Understanding damages in lieu of reinstatement

WHEN an employer unfairly dismisses an employee from employment and that dismissal is found to be unlawful, the tribunal making that finding will order that the employee be reinstated to his or her employment without loss of benefits.

Reinstatement is a remedy which places an unfairly dismissed employee into a position he or she would have been had the unfair dismissal not been committed.

With reinstatement, the employment relationship is deemed not to have been interrupted.

The order of reinstatement normally takes effect from the date the order of reinstatement is made. An order for reinstatement is usually accompanied by an order of back pay. The reason for back pay is to compensate the employee for the period he or she would have been if there had been no wrongful dismissal.

The order for back pay will be from the date of dismissal, or suspension, to date of reinstatement.

The order of reinstatement normally gives an option that the employee should pay damages in lieu of reinstatement, if reinstatement is no longer tenable for any reason. If the employer and employee agree on the damages, then the employer pays the damages and the relationship is severed.

If they do not agree on the quantum of the damages, they return to the tribunal that ordered reinstatement for quantification of the damages.

When parties appear before it, the employee must lead evidence on the damages he or she seeks. The court is not empowered to award damages in the absence of any evidence in support of such award.

In Redstar Wholesalers v Edmore Mabika SC 52/05 ZIYAMBI JA, said: “The court is not entitled to pluck a figure out of a hat because it is of the view that this figure ‘meets the justice of the case’.”

The court should hear evidence as to how long it would reasonably take a person in the position of the dismissed employee to find alternative employment.

Where the parties lead insufficient evidence to enable the court to arrive at an informed conclusion, the court should exercise its powers in terms of Section 89 (2) of the Labour Act by calling evidence in order to resolve the issue.

Back pay and damages are not exactly the same thing. Back pay forms part of damages payable in lieu of reinstatement.

The concept of back pay was defined in Leopard Rock Hotel Company (Pvt) Ltd v Van Beek 2000(1) 251 (SC) as follows: “Back pay is thus a concept associated with reinstatement. If an employee is reinstated, she will normally be awarded back pay. If she succeeds in proving wrongful dismissal, but is not reinstated, she will be entitled to “damages”, a major element of which will be back pay. Perhaps, more correctly, one should say the damages will be assessed by reference to the back pay lost. But here the back pay will be limited to a period from the date of wrongful dismissal to a date by which she could, with reasonable diligence, have obtained alternative employment.”

In calculating damages, various factors are considered. An employee must mitigate his or her loss by finding or accepting an alternative employment as soon as he or she is dismissed. If he or she simply sits around and do nothing, the damages will be limited to the period which he or she is reasonably expected to have found alternative employment. Even if the remuneration in the alternative employment is less than the salary at the former employer’s employment, the amount earned will reduce the damages.

The concept is explained in Ambali v Bata Shoe Co Ltd 1999 (1) ZLR 417 (S) as follows: “I think it is important that this court should make it clear, once and for all, that an employee who considers, whether rightly or wrongly, that he has been unjustly dismissed, is not entitled to sit around and do nothing. He must look for alternative employment. If he does not, his damages will be reduced. He will be compensated only for the period between his wrongful dismissal and the date when he could reasonably have expected to find alternative employment. The figure may be adjusted upwards or downwards. If he could in the meanwhile have taken temporary or intermittent work, his compensation will be reduced. If the alternative work he finds is less well-paid his compensation will be increased.”

The employee, as the claimant must adduce evidence in support of the claim for damages.

In First Mutual Life v Muzivi 2007 (1) ZLR 32, the Supreme Court made it clear that the onus is on the employee to prove each and every claim made.

The claim made ought to be in any event based on net income; not on the gross salary.