STAY OF EXECUTION IN TERMS OF SECTION 145(8) OF THE LRA

Clarification regarding the statutory requirements around the provision of security when brining an application for review the review of an arbitration award, as provided for in terms of section 145 of the Labour Relations Act, Act 66 of 1995 (the LRA).

The relevant provisions of section 145 of the LRA read as follows:

‘(1) Any party to a dispute who alleges a defect in any arbitration proceedings under the auspices of the Commission may apply to the Labour Court for an order setting aside the arbitration award.

(3) The Labour Court may stay the enforcement of the award pending its decision.

(7) The institution of review proceedings does not suspend the operation of an arbitration award unless the applicant furnishes security to the satisfaction of the court in accordance with sub section (8).

(8) Unless the Labour Court directs otherwise, the security furnished as contemplated in subsection (7) must –

(a) in the case of an order of reinstatement or re-employment, be equivalent to 24 months’ remuneration; or

(b) in the case of an order of compensation, be equivalent to the amount of compensation awarded.’

In Rustenburg Local Municipality v South African Local Government Bargaining Council & others [217] 11 BLLR 1161 (LC) at para 12, the Labour Court (LC) provided the following explanation as to why it is important to set security and what the effect of doing so would be:

‘From the outset, an arbitration award issued under the dispute resolution process under the LRA is final and binding. It is now trite that the filing of a review application to challenge such an award, does not suspend the operation of the arbitration award. The arbitration award remains executable, despite the pending review. It is in this context that the enforcement provisions of section 143 of the LRA have been adopted. It enables the beneficiary under the arbitration award to nonetheless, and despite the award being the subject of challenge, still execute and enforce compliance with it. The above being the default position, the duty is then squarely upon the applicant for review to seek relief, in terms of what is specifically provided for in section 145, to stay the execution of the arbitration award pending the conclusion of the applicant’s review application. In other words, the applicant must go out and secure the stay or suspension of the award, failing which the arbitration award will always remain executable and enforceable. The design of section 145 of the LRA is specific. It provides that a stay or suspension of the execution or enforcement can either be in effect purchased by way of security, or obtained by leave of court.’

There thus exists no general requirement when brining an application for the review of an arbitration award to set security. In fact, often opposing parties agree to halt the execution of the arbitration award pending the finalisation of the review application.

Where no such agreement is however reached, the applicant for review remains at risk for the full duration of the pending review application, of the successful party in the arbitration proceedings executing the arbitration award.

Where a monetary amount is awarded in terms of the arbitration award, such execution will be affected by means of a writ of execution against the moveable property of the applicant for review.

Further and where the arbitration award orders the reinstatement of an employee, and the applicant for review has failed to obtain the stay of execution, the arbitration award will be enforced through contempt proceedings brought against the applicant for review.

There is thus substantial risk in failing to obtain the stay of an arbitration award whilst review proceedings are pending.

That said, and despite the general acceptance that the mere provision of a security bond for either the amount in compensation awarded in terms of the arbitration award or a security bond equal to the amount of the remuneration which the employee would have earned during a period of twenty-four (24) months, the LC in Moqhaka Local Municipality v Motloung & others (2017) 38 ILJ 649 (LC) at paras 25 and 26, came to a very different conclusion and held that:

‘On a plain reading of the phrase “...unless the applicant furnishes security to the satisfaction of the Court” in s 145(7), the reference to “the Court” is obviously a reference to the “Labour Court” in section 145 (8) which is entrusted with deciding whether or not the amount of security stipulated in sections 145(8)(a) and (b) needs to be provided. Moreover, the form which the security provided under either of those subsections must take is not prescribed by the LRA. Although the furnishing of a bond of security may be the typical and most convenient form of security, other forms of security might also be considered satisfactory, such as depositing funds with the sheriff. Consideration of whether the requirement has been met may entail an evaluation of the form of security provided and in the absence of the registrar being specifically empowered to determine if the requirements have been met, does not seem to fall within the performance of the “administrative functions” of the Labour Court, which is the role ascribed to officials of the Labour Court in terms of s155 (2)(a) of the LRA. In conclusion, I the registrar or deputy registrar does not have the power to decide if security in terms of section 145 (8) of the LRA, to the satisfaction of the court has been provided.’

Whilst not directly addressing the aforementioned conclusion, the Court in Booi v Wesley Pretorius & Associates (Booi) [2021] ZAECELLC 19 at para 24, inferred that where the requirements of section 145(8) of the LRA are prima facie met, a party would not be entitled to proceed with further execution of the arbitration award, even where a court has not yet pronounced upon the adequacy of the security provided. Effectively the Court placed a reverse onus on the party seeking to execute the arbitration award, to demonstrate that the security set would not meet the satisfaction of the Court. As such the Court concluded that:

‘… once the security bond furnished by an applicant for review is to the satisfaction of the court as section 145(8) of the LRA requires, the suspension of the enforcement of the award follows, and its execution is not competent while the review is pending. In casu, the Plaintiff conceded, correctly I believe, that it is not his pleaded case that the security provided was defective or not to the satisfaction of the Labour Court. It cannot then avail him to contend that he was prevented by the security from enforcing the award. By the operation of section 145(7) of the LRA, the Plaintiff could not have been in a position to enforce the award while the review application was pending.’

