You can't have your cake and eat it: Coca-Cola vs Ndlovu & Others

Generally, a retrenchment dispute is adjudicated by the Labour Court, but if it involves a single employee it may be arbitrated by the CCMA.

The commissioner concluded that Ndlovu's retrenchment was both procedurally and substantively unfair and ordered Coca-Cola to reinstate him with full back-pay, which pay amounted to approximately R530,000 at the date of the award. In closing argument the company had raised the issue of severance pay, which had already been paid to the employee and which would fall to be refunded should the employee be reinstated. Despite this fact, the commissioner refrained from making any ruling regarding repayment of the severance package.

Ordered to repay the severance package

Coca-Cola brought a review application before the Labour Court, among other things, complaining (incredibly if one considers the simple principle of set-off, which it was entitled to apply) that the effect of the arbitration award was to allow Ndlovu to pocket the severance package and also be paid back-pay from the date of dismissal. The Labour Court (per Acting Judge Chetty) agreed with the commissioner's award that Ndlovu's retrenchment was substantively unfair and the relief of retrospective reinstatement. However, the court found that the commissioner committed a reviewable irregularity by not ordering Ndlovu to repay the severance package. To that extent, the arbitration award fell to be set aside and Ndlovu was ordered to repay the severance package. However, a bitter pill to swallow for Coca-Cola is that after the dust has settled regarding calculation of the amounts owed to each other (severance package vs back-pay) Coca-Cola must still pay to Ndlovu a substantial amount of money. This is as a result of accumulation of back-pay pending the finalisation of the review application at Labour Court.

The importance of this judgment is a clear message to employees who seek reinstatement after receiving severance pay - be prepared to repay the severance pay because you can't have your cake and eat it.

This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of tax law.