The Labour Appeal Court (LAC) has delivered an important judgment clarifying the principles governing compensation for unfair precautionary suspensions in the public sector. In Banda v General Public Service Sector Bargaining Council and Others (A2025/092122) [2026] ZALAC 17 (15 April 2026), the Court confirmed that an employee may be entitled to compensation for an unfair suspension even where the employee remained on full pay throughout the suspension period.
This decision is significant for both employers and employees involved in disciplinary proceedings under the Labour Relations Act 66 of 1995 (LRA), particularly in cases involving prolonged precautionary suspensions.
Background Facts
Ms Thembani Banda was employed by the Department of Planning, Monitoring and Evaluation as Chief of Staff in the office of the Minister in the Presidency from October 2021.
In February 2022, the Department placed her on precautionary suspension with full pay pending an investigation into allegations of serious misconduct, purportedly in terms of clause 2.7(2)(a) of the Senior Management Service (SMS) Handbook.
The SMS Handbook requires that a disciplinary hearing be held within 60 days of suspension. If this does not occur, the chairperson must determine whether a further postponement is justified.
However, the disciplinary chairperson incorrectly interpreted the 60-day period as referring to working days rather than calendar days. As a result, Ms Banda’s suspension remained in place for approximately eight months, despite the suspension having effectively lapsed after the expiry of the prescribed period.
The Unfair Labour Practice Dispute
Ms Banda referred an unfair labour practice dispute.
The arbitrator found that the prolonged suspension was unfair and ordered that the suspension be uplifted. However, the arbitrator refused to award compensation under section 194(4) of the LRA.
The reasons advanced for refusing compensation included:
- Ms Banda had remained on full salary during the suspension;
- The Department had relied on incorrect legal advice or interpretation; and
- There was no evidence of malice on the part of the employer.
Ms Banda subsequently launched review proceedings in the Labour Court, challenging the refusal to award compensation. The Labour Court dismissed the review application, holding that the arbitrator had properly exercised his discretion.
She then appealed to the Labour Appeal Court.
Key Legal Issue Before the Labour Appeal Court
The central issue before the LAC was whether the arbitrator had improperly exercised the discretion afforded under section 194(4) of the Labour Relations Act by refusing compensation despite finding that the suspension was unfair and punitive.
The Court considered established principles relating to judicial interference with discretionary decisions, including the approach set out in McGregor v Public Health and Social Development Sectoral Bargaining Council and Others.
Importantly, the Court reaffirmed that compensation for an unfair labour practice is not intended solely to compensate an employee for financial loss.
Compensation Is a Solatium for the Infringement of Rights
A key aspect of the judgment is the Court’s emphasis on the purpose of compensation in unfair labour practice disputes.
The Labour Appeal Court held that compensation under section 194(4) serves as a solatium — a form of redress for the infringement of a legal right — rather than merely compensation for patrimonial or financial loss.
The Court criticised the arbitrator for focusing narrowly on the fact that Ms Banda continued to receive her salary during suspension.
According to the Court, the arbitrator failed to consider substantial evidence regarding the prejudice suffered by Ms Banda, including:
- Psychological and emotional distress;
- Harm to her family life;
- Damage to her professional reputation; and
- Lost career advancement opportunities.
The Court held that these were highly relevant considerations when determining whether compensation was just and equitable.
Labour Appeal Court’s Findings
The LAC concluded that the arbitrator had misconceived the nature and purpose of compensation for unfair labour practices.
In particular, the arbitrator committed a material misdirection by:
- Treating compensation as dependent upon proof of financial loss;
- Overemphasising the absence of bad faith or malice;
- Ignoring the seriousness and duration of the unfair suspension; and
- Failing to properly consider the personal and professional prejudice suffered by the employee.
The Court therefore found that the arbitrator’s refusal to award compensation was unreasonable and reviewable.
The Labour Court was similarly criticised for failing to interfere with the flawed exercise of discretion.
The Final Order
Rather than remit the matter back to arbitration, the Labour Appeal Court substituted the arbitrator’s decision with its own order.
The Court awarded Ms Banda compensation equivalent to one month’s salary, calculated at her remuneration rate at the time of suspension.
The Department was also ordered to pay the costs of the appeal.
Why This Judgment Matters
The decision confirms that:
- A precautionary suspension may become unfair if it is unduly prolonged;
- Full payment during suspension does not automatically eliminate prejudice;
- Compensation under section 194(4) of the LRA is not limited to financial loss; and
- Psychological harm, reputational damage, and career prejudice are relevant considerations in determining just and equitable compensation.
The judgment also serves as a warning to employers that procedural errors in disciplinary processes — even where not malicious — may result in financial consequences.
Conclusion
The Labour Appeal Court’s decision in Banda v GPSSBC and Others reinforces the constitutional and statutory protections afforded to employees subjected to unfair disciplinary processes.
Employers must ensure strict compliance with disciplinary timelines and procedural safeguards, particularly in precautionary suspension matters. Failure to do so may expose employers to compensation claims even where employees remain fully remunerated.
For employees, the judgment confirms that unfair treatment in the workplace may justify compensation for the infringement of dignity, professional standing, and fair labour rights, irrespective of direct financial loss.
Article written by Craig Berkowitz
28 May 2026
Craig Berkowitz is a specialist labour lawyer and Acting Judge in the Labour Court of South Africa with extensive experience in CCMA arbitrations, disciplinary hearings and Labour Court litigation.
📞 083 453 1822
✉️ cblaw@netactive.co.za
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