It is submitted that such an interpretation gives effect to the intention of the Legislature and should thus be preferred.

It should further be noted that a party may also approach the Labour Court for an order in to stay the further execution of the award. As such the Labour Appeal Court (LAC) in City of Johannesburg v SA Municipal Workers Union on behalf of Monareng & another (Monareng) (2019) 40 ILJ 1753 (LAC) at para 20, dealt with two different situations where the Labour Court may be approached to prevent further execution on the arbitration award and the LAC further indirectly albeit obiter (and some years earlier) expressed support for the views as expressed in Booi. As such the LAC held that:

'The Labour Court has a discretionary power under section 145(3) of the LRA to stay the enforcement of an arbitration award pending its decision in the review application. It may stay the enforcement of an arbitration award pending finalisation of a review application against the award with or without conditions. It may in terms of section 145(8) of the LRA dispense with the requirement of furnishing security. Properly construed, section 145(3) read with section 145(7) and (8) should be interpreted to mean that where an applicant in a review application furnishes security to the Labour Court in accordance with section 145(8) of the LRA, the operation of the arbitration award is automatically suspended pending its decision in the review application. In other words, the employer need not make an application in terms of section 145(3) of the LRA to stay the enforcement of the arbitration award pending the finalisation of the review application. [8] However, should the employer wish to be absolved from providing security or to provide security in an amount less than the threshold in subsections (8) (a) and (b), then it is required to make an application to the Labour Court, in terms of section 145(3), for the stay of the enforcement of the arbitration award pending its decision in the review application. The employer must make out a proper case for the stay as well as for the provision of security in accordance with section 145(8) to be dispensed with or reduced… The onus is on the employer seeking an exemption from furnishing security under section 145(8) of the LRA to establish that it has assets of a sufficient value to meet its obligations should the arbitration award be upheld by the Labour Court on review. On a purposive or contextual construction, sections 145(7) and (8) of the LRA must be construed as requiring all employers – whether in the public or private sectors – to provide security. I accordingly support the position adopted in Rustenburg Local Municipality that all employers whether in the public or private sector should be subject to the same requirement of providing security.’

The LC in Emalahleni Local Municipality v Phooko N.O & others [2021] ZALCJHB 61 at paras 14 to 25, explained the difference between the two options available to a litigant, seeking the stay of further execution, in the following manner:

‘A proper reading of the judgment (City of Johannesburg v SAMWU obo Monareng and Another) suggests that there are two distinct applications that a party may bring. Those are, for a stay or for being absolved from furnishing security… For very obvious reasons, there is no requirement to furnish security or to be absolved before a stay may be granted. The [Monareng] judgment accepts and appreciates an existence of an underlying dispute, which in my view is a review application. However, of importance is its existence and not the merits or demerits of the underlying dispute before a stay may be granted. Having traversed the authorities, I take a view that once a party satisfies the requirements spelled out above a stay must happen irrespective of whether a party has symbiotically sought to be absolved from the furnishing of security… Where a party is unable to furnish security, in my view, the only way to prevent an imminent irreparable harm is to obtain a stay, which is an equivalent of an interim interdict. In the event I am wrong in my conclusions that a section 145 (3) application is not separate and distinct from a requirement to furnish security, I am satisfied that the applicant has made a case for being absolved from furnishing security. City of Johannesburg tells us that the onus lies with an applicant who must show that it has assets of a sufficient value to meet its obligations should the arbitration award be upheld by the Labour Court on review. The LAC did not consider prejudice to an employer as being decisive. It considers it to be one factor but it is not decisive. It does seem that the LAC considers the sufficiency of assets as a crucial consideration. ..’

It should however be remembered that an application to stay the execution of an arbitration award is an application for final relief and as such a litigant would be required to demonstrate that there was no alternative remedy available to the said litigant.

As section 145(8) of the LRA provides an effective alternative, the LC will not in the normal course grant the mere stay of the execution of an arbitration award. This effectively means that the LC will in general, and in almost all instances, solely grant the stay of further execution where it is of the view that the applicant can or should, for some reason, not pay the security as provided for in terms of section 145(8) of the LRA.

It is submitted that in general and where an applicant for review cannot demonstrate an inability to affect payment of the security bond provided for in terms of section 145(8) of the LRA, the Labour Court will not stay the further execution of the arbitration award.