Must costs follow the result in Labour Court disputes?

“I’m unemployed because my fixed-term contract was not renewed by my employer. I referred a dispute to the CCMA but was unsuccessful there. My attorney does feel there is merits in taking the matter on review to the Labour Court, but has warned me that it may be expensive and there is no guarantee that even if I win my case, that my legal costs will be paid by the employer. Is this really correct? I always thought that the unsuccessful party must pay the successful party’s costs?”

To clarify the rule of practice that ‘cost orders follow the result’, or plainly put, that the unsuccessful party must pay the costs of litigation, our Constitutional Court recently reviewed this rule of practice in the context of labour matters heard in the Labour Court and Labour Appeal Court.

The Constitutional Court found that this rule of practice does not automatically govern the making of orders of costs in the Labour Court or Labour Appeal Court as the relevant statutory provision outlined in the Labour Relations Act 66 of 1995 requires that orders of costs in the Labour Courts are to be made in accordance with the requirements of the law and fairness.

This means that our Labour Courts, when considering the making of a cost order, must seek to strike a fair balance between on the one hand, not unduly discouraging workers, employers, trade unions and employers’ organisations from approaching the Labour Courts and on the other hand, limiting parties to bring frivolous cases to the Labour Courts that should not be heard. This means that our Labour Courts have a discretion, whereby they must take considerations, such as amongst others, law and fairness, into account when considering whether a cost order should be awarded or not, and not simply let the costs follow the result. 

It accordingly does open the door for the possibility that even if successful, a party may not be able to recover its costs from the other party. Our recommendation is to discuss the risk of this with your attorney before deciding to proceed with a review application to the Labour Court.

February 7, 2018

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