Topic 2

The Contract of Employment and Basic Conditions Employment Act

Meaning of “EMPLOYEE”

The first question that needs to be determined is covered by legislation, the applicability labour
legislation? The reason is that you can qualify for labour legislation if you are an
employee, for instance if you are an independent contractor you are not an employee and
you cannot for instance claim unfair dismissal. If you are an independent contractor and you
feel that your contract was terminated unfairly, this would amount to a normal civil breach of
contract claim. The main reason it is important to distinguish between and employee or an
independent contractor is that there are different legal consequences that flows form that.

1) Traditional definition: Contract of Employment

“Contract between two persons, the master (employer) and the servant (employee), for the
letting and hiring of the latter’s services for reward, the master being able to supervise and
control the servant’s work...”

The definition is insufficient for many reasons, one being that we do not work with master and
servant anymore. When looking at it from a more legal perspective it talks about supervision
and control but how much supervision and control, if this servant worked for the master 7 days
a week but the master was only present at the workplace for 1 out of the 7 days, does this
qualify as supervision, in order for it to fall within the definition?

Furthermore independent contractors can also be controlled to an extent, for example, I obtain
a contractor to do my gardening at my house although hat person will not be an employee, he
would be an independent contractor, we can still say that they must only come on Monday
between 8-9, I want you to do this and I want you to do that, so we can see that there is a
certain amount of control, although he does not qualify as an employee.

Finally the definition talks about a nature of reward for the service provided, what is a reward?
Is it money, food or housing it is not defined

Previously our Industrial Courts forerunner to the labour courts started developing this
definition cos of the problems with it, it introduced this whole concept of looking at the
substance of the relationship over the form. Substance over form, for example, if I have a
contract with my domestic worker who is my employee but I do not want to be bound by labour
legislation, so I insert in the contract that she is an independent contractor. So the form of the
contract would be that of an independent contractor, but if you look at the practical
relationship, the substance of our relationship, she is nothing other than my employee.
Should a matter be taken to court between us, the court will look at what is our relationship as
opposed to what was said in the contract, soothe courts will look at the practical relationship
or situation as the substance and that is what the courts began to develop and implement.

2) Definition of an Employee: LRA and BCEA

When we look at the LRA that was introduced in 1995, it provided us with a definition for an
employee, bear in mind that the definition on the Basic Conditions of Employment Act is the
same as in the LRA. The definition in the Employment Equity Act although not word for word
the same, basically it says the same.

“Employee” means—

a) Any person, excluding an independent contractor, who works for another person
or for the State and who receives, or is entitled to receive, any remuneration;
b) Any other person who in any manner assists in carrying on or conducting the
business of an employer...”

This statutory definition still insufficient, if we look at the problems we had with the old definition
we have the same problems here still. First of all it says any person, excluding an independent
contractor, but nowhere in the act is an independent contractor defined. So they use this
concept without defining it anywhere, so what is the difference then between an employee and
an independent contractor.

The Act then goes on to talk about entitled to receive remuneration, well then again what would
remuneration be would it be in the form of money, it is how the courts have interpreted it, but
it is not stipulated in the definition. If you are an independent contractor you also receive
remuneration for your services, paid as independent contractor, but it does not make you an
employee

Assists in conducting with the business of an employer, yes employees do that, but again what
about independent contractors, they also assist in the conducting of the business, so this
definition lacks as it does not lead us to an answer as to whether one is an employer or an
independent contractor.

SABC v McKenzie it discusses locatio conductio operarum and locatio conductio operis
and deals with the difference between employee and independent contractor. You need to
understand the court reasoning what the court took into account to come to the conclusion
and ultimately what was the conclusion.

Employee vs. Independent Contractor

The definition on the LRA which is insufficient, the court then went on to develop judicial tests.
The judicial tests are not something that you will find anywhere written, it is found in case law
where the courts determine whether a person is an employee or independent contractor.
There are three judicial tests, control test, organisation test and multiple or dominant
impression test. It is important to note that these tests where later to an extent codified in the
LRA, found in s200A of the LRA and s83A BCEA. These two sections are similar in wording
and IMPORTANT.

3) Judicial Tests
Control Test

When looking at the definition in the LRA as to who an employee is, the court says yes that it
is not sufficient, so they used what they call the control test. With this test the judges
considered the extent of how much control the alleged employer has over the individual who
is claiming to be an employee.

The test was the greater the degree of supervision or control the stronger the probability
of contract of service or an employee, if the individual had a lessor degree or no degree
of supervision or control the probability that the individual was an independent
contractor.

This test was initially strictly applied as the court only considered the issue of control, but
this became problematic and not always sufficient in the modern workplace, due to 2 reasons
basically.

First of all with highly skilled or senior employees there is no one that controls them in terms
of how they should do their work as they are given the freedom to perform their work. For
example, if you are the senior legal consultant for a company you run the legal part of that
company, there is no one that is going to check up on you, whether you interpret legislation
properly or not, so there is very little or any control over senior employees.

The second problem is with industrialisation the world stepped away from the concept that
everyone works in factories, today we have many people out on the road we have door to door
sales people, estate agents, although the qualify as employees there is not a lot of control
over them as they are not in the office most of the time.

Therefore the control test became de facto as control was not always present or practical and
became insufficient as far as modern business is concerned. The test is no longer applied as
a standalone test and cannot define a contract with regards to one characteristic

Organisation Test

Due to the problems created with the control test the courts introduced the organisations test,
although initially welcomed turned out to be just as problematic as the control test. The
organisation test looks at whether this individual claiming to be an employee forms part of the
bigger organisation of the employer (the individual’s role, significance, reliance on structure of
employer). In other words is this person integrated into this company? An individual can be
integrated in many ways for example, your receive remuneration, this means that you are on
the payroll of the company. If the company has functions you are involved in those functions.

The test is a simply one, if you are integrated fully into the company then you are an employee,
if you are not integrated to al large extent you are then considered to be an independent
contractor. The test became problematic, the problems experienced with this test are similar
to those of the control test, if we look at a door to door sales person who is on the road is
never integrated as they are never in the office. An employee that works on commission you
perhaps won’t be on the company’s normal pay roll as you have no set payment every month.

Independent contractor work on-site so they are integrated but this does not mean that are
employees necessarily and it is often difficult to define what is an organisation of a company
or business, for example, what do you do with a company that has over 100 branches
throughout the country, where is the organisation.

The courts decided that they cannot simply use the organisation test as standalone test; in
fact we cannot even use the two tests together as they are both problematic, the court then
developed multiple or dominant impression test.

Multiple or Dominant Impression Test

The court will look at the factors over all the substance, they now focuses on the relationship
between parties as a whole and not just specific aspects. Control or organisation integration
are but 2 factors that the court will consider, as there are a range of other factors the court will
consider, there is no closed list to these factors such as the amount of hours worked, control,
form (nature) of contract, method and amount of remuneration, providing “tools of trade (tools
required to do a job) and employer’s right of disciplinary action, shows that the individual is an
employee as you cannot discipline an independent contractor, you simply terminate their
contracts.

The conclusion is drawn from whole picture as opposed to just the control or organisation
element, as it incorporates aspects from several tests, this test focuses on substance over
form, therefore dominant impression is mostly used and this test applies to more than just full-
time employees it applies to part-time and temporary workers.

Smit v Workmen’s Compensation Commissioner the court considered the following

whether Smit was a “workman” (employee), development of locatio conductio operis and
locatio conductio operarum. This decision looks at the control or supervision and organisation
test and found problems with them although it implemented those tests.

Bargaining Councils

Self study

4) Statutory Developments

Here we look at the Roman law definition of an employee that was found to be insufficient,
and then came the definition of an employee in the LRA that once again remained insufficient.
Then we looked at the judicial tests developed by our courts to a large extent was also
insufficient, although the dominant impression test was developed. After this s200A of the LRA
and s83A of the BCEA were introduced in 2000

S 200A LRA Presumption as to who is employee

S 83A BCEA (similar wording to s 200A)

The section starts off by saying that if any one or more of the following factors are present in
the relationship this individual is deemed to be an employee until the employer can prove the
contrary, so this is the normally working of a presumption. This test is ONLY applicable to
individuals who earn less or below the earning threshold amount a year. If you earn in excess
to the threshold the test does not apply to you.
So when looking at the specific factors listed in 200A and 83A, it is a codification of the
dominant impression test.

“1) Until the contrary is proved, a person who works for, or renders services to, any other person
is presumed, regardless of the form of the contract, to be an employee, if any one or more of
the following factors are present:
a) The manner in which the person works is subject to the control or direction of another
person
b) The person’s hours of work are subject to the control or direction of another person;
c) In the case of a person who works for an organisation, the person forms part of that
organisation (organisation test)
d) The person has worked for that other person for an average of at least 40 hours per
month over the last three months
e) The person is economically dependent on the other person for whom he or she
works or renders services
f) The person is provided with tools of trade or work equipment by the other person;
g) The person only works for or renders services to one person.”

