months' salary. The court also observed that compensation under the LRA is distinct from damages and comprises recompense for both patrimonial and non-patrimonial (sentimental) loss, including a solatium for injury to feelings caused by the manner of dismissal. The court commented on the 'dismal state of affairs' created by the pre-amended section 194(2), which the 2002 amendments sought to address. The dissenting judgment of Southwood AJA contains extensive obiter on the test for condonation and the factors to be considered, expressing the view (contrary to the trial judge) that an application for condonation would probably have succeeded given the merits of the case and the importance of the matter to the respondents, despite the long delay and inadequate explanation.

This case establishes important principles regarding the liability of trade unions for breach of mandate when they undertake to represent employees in labour disputes. It confirms that: (1) a trade union that accepts a mandate to represent employees owes them a contractual duty to perform that mandate with care and diligence, regardless of whether remuneration is received; (2) a union cannot escape liability by asserting that the employee was not entitled to assistance under its constitution once it has in fact undertaken the mandate; (3) where a union breaches its mandate by repudiating it, the affected employees are not required to themselves take steps (such as applying for condonation) that would otherwise have been the union's responsibility - the union cannot take advantage of its own wrong; (4) the measure of damages for breach of such a mandate is the compensation that would have been awarded in the Labour Court; and (5) the amended section 194 of the LRA (allowing discretion to award just and equitable compensation up to 12 months' salary) applies to pending disputes. The case also illustrates the application of general contract law principles (election, repudiation, causation) in the labour law context.