CCMA Default Awards

Posted on Wednesday, 17 January 2007
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The mystery of the disappearing fax

Established in 1996, the CCMA was born out of the labour relations act to serve as the first port of call for disgruntled and unfairly treated employees. In its first 12-months of operation, the commission handled just over 12 000 cases, which is equivalent to approximately 50 cases per day. According to the 2005 figures, the CCMA now handles over 500 cases each day -- that’s more than one case every minute.

According to Mitch Marescia, managing director of Camargue, a specialist underwriting insurance firm with approved coverholder status at Lloyd’s of London, when employers appear at the CCMA offices to exonerate themselves, current estimates show that almost 50% of cases are unsuccessfully defended.

“Employers can of course mitigate the risk of losing a case at the CCMA through the use of labour professionals and an attempt to manage discipline consistently and fairly in the organisation,” adds Marescia.

Unfortunately, the management of a company faces an increasing risk of having an award made against the organisation, based purely on the fact that they failed to attend the CCMA hearings. An occurrence that is more common than not.
 
In terms of CCMA standard rulings, two things need to happen at the start of the dispute resolution process:
a)    The employee must serve a 7.11 document on the company (detailing the nature of the dispute) and must provide proof to the CCMA that the document has been served. This interaction normally occurs via fax.
b)    The CCMA must issue a notice of set-down to the company. This advises the organisation of the venue and time of the dispute resolution hearing. This interaction also takes place via fax generally (although a mailed version also arrives periodically).

Marescia says: “Regrettably for the defendant, neither fax nor mail are totally reliable methods of communication and in many instances the documentation is either sent to the incorrect fax number or is intercepted by other employees acting in collaboration with the applicant.”

Marescia goes on to caution that failure to attend these proceedings can result in default awards which can be as severe as 24-months salary payable to the employee.
“Of course a default judgment can always be rescinded at the CCMA but this process can involve legal practitioners fees and may take anywhere from two- to eight-weeks to resolve. That said, it is however becoming increasingly difficult to have default awards rescinded with commissioners taking a much firmer position when employers do not arrive for arbitration proceedings.”

Larger companies with extensive branch networks are particularly susceptible to such problems but it has been noted that an increasing number of smaller enterprises with uncomplicated branch structures also have to go through the rescission process. Very often the smaller organisations do not have the resources to continue with rescission applications, and in many cases simply pay the default award to avoid the hassle factor.

“It is estimated that over 10% of the total cases referred to the CCMA result in a default award being made against the employer. One cannot help but notice the irony in the fact that the CCMA now hears 12 000 rescission applications each year, almost the equivalent of the total caseload countrywide in 1996,” says Marescia.

According to Marescia, many employers consider the situation as hopeless – a real “catch 22” scenario where an award seems inevitable; either by way of an unjust decision being made by a commissioner or an award made in absentia. “And this when no knowledge of the dispute even existed.”

Fortunately there are organisations able to manage this exposure for employers through the combined use of employment practices liability insurance and technology. When partnering with Camargue, the cost of rescission applications and default awards can be covered by the insurance, while the receipt of critical CCMA documents – via fax or mail – can be managed by linking to the CCMA systems through its technology partners.

For further information e-mail camargue@camargueum.co.za, call 011 356 4842 or visit www.camargueum.co.za.