If the employer and the employee implement this section but they cannot come to an
understanding or an agreement to the stages, they may approach the CCMA for what is called
for an advisory award as to whether person is an employee. Advisory award is merely advice
and is not an order which binds the parties, if they do not want to implement the advice the
CCMA has given they do not have too.

5) Code of Good Practice: Who is an employee?

A code of good practice is not legislation it is simply a code stipulating what the best practice
would be under specific circumstances; although the code of good practice was never
intended to be binding on the parties like legislation would bind would them. Over the years
our courts started interpreting our codes of good practice as an almost type of legislation, to
the extent that these days apart from the applicable legislation, the court will first look at what
did the code of good practice say and did you adhere to that.

The code of good practice is similar in its content to that of our LRA definition, to the judicial
tests and the statutory developments. It says the same thing in other words. The code of good
practice aims at further defining and regulating the definition of an employee, the presumption
of who’s an employee, it interprets the statutory definition of “employee” and distinguish
employee v independent contractor, lastly employee of temporary employment services

THE DISTINCTION BETWEEN EMPLOYEE AND INDEPENDENT CONTRACTOR IS IDEAL

FOR A LONGER QUESTION WHERE WE GIVE YOU A SET OF FACTS, MR. X RENDERS
SERVICES TO MR. Y GIVE YOU DETAIL AND BACKGROUND. YOU NEED TO ADVISE
THE PARTIES AS TO THE LEGAL STATUS BETWEEN THEM, IS MR. X AN EMPLOYEE
OR NOT

Structure of Answer

Introduction
Briefly explain why you are asked whether Mr. X is an employee, the reason is that it will
determine the legal consequences that will follow form this relationship

Thereafter you can start briefly in a sentence or two explain the old definition of who an
employee was and the new definition we find in the LRA, then briefly then explain the problems
we have with those 2 definitions

Body

First of all although it is problematic we will consider the definition of employee in the LRA,
this is not the only factor to consider we will need to look at the form of the contract, does the
contract say you are an employee or independent contractor, thirdly you will look at the 3
judicial tests and describe each briefly while focusing on the dominant impression one more
than other 2.

Fourth factor you look at s200A and s83A don’t make the mistake when discussing these
sections by simply referring to them and that you will consider them show that you understand
those factors and give examples show how to implement these two sections, the presumptions
created by them and how it works. Then explain the code of good practice.

Then apply factors to the facts given

Always refers to relevant case law, then you will reach the conclusion (10-15 Marks)

Building Bargain Council v Melmon’s Cabinets CC

It looks at whether the individual can be regarded as employees or independent contractors,

the court looked at the substance of the relationship over the form, whether the contract was
in fact what it was really and whether the contract was a “sham”. And the court applied the
dominant impression test

Statutory Exclusions

It is important to remember that only employees are protected by labour legislation however,
there are certain group of employees who are specifically excluded from the protection of the
LRA and the BCEA, and they are listed in these 2 pieces of legislation. The fact that they are
not protected does not mean that they are not employees they are simply an exception to
those who are protected.

These parties are TOTALLY and COMPLETELY excluded, are members of National Defence
Force, members of National Intelligence Agency and members of South African Secret
Service. Although not mentioned in either the LRA or the BCEA, it has been held in various
judgements that magistrates and judges are not employees for the purposes of the LRA and
BCEA. The issues of magistrates and judges not being protected is extremely frustrating cos
on the one hand if they feel they are unfairly treated as employees they are not protected by
the legislation, however where do they go, where can they go to. They cannot claim against
the state as they are supposed to be independent from the state, the state argues that they
are not the real employer, who do they work for.

These parties are PARTIALLY excluded, they are excluded from certain sections of the BCEA
not completely excluded from the BCEA, they are Senior Managerial Employees, Sales staff
and employees working fewer than 24 hours a month and Employees earning above
ministerial proclaimed threshold. This is the same threshold as mentioned above.

Senior Managerial Employees is not defined in the BCEA, they use this concept but does
not define it, our court have held that to determine whether an individual is a senior managerial
employee you need to consider factors such as who reports to that person, what is that
persons powers in term of taking disciplinary action against other employees and making
appointments, does this individual report to someone else

Sales staff and employees working fewer than 24 hours a month, although this provision
makes sense if you work 24 hours or less a month it would be unfair if they treat you the same
as a full time employee. The problem with this provision is when we are looking at domestic
workers. Many domestic workers do not work for one employer at a time in fact what you find
that they work for different people on different days. Although the domestic worker works a full
week, but according to the provision, if you work less than 24 hours a month for a specific
employer you are excluded. In total the domestic worker will work more than 24 hours a month,
but perhaps not for one employer, which means that they are excluded.

A domestic worker more than 40 hours a week, but practically has no claim to sick leave or
leave days as they are excluded.

What about South African employees that work abroad? Generally if you work in another
country you are bound by their employment law and not by South Africa’s labour legislation,
there are exceptions to this rule when your contract was concluded in South Africa, then still
governed by our legislation, secondly irrespective of where you concluded the contract if the
parties stipulate whether expressly or tacitly that south African legislation will be used in the
event of issues, the agree to that then they are bound by AmSouth African law and finally, if
an individual works in another country, but the head office of the employer is in South Africa,
so a South African based company, then they are protected by South African legislation

Closed Corporations

What happens with a Close Corporations, is that you have this CC with one or two members,
so the CC contracts with a specific company or employer to render certain services, but
practically looking at the relationship you will find that the one or two members of the CC only
work for that specific company, that is the only contract that the CC has. The question
becomes are they not really employees rather, if you look at the substance over the form of
the relationship, this is what we call “piercing the corporate veil”. This is where our courts look
does not necessarily look at what the relationship says in words but looks at the practical
application, they may be employee even if services rendered through CC.

Contract of Employment and Basic Conditions Employment Act

General contractual principles are applicable to any contract remains applicable to a contract
of employment. The most relevant contractual principles for a valid employment contract are
the following

1) Essential terms agreed these terms need to be on the contract

2) Consensus an agreement or intention to create mutual rights and duties the
parties must be aware of each other’s intention
 3) Capacity to contract or act in other words certain minors do not have the capacity
to enter into contracts, and certain adults do not have contractual capacity
4) Performance of rights and duties must be possible or practical Cannot contract
with an individual to do something illegal, cannot have a contract between a drug
syndicate and a drug dealer saying you are my employee.
5) Rights and duties permitted by law
6) Formalities prescribed must be observed position within a company is subject to
the fact that the employee has a valid driver’s license and given a month or two obtain
that license, if they fail to obtain license then the contract is not valid as there was a
specific formality that needed to be followed
7) Contracting in good faith

When looking at an employment contract there is generally a power imbalance between an

employer and employee, especially in a country like South Africa where there is an extremely
high unemployment rate. So employers know that employees need to work and that there are
not many jobs available, so they can basically offer anything to the employee and employee
will accept it. The law comes in to say that an employer cannot do there are certain minimum
requirements which an employer has to implement to protect the best interests of employees
and therefore necessary for labour law to intervene.

There are certain formalities and requirements which have to be agreed upon and put into
writing, but everything else contained in the LRA, EE and BCEA which is not specifically stated
in the contract is automatically “read into” contract of employment.

Contract of Employment

To have a valid contract you need to agree on the essential terms, what are the essential
terms, the parties will have to stipulate that they entered into the agreement voluntarily no
one was forced to enter into this contract, the constitution prohibits forced labour. Another
essential term is that the contract must be between two legal persons or parties who have
the capacity to enter into contracts. The employee agrees to specified and implied duties
provided that it has been specified in the contract. The amount of remuneration MUST be
specified by the employer, what the payment will be, how much and how often payment will
take place. The duration of contract specified or no duration it must be specified that it is
an indefinite period, it must be stipulated that it terminate upon death or termination. The
finally term that they need to agree on is that the employer will have the power to tell the
employee how to do their work, within the bounds of reasonableness, in other words the
employer has the right to stipulate manner of work (reasonable).

