Final ruling: Costs do not follow the result in labour matters

12 October 2021,  Tata Mokwayi 316

Litigants, particularly employees and/or employers, often fear approaching institutions such as the Commission for Conciliation, Mediation and Arbitration (“CCMA”); the Labour Court or the Labour Appeal Court when aggrieved with an unfavourable outcome due to the likelihood of automatically having a cost order against them. 

The fear is often based on an established rule in litigation that costs follow the result. However, this rule does not apply in labour matters as labour disputes favour an approach based on “law and fairness”. The Constitutional Court has, once again, issued a judgment to clarify that costs do not follow the result in labour matters. 

The rule that costs do not follow the result in labour matters honours key imperatives that flow directly from the Constitution and the Labour Relations Act 66 of 1995 (“the LRA”). 

The Court explained that two constitutional provisions are particularly relevant when it comes to the question about costs, which are: section 23 of the Constitution which entrenches various labour rights, including the right to fair labour practices and section 34 of the Constitution which enshrines the right to have one’s dispute resolved by the application of law in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum. 

The judgment provided that it is clear from a holistic reading of the LRA that the dispute resolution mechanisms that it creates such as the CCMA; Labour Court and Labour Appeal Court were meant to be a “one stop shop” for the resolution of labour disputes.These mechanisms were intended to be simple and accessible, so that those to whom the labour rights enshrined in our Constitution are conferred can vindicate those rights speedily and cost-effectively.  This laudable statutory goal would be eroded when the bearers of labour rights are faced with the threat of adverse costs orders if their claims are, for whatever reason, unsuccessful. 

The rule against automatic costs orders is an integral part of the scheme of the LRA in that it ensures access to labour dispute resolution institutions and no doubt enlarges the width by which the doors of those institutions are kept open.

The court reiterated that it is imperative for our constitutional democracy that the doors of labour dispute resolution institutions be kept wide open for litigants to air their grievances, so that unlawful industrial action, and all its potential consequences, is generally avoided. 

It is important to note that the court made it abundantly clear that the implication of the judgment does not mean that costs orders can never be ordered against a party involved in a labour matter. However, when making costs orders in labour matters, courts are enjoined to apply the fairness standard in the LRA as a matter of constitutional and statutory obligation. 

The judicial exercise of a court’s discretion to award costs requires, at the very least, that the court must do two things.  First, it must give reasons for doing so and must account for its departure from the ordinary rule that costs should not be ordered.   Second, it must apply its mind to the dictates of the fairness standard in section 162 of the LRA, and the constitutional and statutory imperatives that underpin it.  Where a court fails to do so, it commits an error of law and thus misdirects itself.  

Related Expertise: Labour and Employment

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