Sources of regulation
There are four sources of law that regulate the termination of the employment
relationship in South Africa: the
Constitution, legislation, the common law and collective agreements.
Art. 23 of the South African Constitution entrenches several fundamental
rights concerning labour relations. These rights apply to legislation and
to the common law. They are also capable of being made applicable to employers
and employees in the private sector.
The constitutional right to fair labour practices includes the right not
to be unfairly dismissed. Art. 39(1) of the Constitution requires
the courts or arbitration tribunals to “consider international law” when
interpreting the provisions of the Bill of Rights. The courts have had recourse
to the ILO Termination of Employment Convention, 1982 (No. 158), [1] and Recommendation, 1982 (No. 166), when interpreting
the right not to be unfairly dismissed.
Two pieces of legislation apply to the termination of employment: the Labour
Relations Act (LRA) (No. 66 of 1995) and the Basic Conditions of Employment
Act (No. 75 of 1997) (BCEA).
The constitutional right not to be unfairly dismissed is given effect to
by Chapter VIII of the LRA, which provides a remedy for unfair dismissal.
Schedule 8 of the LRA contains a “Code of Good Practice: Dismissal”. The
Labour Courts and the Commission for Conciliation and Arbitration must take
this Code into account when determining the fairness of a dismissal.
The BCEA sets minimum terms and conditions of employment including the notice
of termination and the payment of a severance allowance.
In South African common law, a contract of employment is regarded as a
species of lease. Accordingly, the common law rules on the cancellation of
contracts of lease apply to termination of employment contracts. [2]
Collective agreements are also a source of law regulating the individual
employment relationship. The LRA provides a framework within which one or
more trade unions and one or more employers or their organizations can collectively
bargain to determine terms and conditions of employment. These agreements
often include pre-dismissal procedures, periods of notice and post-dismissal
procedures. Collective agreements may provide alternative procedures for
processing unfair dismissal disputes.
Scope of legislation
The LRA which deals with the right not to be unfairly dismissed (sec. 185,
LRA), applies to all employers and employees in both the public and the private
sectors, with the exception of members of the defence force and the State
intelligence agencies (sec. 2, LRA).
An “employee” is defined as “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” (sec. 213, LRA). [3] Section
200A of the LRA sets out the ‘presumption as to who is an employee.’ This
is a guideline to assist in determining who is an employee. This presumption
does not apply to persons earning more than a certain amount determined periodically
by the Minister of Labour (sec. 6 (3), BCEA).
The scope of the BCEA, which deals with the minimum period of notice and
severance pay, is similarly limited except that there is an additional general
limitation of scope (regarding unpaid volunteers working for charitable organizations)
and several specific limitations in respect of merchant seamen (only the
provisions on severance pay apply). Moreover, the BCEA does not apply to
persons undergoing vocational training to the extent their terms and conditions
are regulated by other laws, and employees who work less than 24 hours a
month are not covered by the notice and severance pay provisions (sec.
36, BCEA).
The consequence of limiting the scope of the LRA means that there is no
statutory remedy for an unfair dismissal of an employee falling within the
excluded categories. However, because art. 23(1) of the Constitution
entrenches the right to fair labour practices for “everyone”, the unfair
dismissal of such an employee may found a constitutional claim.
Contracts of employment
The validity of a contract of employment is governed by common law rules
of contract. There must be an intention to contract, i.e. to create obligations.
But the fact that parties intend to enter into a contract does not mean that
the contract is valid. The parties must have contractual capacity. The performance
undertaken must be possible at the time of contracting. The contract itself,
its performance and purpose must be lawful. Finally, there must be compliance
with any constitutive formalities.
The contractual arrangements between the parties are, to an increasing extent,
in the formal sector, being embodied in written documents. In most cases,
however, this is not a legal requirement. Thus a contract of employment may
be concluded orally or in writing; and expressly or by implication. However,
certain limited classes of contracts of employment must be in writing, such
as contracts of apprenticeship and articles of clerkship. The BCEA requires
employers (except those who employ fewer than five employees and employees
who work for less than 24 hours a month or are domestic workers) to produce
written particulars of certain terms and conditions of employment (sec.
29). However, an unwritten contract is still valid.
The BCEA lays down a wide range of minimum standards (e.g. dealing with
hours of work, overtime, leave, sick leave, work on Sundays and public holidays).
However, the parties to a contract of employment have the freedom to agree
to terms and conditions of employment which are more favourable than those
laid down by legislation. They are also generally free to agree on matters
which are not regulated by statute.
A contract of employment may be concluded for a definite or an indefinite
period, and it can provide for full- or part-time work as well as temporary
work. However, under the LRA an employer who fails to renew a fixed-term
contract, when a “reasonable expectation” that it will be renewed is held
by the employee, is deemed to have dismissed the employee. [4]
The provisions of the BCEA are deemed to be included in all contracts of
employment unless the terms of other laws, or the contract itself are more
favourable (sec. 4). Moreover, the Minister of Labour may make a “sectoral
determination” setting different minimum standards for specific sectors (sec.