Agreement

The agreement must have been entered into voluntarily and freely and they must be aware
of the nature of their duties and obligations. Here we see the same elements for the
existence of a contract, provision of service and remuneration

Contracts also arise tacitly, there is no express contract. Where a contract arises expressly
is where they agree they want to contract and enter into a contract. Tacit contract is where the
parties do not necessarily sit down to enter into a contract, as of today. It simply arises, for
example, if where an employer gets an individual to do a specific task the initial idea was that
it was going to be a once off thing but over the months the employer utilised the employer
more and more to the extent the individual is in the full time employ of the employer, they
never sat down and agreed on terms, however, they never entered into an agreement, the
courts can on the circumstances find that it is a contract of employment but the contract arose
tacitly instead of expressly. : E.g. employee works for employer for some time already

Formalities

What are the formalities that need to be adhered to for there to be a valid contract? There is
NO traditional formalities required the ONLY 2 issues that may be considered formalities is
the services or duties that need to be rendered and remuneration is important. The BCEA
stipulates that employers with more than 5 employees must put certain provisions in writing; if
you employ less than 5 then it does not apply to you. Failure to record does not however
render contract void there are however penalties the employer will suffer

Commencement

The basic principle is on the date the parties agreed to, which is normally the first day of the
month, when the essential terms have been agreed upon. Beware of suspensive clause
(commence work on future date), the parties may agree that the contract may only commence
once the employee obtain their driver’s license; there is no valid contract up until the point that
the condition has been complied with. It suspends the commencement of the contract. If the
employer and employee agree on the commencement date, once that date arises the
employer has to take employee into his service, if the employer fails or refuses to allow
employee to commence work on agreed date this amounts to a breach of contract and unfair
dismissal in terms of the LRA.

For example, you go an interview with a potential employer they are very happy with you and
they offer you the position, between you and the employer you agree on the essential terms,
you agree on the commencement date and your salary. The contract stipulates you will start
the 1 August 2012. However between now and the commencement date, the employer finds
out something about you, which they don’t like they find out you have a certain political view
that they do not agree with or that you were arrests over the weekend for driving under the
influence. Based on this new information they refuse let you starts on the commencement
date, this is a dismissal, you can take the employer to CCMA, it is up to the employer to argue
at the CCMA the reason they used for not letting you work was a valid reason.

Content of the contract of Employment

Free to regulate rights and duties provided that they are subject to the law and good morals.
If the employer employees more than 5 employees the BCEA provides that the employer must
provide following in writing, the employer’s full name and address, name; occupation of
employee (brief description of work), place(s) of work, commencement date of employment,
ordinary working hours and days of work, wage or salary and method of calculating
remuneration (including frequency and deductions), the rate of pay for overtime and any other
cash payments. Whether there is payment in kind and value, leave, notice period or specified
date of termination, description council or sectoral determinations covering employer’s
business and period of employment with previous employer which counts towards employee’s
total period of employment
These elements must be in writing, the problem that arises, although the BCEA stipulates that
these must be writing if the parties fail to do so, it does not mean that the employment contract
is invalid, the contact will still be valid, what will happen though is that there could be penalties
that the employer will have to pay, the department of Labour will take employer to the Labour
Court for breach of legislation. The contract itself is not affected

List of documents part of contract

These are other issues that are found in a contract of employment, they are not the issues
mentioned in the BCEA that have to be in writing. Additional issues with regards to the nature
of job and remuneration, who the employee must report too, bonus payable and relocation
expenses

Other benefits that the employee is entitled to that does not have to be writing such as pension;
medical aid; housing; car allowance and share options. Miscellaneous details such as
intellectual property, codes of conduct, representation by trade union (closed or agency shop
agreement) or adjudication of disputes

For example, when dealing with intellectual property, you work for a newspaper, what you
have written is that your intellectual property or the company’s? Normally with the employer

Terms of Contract of Employment

This is extremely important when dealing with any type of contract. There are four main types
of terms

(1) Express essential terms

(2) Implied
(3) Tacit
(4) Incorporated

1) Express terms

It is the terms or aspects specifically agreed upon by parties, which are normally reduced to
writing, we agree that expressly you will agree to start work on 1 August.

2) Tacit terms

“Unexpressed provision of the contract which derives from common intention of the
parties, as inferred by court from the express terms of the contract and the surrounding
circumstances…”

This quote is simply saying that they forgot to include those terms in the contract, and this is
normally read into the contract, which can be amended afterwards to include this. Let us
assumed that parties would have expressly agreed upon terms if they had thought about them
at the time of contracting, this is normally where there is a long standing practice may give
rise to tacit term

3) Implied terms
It is not a term that has been expressly agreed to; it is not something that the parties would
have agreed to if they had thought about it. An implied term is something that is automatically
part of the contract whether the parties want it to be there or not. This is normally called the
common law duties, where the rights and obligations are as per the common law, for example,
the common law duty for you to act honestly towards your employer; you cannot steal form or
defraud your employer. The parties did not expressly state in the contract that you may not
steal from your employer. It is an implied term it is something so FUNDAMENTAL that it will
always form part of the contract of employment, cannot steal from your employer, regardless
if you thought about it or it was in writing.

Imported into contract by operation of law, the Bill of Rights places duty to develop common
law, thus the Constitutional imperative to read implied terms into contract. Parties may agree
to expressly exclude implied terms, UNLESS it is Contra bonos mores and essential terms

4) Incorporated terms

Simply where your legislative provisions are incorporated into the contract (collective
agreements) automatically read into contract of employment. Incorporate when contract does
not expressly deal with these matters. S23 LRA states that collective agreement automatically
varies individual contracts of employees bound by these agreements and s199 LRA states
that one cannot however exclude or vary conditions in collective agreement if employee’s
benefits will be less. May agree to more favourable terms!

IN THE TEST OR EXAM IF ASKED, EXPLAIN EACH IN A SENTENCE OR TWO AND GIVE
EXAMPLES OR TWO, THIS WOULD BE A GOOD ANSWER AND IT MEANS YOU KNOW
YOUR WORK

Types of Employment Contracts

2 Predominant types:
1) Fixed term and 2) Indefinite

Fixed-term

It is a contract for a specified fixed duration or period, normally you will find that the contract
will stipulate that the contract is valid for a year, do not be mistaken that if there is not a
specified date, or term that it is not a fixed term. There is a possibility that the contract may
have no specified date or period, it will state something to the lines of “you will complete the
following project for us and this contract will terminate once project will end, it could be in a
month or year, it remains a fixed terms contract as a term has been described. The contract
may terminate through resignation; death employee; dismissal; mutual agreement. If we think
back dismissal in s187, is where the employee had reasonable expectation to renewal but
there was no renewal fixed term contract (or renewal on less favourable terms). Automatic
termination is not dismissal

Indefinite contracts

It is a contract without the termination date being specified, the contract will only terminate
upon resignation; death employee; dismissal; mutual agreement or retirement
THE PARTIES AGREED TO A CONTRACT VALID FOR 6 MONTHS AT THE END OF THE 6 MONTH
PERIOD IS THERE ANYTHING THAT THE EMPLOYEE CAN DO OR CLAIM? THE ANSWER IS 2
FOLD IF THERE WAS NO REASONABLE EXPECTATION THEN NO THERE IS NOTHING THE
EMPLOYEE CAN DO; IT WAS A SIMPLE AUTOMATIC TERMINATION. IF THERE WAS
REASONABLE EXPECTATION THE EMPLOYEE MAY BE ABLE TO ARGUE UNFAIR DISMISSAL
AND THEN YOU WOULD DEFINE WHAT REASONABLE EXPECTATION IS.

Employer’s Power of Command

There is a common law rule that states that in any employment relationship the employer has
the power of command in other words the employer has the power to dictate the method of
work. Compared to the earlier days this is now a qualified right in terms of legislation you can
only ask your employee to do things that are allowed in terms of legislation and that which is
reasonable and fair. For example, if you are a legal advisor, it would be unreasonable for you
to be asked to pick up your bosses dry cleaning. Employee must abide to all instructions from
the employer which is lawful and reasonable instructions. If the employer feels that the
employee did not abide by a lawful and reasonable instruction that could be a charge of
insolence failure to do what is expected. Typically the employees arguments would be at the
disciplinary hearing would be that the instruction given was either not reasonable or it was
unlawful. There is always interplay between having power to command for the employers and
on the other hand the bargaining power for employees. Some argue that legislation is still in
favour of the employers and other argues that it is in favour of the employees.

Variation of Contract

Once we have a contract of employment as with any contract that contract or any terms thereof
can be varied, it can change and an easy example is, once you commence employment you
earn R10 000 a month, that does not mean that you will be paid that amount forever, there will
be increases. That in itself is a variation of the contract as the original contract stated R10 000.

Normal contractual principles apply that neither the employer nor the employee may just vary
the terms of the contract unilaterally. This implies that the terms and conditions may be
varied if there is an agreement between the employer and employee whether by way of
expressed and mutual consent or by way of a collective agreement

The ONLY time a party may unilaterally vary something in the contract is where the employer
changes a working practices. A work practice is not a term of the contract; work practice is
simply a work practice within the company. For example, most employers provide basic coffee,
tea, sugar and milk to the employees and the employees can use. The employer decided to
stop providing this. Now the employer may be allowed to do that as this is not a variation of a
term of a contact, it is a variation of working practice.

