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Cape Town - Former Bafana Bafana coach Shakes Mashaba's R4.1m compensation request was denied by the South Africa Football Association (SAFA).
According to the SowetanLIVE website, the 66-year-old is demanding that the football governing body covers seven months remuneration.
However, SAFA is only willing to cough up one month's salary, with the amount said to be around R580 000.
The alternative demand was that Mashaba be reinstated as South Africa head coach but SAFA is looking to appoint a new mentor.
Mashaba's case will now go through arbitration after both parties could not agree on a deal, said commissioner Hlalele Molotsi of the Commission for Conciliation, Mediation and Arbitration (CCMA).
Bafana Bafana have been without a coach since the footballing body axed Mashaba in December last year.
Mashaba was found guilty of insulting top football officials after South Africa's 2018 Soccer World Cup qualifier victory over Senegal.
The announcement of Mashaba's replacement is only expected to be made after SAFA president Danny Jordaan returns from supporting the SA Under-20 side in Zambia.