This agreement must be express and mutual consent, when looking at the BCEA, it provides
for the minimum, the party may agree to vary any condition but only in the sense of giving
something better, one cannot vary a basic condition by providing less. For example, 21
consecutive leave days, the parties can agree to vary that for 25 days. But they cannot agree
to less than 21 days even if they both agree

BASIC CONDITIONS OF EMPLOYMENT

Minimum (basic) conditions of employment look at the discussion of incorporated terms. The
BCEA regulates aspects of for example an employee’s working hours; leave; remuneration
and termination of employment. BCEA states that its provisions constitute terms of any
contract of employment, except to the extent that any other law or the contract provides for
more favourable conditions, the general rule is that this is applicable to employers &
employees with exceptions to those the BCEA does not apply to.

2 exceptions

1) Completely excluded members of the National Intelligence Agency, members of the

South African Secret Service, unpaid volunteers working for charity organisations

2) Partially excluded senior managerial employees (authority to hire, discipline and dismiss
employees), individuals earning more than the earnings threshold, salespersons who travel to
customer premises and regulate their own hours of work and individuals who work less than
24 hours’ per month for an employer

Interpretation of BCEA

Purpose of BCEA

S2 The purpose of this Act is to advance economic development and social justice by
fulfilling the primary objects of this Act which are –
a) To give effect to and regulate the right to fair labour practices conferred by section 23 (1) of
the Constitution—
i) By establishing and enforcing basic conditions of employment; and
ii) By regulating the variation of basic conditions of employment;
b) To give effect to obligations incurred by the Republic as a member state of the International
Labour Organisation

S 4 Inclusion of provisions in contracts of employment: A basic condition of employment

constitutes a term of any contract of employment except to the extent that—:
a) any other law provides a term that is more favourable to the employee
b) the basic condition of employment has been replaced, varied, or excluded in
accordance with the provisions of this Act
c) a term of the contract of employment is more favourable to the employee
than the basic condition of employment

S5 This Act not affected by agreements: This Act or anything done under it takes
precedence over any agreement, whether entered into before or after the commencement of
this Act

Working Hours

The maximum hours that is to be worked a week. The general rule is that no employee will
work more than 45 hours a week, although the Act does not stipulate it as such (45 “normal”
hours). This is broken down into the maximum number of hours on a day if you work a 5 day
week is 9 hours a day and if you a maximum of 8 hours a day if you work more than a 5 day
a week.
Overtime

An employer may ONLY allow an employee to work overtime if there is an agreement (ad hoc
agreement, employment contract, collective agreement) that the employee will work overtime
as of when required. Meaning that an employer cannot simply tell an employee to work
overtime, if the employee refuses then employer takes disciplinary action, that’s unlawful there
must be a stipulation in the contract of employment or failing that an oral agreement between
the parties in which the employee agreed and confirmed that he may have to work overtime
from time to time. Most contract stipulates in general that you may be required to work overtime
and by signing this contract you agree to work overtime as of when required.

All working hours exceeding our “normal” hours of 45 hours a week those hours are called
overtime. An employee may NOT work more than 10 “overtime” hours in total in a week. The
most hours an employee can work a week is 55 hours; this is a subject to the condition that
the employee may not work more than 12 hours in total on a specific day.

Overtime pay, the minimum remuneration for that is 1.5 times your normal wage or salary, for
example if you normally get paid R10 an hour, for overtime you will receive R15 an hour,
unless your overtime falls on a Sunday or public holiday, then you are paid double. The Act
also stipulates that you have a choice between having payment of your overtime 1.5
remuneration or rather providing the employee with 90 minutes time off instead of payment
per hour worked overtime. This was not used much in the past, as many people just wanted
their money rather, these days getting time off is becoming a better option. You cannot enforce
overtime when overtime exceeds periods prescribed in BCEA, contract or collective
agreement.

Night work

Is any work that is done between 18h00 and 06h00 the next morning, there are condition that
need to be complied with when working those hours, s17 of the BCEA

Meal and rest breaks

An employee ONLY becomes entitled to a one hour if that employee worked more than five
continuous hours’ of work. If you work from 08h00 till 13h00 then that employee will not have
a break. During meal interval employee may only be required to perform duties that cannot be
left unattended and cannot be performed by another employee (s 14(2). Break may be
reduced to 30 minutes by agreement for working more than 5 hours. Break may be dispensed
with, in writing, if employee works less than 6 hours a day

General

Employees entitled to continuous 12-hour rest break between ending and commencing work
and entitled to 36-hour continuous break per week, which must include a Sunday; this may be
amended by agreement

Termination of Employment
We know that termination occurs if the employee is dismissed, resigns or employee passes
away or a mutual agreement. Our focus will be on dismissal and resignation. Notice period
given by either the employer or the employee. You cannot simply say that you are resigning
and will not be working as of tomorrow; there is a certain notice period that you have to work
through. In terms of notice period the act stipulates, if you were employed for LESS than 6
months the notice period is only 1 week, if you employed between 6 months and 1 year
your notice period is 2 weeks. If you were employed for more than a year your notice period
is 4 weeks.

Our general rule you can never give less but you can always give more. With the more senior
and technical jobs the notice period may be longer, the reason for that is if the employee
leaves the employment of the employer due to the nature of the position the employer need
sufficient time to find a replacement, if it is a specialised position or senior position a month
might not be enough and important to note that it depends on the agreement of the parties.

Normally the notice must be in writing, explained orally to person incapable of reading. The
employer may however terminate the contract without notice (“summarily”), the employer may
only do so if there a very good reasons for doing so for example, gross misconduct or sever
misconduct.

Notice may not be given by employer during any period of leave, for example, it is the end of
the year and I have taken 2 weeks annual leave, my first week during the my leave that my
services are terminated, another week left of leave and then when I get back I only have 3
weeks left. The Act stipulates that you cannot do that and that you can only do that once the
employee comes back from leave may you terminate their services. The reason for that is that
if you terminate a contract during leave the employer is actually gaining, as the employee is
on leave and is uses it as notice.

The employer may pay the employee in lieu (instead of) of notice, for examples if an employee
is found guilty of misconduct, not gross misconduct therefore the employer will dismiss with
notice and not without notice. That means that the employer must still continue to work through
the notice period, but this could be uncomfortable, the employer may pay remuneration instead
of employee working out notice.

Payments due upon termination

You will need to pay the employee any outstanding salaries, for example, if the employee is
paid at the end of the month, but gets dismissed in the middle of the month, the employer must
still pay for those days worked. The employee must get paid for unused paid time off that
employee is entitled to, accrued annual leave, leave that has not been taken for the year
must be paid out, this does NOT apply to sick leave, annual leave is right that you take, sick
leave you can only take if you are sick it is not a right in the sense of annual leave, outstanding
overtime pay and any outstanding remuneration

Severance pay (‘retrenchments’), if an employee is retrenched in other words dismissed for

operational reasons, the Act stipulates apart from the payments mentioned above, retrenched
employees are entitled to one week’s remuneration for every completed year of continuous
employment with same employer. So there is 3 elements one weeks pay for every year
worked with the same employee.
Certificate of Service is NOT the same as reference letter, it simply a document that states
that you worked for that employer, this is all about the facts whereas a reference letter that’s
personal.

If the employee fails to give or to work out notice period, the point is that it is very difficult for
the employer to do anything, first you cannot physically force the employee to work their notice
period, these days we find that the employer builds in a clause into the contract that stipulates
that if you resign and you fail to work out your notice period the employer will be allowed to
hold back any money owing to the employee, normally this would be the salary that would
have been paid, for example, you worked up until the 15 of that month and then fail to work
your notice period then the employer must pay you up until the 15th. Secondly, what happens
if there is no monies owed to you or there is no clause like that in the contract, it becomes
difficult and their only remember would be to institute a civil claim for damages, to be
successful with such a claim the employer will have to prove actual damages, experience or
loss suffered from the employee not working out their notice period. This is difficult to prove, if
the employer is successful the amount that can be claimed far outweigh compared to taking
this matter to court.

Practically the best thing to do is included a clause in you’re the contract.

Annual Leave

The Act stipulates that any employee is entitled to 21 consecutive days during any 12 month
cycle and every cycle begins at the commencing employment and the end is at the previous
leave cycle. The Act talks about 21 consecutive days which means that it includes Saturday
and Sundays, which is why you would often hear people say that they only have 15 days a
year, it is because if you take out Saturday and Sunday’s.

Your leave do have to take it all at once, well it depends on what the agreement with the
employer is, for example, if the employer states in your contract that the company shuts down
annually once a year, for a period of 3 weeks then you have to take it all at once during that
period. If the company however does not shut down and there are skeleton staffs for that
period, then you can break it up, but it all comes back to the agreement. The time taken must
be time specified by employer, or unless otherwise agreed or verbal agreement.

Leave must be taken within six months after it fell due or after completion of previous
leave cycle or else it will be forfeited. How this works is that if you start the 1 January and
in 21January you have your 21 consecutive days, during the 12 month period the employee
only took 14 days so you have 7 days left. As for the next cycle you get your new days, but
now the question is what about those 7 days of the previous cycle you must take those within
6 months, in other words before the 1 July, if you do not take it you lose or forfeit it.

In the event that your contract is terminated or you resign, the payments that you are entitled
to would be any accrued leave, now accrued leave would be leave that you are entitled to but
did not take. For example, 01 January 2012 – 31 January 2013 you are entitled to 1 weeks
leave, you resign in May 2013, but you only took 2 weeks in 2012, your accrued leave that
should be paid to would be your 1 week form 2012 as you have not forfeited it yet and the
accrued leave for the pro rata leave from January to May 2013, which will be in the range of
7-8 working days. Some companies say that yes that Act states that untaken leave will be
forfeited if it is not taken within 6 months, but our golden rule is that parties can always agree
to better terms, never agree on lesser terms, so many companies would be that if you do not
take the leave before it being forfeited in terms of the Act, our company policy would be that
you could accrue leave to a maximum of 5 days, meaning that if you do not take the leave you
will not forfeit it in terms of the Act, because we agree that you can accrue, but only to amount
of 5 days, cos you never lose it.

What happens if a public holiday falls within the leave period? For example, if there is a public
holiday on Thursday, and you take the whole week off, how much leave would have to apply
for, 5 or 4 days? You will apply for 4 days leave. So if a public holiday falls within your leave
period it is yours automatically you would not have to put in leave.

May not pay employee in lieu of leave, this means that if you read the wording of the Act it
stipulates that any employee must take 21 consecutive leave days it does not say may it says
MUST. An employer and employee cannot agree that an employee will not take leave but in
return they will be paid for that, even if the parties want to do that they cannot agree to that.
They ONLY time that leave will be paid is upon termination of the contract. The reason
behind this is an ethical one, especially people, who needs money; they will not take leave but
only take the money.

Sick Leave

During the first six months an employee is entitle to one day for every 26 days worked, this
is paid sick leave, after six months once the employer becomes more permanent, the Act
reads as follows, “after 6 months you are entitles to the number of normal working days in six
week period, every 36 month cycle’. Simply put, in every work week there is 5 days, 5 days
for a 6 week period (5 x 6 =30 days), 36 months is 3 years, so 30 days for every 3 years
cycle.

ONLY take sick leave only when you are incapacitated, in practice this is a major problem.
Sick leave is either if you are sick or injured, if you simply just don’t feel like working and claim
it to be sick leave it is actually dishonesty, even if caused by employee’s conduct.

May not claim sick leave under the Compensation for Occupational Injuries and Diseases Act
and Occupational Diseases in Mines and Works Act

Employer may insist on medical certificate, the tricky part comes in as the employer can only
ask for a certificate if the employer has been sick or absent for more than 2 days. So if the
employer is away for more than two days the employee is entitled to request a sick certificate,
if a certificate is not provided then the employer does not have to give paid sick leave. If the
employer has evidence that the employee was not sick, they can be discharged with
misconduct.

The bulk of the problem is where the employee is sick for 1 or 2 days at a time, the employer
cannot ask and cannot even ask for a certificate. So what typically happens is where there is
a public holiday on the Thursday, so the problem is that there is only one day sick leave so
the employer does not have a right to ask for a sick certificate for Friday, so how do we know
if people were actually ill on that Friday?

What you start doing as an employer is that you pick on trends, so the employer would know
that if there was a public holiday of Tuesday or Thursday then you can already say that X and
Y is going to be ill. Unfortunately a lot of people after pay day are ill for a day or two, it becomes
a trend and the employer knows who is likely to do that. The point is that if you pick up trends
things like that the employer can enter into a discussion and process with those employee’s
and basically the rules will be different for them, they will be required to provided a sick
certificate even if they are only sick for one day, if it falls on one of the above mentioned days.

For all days if absent more than twice within 8 week period (8-week rule), then you will be
required to provide a sick certificate for the rest of the 8 week period. For example, in week 1,
X was sick on Tuesday, sick certificate NO, week 3 X is sick again on the Tuesday, sick
certificate, NO, week 4 X is sick on Wednesday, sick certificate, YES. This rule becomes
applicable in cases such as these as the rule talk about on more than 2 occasions; it is ONLY
for an 8 week period after the 8 week period has ended a new one begins.

Most important to remember that an employer has the right to ask for a certificate more the
employee being absent for more than 2 days, and then 8 week rule, WE COULD BE ASKED
A SHORT QUESTION ON THIS, WHERE WE HAVE TO BRIEFLY EXPLAIN THIS .

Maternity Leave

It is 4 consecutive months unpaid maternity leave (per confinement), why the protection if it
is unpaid leave, the security is that you still have a job to come back to. When may maternity
leave commence anytime within 4 weeks before expected date or form any date a medical
practitioner or midwife certifies that you need to take leave and that it is necessary. No
employee may work within 6 weeks after giving birth or miscarriage, this is an absolute rule,
even if you wanted to you cannot, the employer may not allow you back, within the 6 weeks,
unless certified that it is safe by medical practitioner/midwife

You will need to inform your employer in writing of your intended commencement date of
maternity leave and returning or anticipation dates after, the employer will need to be informed
at least four weeks before the commencement date or when reasonably practicable

Employer may not employ pregnant or nursing mothers in work which is hazardous to both or
either mother and /or child. This is problematic in practice, for example, you have an employee
who works with chemicals on a regular basis, this provision stipulates that they may not allow
that mother to do that work for the period of time as may hurt her baby after birth or during
pregnancy, this is where a suitable alternative employment is arranged specifically in night
work or work that is dangerous, however where it reasonably practicable.

The Act states where reasonable possible what happens is a situation where an employer
does not have another position for the employee, there is no reasonable option, but at the
same time the Act prohibits you from allowing this.

Family Responsibility Leave

This is only available to employees who have been employed for more than four months for
the same employee and works more than four days a week, this is the qualifying rule. The
employer is entitled to 3 days paid leave in 12 month cycle titled “family responsibilities”.

The specific circumstances for which you qualify in order for family responsibility to be taken,
these circumstances are, the birth or illness of your child whether blood or adopted, or the
death of any immediate family, spouse, life partner, parent, grandparent, child, grandchild and
sibling. What happens if you are attending a funeral of a family member, you will be able to
take family responsibility as long as it is one of these listed members? An employee or
employer can always agree to give more, as some of our cultures in South Africa is a longer
period as it does not centre around the funereal, here the problem comes in as the Act applies
to everyone, but nothing stopping the employer to agree to more, but this lapses at the end of
cycle, if not taken it lapses does not accrue

In the event that your child is ill and you take family responsibility you take care of that child,
the Act stipulates that your employer may ask for a certificate, which is harsh as your child
may only have been sick for one day.

Paternity leave is the same as maternity leave just for the Dad’s, In South African legislation
does not have a thing such as paternity leave, when people talk about maternity leave they
are referring to family responsibility leave, as you can take this on the birth of your child, once
your baby is born, you may take 3 day family responsibly leave.

Variation of Basic Conditions of Employment

Golden rule, you always have to give the minimum in terms of the Act but can always give
more or better, you get these better variations either through an agreement or variation by
Minister (of Labour).

Variation by agreement

Variation by agreement could be either is done by collective agreement or by individual

agreement, between the parties.

Collective agreement

It deals more with collective labour law, not an agreement with an individual employer and an
individual employee, but rather a group of employees and a group of employers, parties can
be part of collective agreement it provides better provisions than the BCEA. The collective
agreement must be consistent with purpose of BCEA and will not limit the protection in regards
to the working hours and night work, not reduce sick or maternity leave, does not conflict child
or forced labour provisions

Individual Agreement

Then you have an individual agreement between employer & employee agrees, this is where
bargaining power comes in as you can replace or exclude a basic condition to the extent
permitted by BCEA or sectoral determination

Variation by Minister

Variation by the Minister is done in by what we call the sectoral determinations that is
consistent with purpose of BCEA. The sectoral determination is a document drafted and
enacted by the Minster of Labour which will be relevant to a category of employees, and it
determines to replace or exclude any basic condition in respect of any category of employees
or category of employers, so yes to provides for the conditions on the BCEA but better than
the BCEA.

Monitoring and Enforcement

The primary responsibility to promote or monitor or enforce compliance with the BCEA, falls
on our Labour inspectors (s 63 & 64) they are employees of the Department of Labour, what
do they do is that they advise employers or employees of their rights in terms of labour
legislation. They can do inspections and investigate into complaints and they can issue
undertakings and compliance orders

Undertakings and compliance orders

An undertaking is where and employer breaches a certain provision in the BCEA and after the
investigation the Labour inspector says that the employer is in breach and we ask you to give
us an undertaking that you rectify this in a certain period of time. It is almost a kind of good
faith thing, we are not forcing you just asking you to undertake, in writing.

Compliance order an order that needs to be compiled with so it is more formal than an
undertaking,

When will you give an undertaking and when will you give a compliance order?

To give a compliance order there has to be certain transgressions of the BCEA, labour
inspectors can ONLY give compliance orders, so it is the more serious transgressions you
cannot even consider an undertaking, you have to give a compliance order, which provisions
those are is found in the BCEA. A compliance order can be given where there was a secure
written undertaking in terms with s68, and the employer failed to comply with the
undertaking a compliance order can be issued. If the employer fails to comply with the
compliance order then the labour inspectors may in terms of s69 let it become a court order

Protection against discrimination (s78)

Employee rights (s 78):

Can make a complaint to trade union or labour inspector where the failure or refusal by
employer to comply with BCEA, where they discuss the conditions of employment with fellow
employees, employer, any other person

The employees can refuse to comply with instruction contrary to Act or sectoral determination;
they can refuse to agree to any term or condition of employment contrary to Act any sectoral
determination

The employees can inspect their own record which is kept by employer, participate in
proceedings of Act and request a trade union representative or labour inspector to inspect any
record kept in terms of Act in relation to that employee

Protection of rights (s 79)

This does not only apply to current employees but also former employees or even applicants
for employment. The rules is that NO person may discriminate against or prejudice employee
for exercising a right conferred by this Part, basic right against discrimination in the BCEA,
and may not favour an employee in exchange for the employee not exercising a right conferred
by the Act. It is almost quid pro quo, you cannot say if you don’t lie a complaint against me I
will give you a bonus this is prohibited.
DO NOT EXPECT A LONG QUESTION ON THIS. IF ASKED A QUESTION ON EITHER S78
OR S79 JUST MAKE SURE THAT ARE ABLE TO GIVE ONE OR TWO EXAMPLES OF
WHAT THE CONTENT IS

Rights and Duties of the Parties

Nature of employment relationship is a two way or reciprocal relationship, it is what we call

a “quid pro quo” in other words you get something and you receive something for that given.
The employer is giving the remuneration or experience but receiving services for the
employee, whereas the employee on the other is giving services and receiving remuneration.
There are rights and obligations between them, these right and obligations, forms part of
the implied terms, those contractual rights and duties that are not written down but are as
per the common law

Duties of Employees

1) Enter and remain in service

2) Maintain reasonable efficiency
3) Further employer’s business interests
4) Be respectful and obedient
5) Refrain from misconduct

(1) Enter and remain in service

This is deemed the main contractual obligation of any employee, without rendering services
then what is the contract about. The duty entails that the employee must render their personal
services at employer’s disposal, as this is an obligation between yourself and the employer.
This is a continuous obligation, due to the fact the termination of an employment contract
will only come about on death, dismissal or resignation. Failure to adhere to this duty, can
bring about a charge of misconduct for example, the normal charges are of desertion or
absenteeism. The difference between desertion and absenteeism

Desertion is where you stay out work without authorisation in other words you desert your
job, there is no intention to come back to work at all this is more of a permanent nature,

Absenteeism is of a shorter period, you are away from work a day or two or week without
authorisation, but you have the intention to come back

Out general principle which is important “No work, no pay” if you do not work for that day
you do not get paid

(2) Maintain reasonable efficiency

The law says that once you are offered a position and once you have accepted that position,
by accepting that position you are implicitly guarantying that you as the employee is capable
to perform the tasks or duties. In other words you cannot apply for a job if you do not have the
capabilities to perform the duties. Not ONLY must you be physically capable of doing your
duties you need to be reasonably efficient in the performance of your duties. When talking
about being bound by representations made it refers back to the qualifications or experience
you told the employer you have, reference letters from previous employers you worked for,
you cannot be dishonest with these issues, if you are dishonest you can be charged with
dishonesty and could lead to your dismissal. When talking about being reasonable efficiency
what is the standard of competency expected? Here we look at comparing you with another,
but you cannot be compared to a director experience to a first year candidate attorney. How
do you determine this, there are factors that need to be looked at to assist us in determining
this such as status, seniority, nature of tasks, the training or experience of the employee and
comparable to other employees, where you pair the same employees with the same
experience.

(3) Further employer’s business interest

The basic rule is that the employee must use their energy and time or skills to further business
interests of employer when under their employ, in other words your normal working hours
must be devoted to the employer’s business. You cannot for example, run a separate business
on the side that take ups your working hours with the employer.

Conflict of interest

The employee may not create a conflict of interest, where your own personal interests
conflicts with that of the employer, with the results that you act in the best interest of your
situation and not with the best interest of the employer.

Looking at a few examples, you cannot acquire any benefits through employment without
employer’s knowledge, typically what we find here as an employee you are given something
by a happy client that can range from something small to something bigger, in those situations
you need to declare those benefits to your employer, it does not mean that you will not be able
to use it. You will need to declare it, the reason is simply that sometimes and this is when
corruption comes in when a client will say if this benefit if you make sure the follow happens.
This at times cannot be in the best interest of the employer, so you chose you interests over
that of the employers. The employee may not work for another whose business interest
conflicts with employer, for example, you are the sales person for Puma and on the side
you act as sale person for Nike, this is a conflict of interest its being dishonest. The employee
may not enter into arrangements creating conflict between own and employer interest
(disclose this on appointment), this is different from the first example is in were you are offered
a position with the employer but you are already involved with something this is in conflict with
the new position, you need to inform the employer to avoid a charge of dishonest, for example,
you are family member of the Nike although you are not involved but now you apply for a
position at Puma, you need to declare your involvement with Nike and if not declared and it is
found out by the subsequent employer. The employee may not secretly compete with
employer; this is where you directly compete with the employer by running a similar business
on the side.

The employer may NOT hold a 2nd incompatible job but MAY hold 2nd “compatible” job. The
basic rule is that you cannot be employed in a position after hours which position would conflict
with you position with this employer, it goes further, even if the position you hold after hours
doe not compete with your position at the employer it can still be that you may not accept that
position, for instance if that means you are not functional at your employer, for example you
work after hours only get 3 hours sleep and that has an impact on your employer that would
be a problem. You cannot hold a 2nd job during your normal hours, the general rule to address
this issues is to get the permission of your main employer before you take on a second job
and as long as not contractually forbidden, for example as a lecturer that is my main duty, but
perhaps former clients ask for advice on contracts, this is not competing with the university
but needs to be disclosed, as it might impact on the working hours at the university.

Other forms of breach, is when you do not disclosing financial interests in other company and
when you taking bribes or commission, this is illegal and unlawful.

Freely compete once employment terminated there are still restrictions after the employee
has left the company. The most important one is restraint of trade and the confidentiality
clause.

Restraint of trade

A restraint of trade is something that you hold back on, on your trade or services, general
example, if you are employed as a senior sales person at a company your restraint of trade
upon termination of your employment for a period of 12 months you may not hold a similar
position at a similar company. The reason for this is simple, due to the position that you held
at your former employer you now have detailed knowledge and insight to the employers
secrets about that company and they do not want you to take that and simply use it at the new
employer for at least 12 months.

Restrains of trade remains binding after termination of your contract, it restricts competition
with former employer. Any restraint of trade must however be lawful this is normally when it
becomes a problem, you cannot have general restraint of trade saying that once you resign
from our employment you may never hold a position of senior sale manager in any company
in South Africa, it is unlawful as it excludes you from employment. Restraint must be
reasonable and must be reasonable in terms of period for which it remains valid, position you
are excluded from holding, the general rule is 12 months and not longer, there must a specific
position that you may not hold for this specified period and it must be reasonable in terms of
the jurisdiction (area) it covers. For example, you cannot hold a specific position for 12 months
in the greater part of Cape Town, but it would be unreasonable to say in the whole of Africa.

The employer may terminate employment of the employee if they failed to disclose their
existing restraint of trade, this has to do with the new employer, for example, the head of sales
for a large advertising company in South Africa, after he was appointed by the new company
he only then disclosed that he has restraint of trade with my previous employer which was a
big competitor of this employer. The new company was unaware and by negligence on their
side never asked, once he disclosed this information as the new employer cannot act breach
of this restraint, the former employer may take them to court and they then terminated his
contract for dishonesty. An employer cannot compel the employee to sign a restraint of trade
after employment commenced, the reason for this is simply that when you accept an offer of
employment you need to be aware of all the responsibility on an employee as it is on that basis
you decide if you want a job or not.

Confidentiality clause

This remains binding after the termination of the employment contract. It is important not to
get confused with a restraint of trade and confidentiality clause. Yes the 2 overlaps at some
point but try to remember the following
Confidentiality clause is about sharing confidential information in other words an example
would be that if you work for coke, all the employees working there sing a confidentiality clause
stating that you may not take our recipe and work for Pepsi, this does not remain in force for
a certain period of time, it remains in force forever as it is confidential information having to do
with the nature of the employer business, the essence of their business.

Where the 2 overlap, is where the restraint of trade has been entered into in order to practice
some of the confidential information of the former employer, but the restraint of trade is only
valid for a certain amount of time, then you can hold that a similar position, but with the
confidentiality clause remains indefinitely.

May not use confidential info gained during employment and this does not include skills or
knowledge or experience of a general nature

(4) Be respectful and obedient

This is where you need to be respectful and obedient to your employers. The duty of respect
stems from the fact that you are in a subordinate position to the employer, misconduct
examples here is where you do not have the necessary respect includes, gross disrespect
where you are being insulting or abusive, or being insolence this is where you are being
cheeky, you don’t adhere to authority.

The duty to obey, has to with obeying reasonable and lawful instructions, now the issue of
reasonable and lawful, these two concepts are extremely important, so looking at it from the
other side you will guilty of failing to obey an instruction where that instruction ins unreasonable
or unlawful, for example, the delivery person was told to deliver something but told to do it by
breaking all the laws to get to the destination within an unreasonable time, and if you fail to do
so the employer cannot charge you with this issue of disobedience, cos the instruction itself
was unreasonable and unlawful.

So reasonable orders have to do with work related orders that occur during working hours, an
employee cannot ask you to pick up their laundry as this is unreasonable. Lawful an illegal act
or an order outside scope of contractual duties or where there is personal danger (unless
inherently part of position). Cases to be considered on own merits, is applicable to everything
in Labour law and not only this duty, although the general rule is that an instruction must be
reasonable and lawful, there is always exceptions, exceptions are based on the circumstances
of each case, always apply basic rules to the merits!

(5) Refrain from misconduct in general

This is a general duty, when will the dismissal for misconduct be justifiable? The general rule
being implied is that you can a dismiss an employee where the conduct was of such a nature
that the continuation of employment relationship becomes intolerable or unworkable,
the issue of intolerable our LRA states that dismissal must be the last resort, it talks about
progressive discipline, which means not to simply just dismiss someone for the 1st offence,
first try to rectify that conduct by giving that person a warning, or final warning, if the employee
does it again then dismissal.
There are exceptions where the dismissal for the first offences will be reasonable this is where
the offence would of such a gross nature that the continuation of the employment relationship
become intolerable, for example an employee stole R100 000 from your employer, do you
think that the employer will give you a 2nd chance, no cos the nature if the relationship has
become intolerable, how is that they can trust you again.

So the conduct undermines the trust and it was so serious that it becomes more important
than the principle of job security

What about the misconduct prior to commencing employment may it be grounds for dismissal
from the current employment, the general answer is NO but there are exceptions, exceptions
would be where you are precluded by law, by being employed in a certain field. If you go to
the new employer without informing them about your preclusion form being able to be in such
a position would amount to dishonesty. Therefore you have a duty to disclose prior prejudicial
information; the non-disclosure will amount to fraud and will render the employee unfit for
particular employment

Similar a doctor or nurse they are to be registered at the Health Council of South Africa, if you
are kicked off and now employed at a new employer that employer can dismiss as you are
precluded by law from performing specific job or work, the cannot employ you as it is illegal.

The second exception would be that you are not specifically precluded by law from holding a
specific position, but the nature of the offence makes it very difficult to keep you in a similar
position. Legally may work, but clients might be frightened away by past misconduct, for
example a crèche employed someone who was on the sex offences roll, and the parents were
not too happy with that, the crèche dismissed that employer due to dishonesty.

When dismissal for prior misconduct, we need to look at the exceptions and whether the
employment relationship can be reasonably sustained after discovery of past misconduct?
Some misconduct examples, dishonesty, drunkenness, gross negligence, fighting, assault
revealing trade secrets and absenteeism.

Duties of the Employer

1) Receive employee into service

2) Remunerate employee
3) Ensure working conditions safe and healthy

There are also various rights which are concluded in the contract and provided for in legislation
such as the BCEA), collective agreements, etc. these 3 duties are the common law duties and
are not written down anywhere.

(1) Receive employee into service

If you offer the employee a specific job and the employee accepts then there is a conyt6ract,
afterwards if there is refusal to accept the employee into service this would be repudiation of
the employment contract and there could be a claim for unfair dismissal.

There was a case, there was a man, working as an IT consultant as a IT firm in Port Elizabeth,
he applied at another IT firm in Port Elizabeth, the 2 firms were not competitors so no issues
there.
 He applied for the position they called him for a first interview, they were happy with his interview
and called him back for a second interview, after the phoned him back and offered him the
position. He accepted the position. So he had to work out his notice period, which is a month.

During the notice period month he phoned his new employer and informed them that
somewhere in future he does not when, but it will happen, he will have a sex change. The new
employer was shocked and that afternoon they phoned him back and said that they do not
require his services anymore. He took the matter to the labour court claiming that he was
unfairly dismissed, as there was already an employment contract and furthermore he claimed
was that he was unfairly discriminated against due to my sexual orientation.

At the Labour court the new employer argued that they did not argued that they did not dismiss
him due to his intention to have sex change we dismissed you cos we thought that you were
dishonest and you did not disclose an important detail. The Labour Curt judge disagreed, if you
look at the position itself whether male or female does not make a difference if you have the
competence to do the job. The court went on to say that based on the employers conduct, had
the employer revealed his intention to have his sex change at the interview stage, they would
not have appointed him the court said based on all of the it is unfair dismissal as well as
discrimination

The employee won the case, he was awarded R100 000 and the old employer kept them in
their employ

This case although fits best with discrimination, it shows that once there is a contract of
employment, the employer has to take them into their employment although he did not
physically start yet, how employment equity act states that once there is a contract you
are deemed to be an employee.

No duty on the employer to provide the employee with work to keep busy. The exceptions,
in this case is where there is remuneration based on volume of work done, for example if
you are paid per unit for the work done, the court has found that in those instances that the
employer needs to provide work. The failure to allow work degrades employee’s status;
this is where the employer gives the work to other employees instead of them which are
degrading to their status. The employer contracted to train employee in profession or
trade, for example you are a candidate attorney the company that hires you has a duty to train
you and thereby giving you work to do.

Payment in lieu of notice for termination, The general rule that you have to take the employee
into service once the contract is signed, however you may suspend an employee pending
misconduct investigation, this suspension must be remunerated as they have not yet been
found guilty, during the pending investigation the employer may not want the employee to
work, for whatever reason it still needs to be paid. They only time you can suspend someone
without pay is where that person has been found guilty and the sanction is suspension without
pay as part of the disciplinary penalty. Thus the distinguish between suspension with pay and
suspension without pay is very important

Employers may deny access to workplace in the course of collective bargaining when there is
a “lock-out” (provisions of LRA). A contract of employment cannot be ceded or assigned
without employee’s consent. It has been previously said with an employee has the duty to
render his services and the employee cannot send someone else to their job. It is the same
here the employer must take the employee into service, the employer cannot send the
employer to do work at another employer, unless id the employer consents thereto or if there
is a transfer of business as a going concern, this governed by s119 of the LRA (see Topic 9)

(2) Remunerate employee

The fundamental obligation of any employer, you cannot have someone working for you
without working for you. This duty to pay an employee arises from tendering of services by the
employee and NOT actual performance of work, in other words looking at suspension with pay
you need to pay that employee since he is still tendering his services, the employer are
stopping him from working and he is still tendering services, the reason he must still get paid.

The general principle of “no work, no pay” the opposite is true “no pay, no work”. Then in terms
of payment, generally it is remuneration in cash, where payment is made wholly or partly in
kind, in kind means payment in another form apart from money so typically your payment in
kind would be providing of food, accommodation or food or travel allowance. The ONLY act
that deals with payment in kind to a certain extent is the BCEA it only deals with farm and
domestic workers, where the payment in kind is accommodation, so what you will find with
domestic workers is that will reside with the employer on a permanent basis and stay on the
property, so food, water electricity is provided for, the employee gets paid a smaller salary as
the whole package is made out of accommodation. They problem comes in when a farm
worker or domestic worker is dismissed, apart from them being without a job they are without
a place to stay as well, what happens if the employee simply refuses to leave the premises,
here we will look at PIE, it becomes tricky and sensitive.

Payment is commission is allowed commission is where you paid a certain amount of all the
sales you make. When looking at the employment contract and the agreement on
remuneration you sometimes find that the parties do structuring” packages where the
basically give a different name to a part of their income for tax purposes or benefit, so if you
travel a lot and your employer states that he will reimburse you for every kilometre that you
have travelled, may oratories decided to put a specific amount into monthly remuneration in
anticipation of the travelling they will do, the tax benefits on that is better than if you simply
give a claim. Any piece of benefit whether in commission or allowance, everything you get in
return for working for the employer this calculation forms part of what we call your of total cost
to company (TCTC). So what happens is that an employee gets offered a position and the
remuneration is R20 000 but at the end of the day that individual ends up with R10 000 in
cash, contributions are made towards those funds such as the medical aid scheme and
pension fund and of you take all of these small pieces your package is R20 000. When the
employer must get paid well that depends on agreement or custom between the parties, the
BCEA states that you can get paid daily, weekly or monthly.

Employer may not unilaterally deduct any amounts from remuneration; the exception is unless
it is prescribed in terms of law or a court order. The normal deduction is where a parent has
to pay maintenance, when the parent has failed to pay and the applicant then obtained a court
order,

Termination of the employment contract remuneration is paid according to what is due to the
employee, accrued leave etc. If the contract was summarily terminated, the employer will
need to pay for services rendered until day of dismissal. When dealing with a fixed term
contract that is for 1 January – 31 December and the employer terminates the contract on the
31 May, due to the fact that it is a fixed term contract the employer has to pay up until last day
on work which is the 31 May, but the employee can also institute a claim damages, in either
the labour court or the High Court based on the agreement that they had, the agreement was
that they will work until the year, financially is arranged my personal affairs with the idea that
I will have an income, therefore they can claim damages. The damages that they will receive
is normally the amount that they would have received if the contract had run its full course.

What happens when the employer is declared insolvent? That does NOT automatically
terminate the employment contracts, this is an incorrect, it remains in force and thereafter you
have to dismiss the employees based on operational requirements. So all employment
contracts automatically suspended, so when the contract are suspended it means that
employees need not tender services and if they do they have no right to remuneration. What
should an employee do, for example a company is liquidated end of July as of the 1 August
all employment contract are automatically suspended and therefore you do not work and you
do not get paid either, the retrenchment process starts and you are formally dismissed form
the company as of the end of September, so for both the month of August and September you
did not receive any money, it now becomes an insolvency issue and you become a
complainant against the insolvent estate for the loss suffered by suspension or termination
and severance benefits. The employer only has a preferential claim; the employer does not
get all that he has lost

(3) Ensure working conditions are safe and healthy

This is the common law duty and a few examples of what is included are the provision of
proper machinery and equipment, which are in proper condition and safe. Properly trained and
competent supervisory staff and lastly safe system of working, in other words the machinery
might be ok but the way in which you work is not on standard.

This duty that the employer has with regards to health and safety is mostly dealt with in the
Occupational Health and Safety Act (OCHS Act), yes it forms part of labour law as it is part of
the common law duties but practically, is governed in the Act. What happens if the employer
fails to act in accordance with this duty? Firstly it would be a breach of Occupational Health
and Safety Act and the Act stipulates the penalties would be appropriate. From a labour law
point of view an employee may refuse to work until issue resolved and it will be NOT regarded
as breach of contract. for example, if you work in factory where there is no fire extinguishers
and employee can say, that they refuse to work until there are the right amount of fire
extinguishers in the factor, should the employer dismiss the employee, for that refusal it would
be unfair and the employer would be in breach of the Occupational Health and Safety Act.

Other duties

The contractual obligations, what has been agreed to in the contract, what are the obligations
agreed upon, as well as the statutory duties found in the BCEA and LRA, as well as your
implied terms (held by courts, common law developed under Constitution). This goes back to
implied, expressed and tacit terms. For example, the employer will treat employee’s fairly, right
to pre-dismissal hearing and right not to be dismissed without a valid reason.

Breach of duties may provide a basis for claim of damages

SAMSA V MCKENZIE
M was dismissed by SAMSA; M then instituted an unfair dismissal claim under the LRA. Before
the parties actually reached the stage of arbitration at the CCMA they reached a settlement.
However, after reaching the settlement M went ahead and instituted a claim for breach of
contract in the High Court, SAMSA then argued that this is double jeopardy and we have
reached an agreement and cannot therefore institute a similar claim a second time. M argued
the claim that was settled on was an unfair dismissal claim in terms of the LRA, the claim I am
bringing before the High Court is a breach of contract although stemming from the same sets
of facts it is two separate claims altogether. M claim in terms of the High Court was basically
that in any contract of employment there is an implied term, that an employer will not unfairly
dismiss an employee.

The court looked at the expressed, implied, incorporated and tacit terms and held that there
was “an explicit, alternatively implied, further alternatively tacit term…that the employment
contract would not be terminated…without just cause”

SCA held that there was No explicit term as is clear from letter of appointment (contract), the
court then went on to look at the Tacit terms which are those terms that arise from the actual
or imputed intention of the parties as representing what they intended the contractual position
to be. The court held that NO such tacit term was present in this matter and doubt that SAMSA
would have agreed to a further possible contractual claim, which would be the result of such
a tacit term

Then the court looked at implied term is it a common law term, is there a common law duty on
the employer that he will not unfairly dismiss an employee. The court held that YES it is an
implied term, whether the parties agreed on it or not or whether there was the intention to
agree in it or not, but by way of operation of law (automatically) and contract of employment
has this clause in it. The issue was a legal one and does the law impose implied term on
parties? The court held that one has to interpret a statutory provision to establish whether
some part should be incorporated into contract. Did the legislature, with relevant LRA sections,
intend not only to outlaw unfair dismissals and provide remedies, but also intend to incorporate
a term into contracts stipulating they could not be terminated unfairly? The LRA was enacted
to give effect to labour rights guaranteed by the Constitution

THERE COULD BE SHORT QUESTIONS ON THIS, SUCH AS WHAT IS THE MAIN ISSUE
CONSIDERED IN THIS CASE, WHAT IMPLIED TERM DID THE COURT IN THE CASE HELD TO BE
INCORPORATED INTO EVERY CONTRACTOR A TRUE OR FALSE QUESTION IN SAMSA V
MCKENZIE THE COURT HELD THAT IT WAS NOT A IMPLIED TERM

SAPPI NOVO BOARD v BOLLEURS

What happened in this case was the B was employed by S a law firm. During his employment
he introduced one the law firms clients K (debtor and customer of the law firm) to a certain Mr.
King (3rd party). The discussion between the client and Mr. King, it resulted in Mr. King to
finance continuation of K’s operations as K was struggling financially. B had nothing to with
the details between them and the agreement, but B requested commission (referral fee) from
K for introduction, K agreed that it would be fair, B thought he would be clever and let the
invoiced K for R10 000 as “attorney and client fee” which are legal fees. So this went through
the books of the law firm. Ultimately this client was liquidated and the appointed liquidator
became aware of this referral fee. They brought R10 000 fee to the law firms attention who at
that time had no idea of this whole arrangement. B summarily dismissed
The law firm based on the dishonesty which was based on that B acted in a way which was
more favourable to your own interests to that of the company’s interest

This is part of the employee’s duties to further the interests of the business, the court held that
in terms of the fairness of the dismissal and whether it was substantively fair?

The court held that it is an implied term of contract of employment that employee will act with
good faith towards employer, this acting in good faith includes acting in the employer best
interests and the employee will serve employer honestly and faithfully. The duty which
employee owes employer is fiduciary duty a “…obligation not to work against his master’s
interests” but rather to further interests of employer, not employee’s own.

Receiving commission arising out of employment relationship without employer’s knowledge

constitutes a lack of good faith, it is immaterial that if you act in our own interest and you
receive money, but in doing so you are not prejudicing your employer rather that the employer
is benefiting, or might have benefited from the transaction, it would still be breach of this duty.
In this case it had nothing to do with benefitting, the mere fact that the employee did not bring
it under the employers attention, this was the issue here and that dishonesty is not prerequisite
in order to dismiss the employee, the court held that the dismissal fair

CWIU v SA POLYMER HOLDINGS

The case deals with common law duty of an employee, have a look at what the court says
about insubordination and lawful and reasonable orders, so when reading the case focus on
these 3 issues.