55), and may deem categories of persons to be employees (sec. 83).
Termination of employment
The different ways in which a labour contract can come to an end are enumerated
and regulated in part by the general law of contract (common law principles)
and in part by specific statutory provisions
of labour law. When a contract is entered into for a fixed period of time,
it will automatically come to an end when the contract period expires. The
parties to the contract can also agree on the automatic termination of the
employment contract on the occurrence of a future event: for example, when
the task or project for which the employee has been employed is completed.
As a general rule, a contract of employment can also be terminated by mutual
agreement of the parties. Moreover, the death (but not the illness) of the
employee will lead to the end of the contract. However, in terms of common
law, the death of an employer will not necessarily lead to the contract’s
termination. A contract may also terminate by operation of law.
There is today a plethora of case law providing
guidelines of circumstances in which dismissal would be considered an appropriate
sanction. [5]
Dismissal
“Every employee has the right not to be unfairly dismissed” (sec. 185,
LRA). The LRA in section 186(1) defines dismissal and distinguishes between
“automatically unfair dismissals” and “unfair dismissals” in sections 187
and 188. According to this legislation, any dismissal is unfair if
it is based on an “automatically unfair reason”. A dismissal will also be
unfair if it is not for a fair reason based on the employee’s conduct or
capacity, or owing to the employer’s operational requirements, or if the
correct procedures have not been followed. This is the case even if the dismissal
complies with any notice period in a contract of employment or in legislation
governing employment (sec. 188 of the LRA and sec. 2(1) of the Code of Good
Practice, Schedule 8 of the LRA).
Automatically unfair dismissals [6]
In regard to automatically unfair dismissals, the question of fairness is
decided irrespective of whether the employer has lawfully terminated the
contract of employment at common law. [7] Sec. 187 of the LRA lists the automatically
unfair reasons as follows:
- dismissal
based on membership in a union or a workplace forum, or participation in
lawful union activities or workplace forum activities;
- an
employer’s request that a person seeking employment shall not be or become
a member of any trade union or workplace forum, or would have to give up
such membership;
- dismissal
based on participation in a strike in conformity with the LRA or the intention
to participate in such a strike or to support it;
- dismissal
based on the employee exercising a right under the LRA, or participating
in any labour proceedings;
- an
employer compelling an employee to accept a demand concerning a matter
of mutual interest between the employer and employee;
- dismissal
based on race, colour, ethnic or social origin, gender, marital status,
family responsibilities, sexual orientation, religion, conscience, belief,
political
opinion, or disability, unless the reason for dismissal is based on an
inherent requirement of the particular job;
- pregnancy
or maternity; or
- dismissal
based on age, unless the employee has reached the normal or agreed retirement
age for employees in that capacity.
Unfair dismissals
Sec. 188 of the LRA stipulates that a dismissal is unfair where the
employer fails to prove that the dismissal was effected for a fair reason.
Fair reasons may be:
- connected
with the employee’s conduct;
- connected
with the employee’s capacity; (e.g poor work performance, incompatibility [8])
or
- based
on the employer’s operational requirements.
Substantive and procedural fairness [9]
Dismissal must be for a fair reason (substantive fairness) and in compliance
with a fair procedure (procedural fairness), which includes taking account
of the Code of Good Practice. [10] Participation in an illegal strike may
also constitute a fair reason for dismissal. For a dismissal for operational
requirements to be deemed a fair dismissal, the employer must, among other
things, consult the affected employee [11] and offer the employee a reasonable alternative
to dismissal. [12]
Sec. 189 of the LRA regulates dismissals on the grounds of the operational
requirements of a business. Dismissals for economic, technological, structural
or similar reasons are commonly collective dismissals.
Another principle that is applied in determining the fairness of a dismissal
in South African law is that of consistency. This entails determining whether
the employer has consistently applied the same standard in dealing with misconduct
or breaches of his/her company code. Unjustified inconsistency on the part
of the employer renders an employee’s dismissal substantively unfair. [13]
Notice and prior procedural safeguards
An employer seeking to dismiss an employee must observe the minimum notice
periods as prescribed, inter alia, by sec. 37 of the
BCEA. According to this section, a party wishing to terminate a contract
of employment must, during the first four weeks of employment, give the
other party one week’s notice. For employment of more than four weeks,
but less than a year, two weeks’ notice is required. For employment of
more than a year (or more than four weeks for farm or domestic workers),
the notice period is four weeks. An employer may make a payment in lieu
of notice, but a contractual notice period required of an employee may
not be longer than the period to be given to an employee. Collective agreements,
but not individual contracts, may provide shorter notice periods than those
stipulated by the BCEA.
Notice of termination may not be given while an
employee is absent on leave, including sick leave; usually, it must be given
in writing, except if an employee is illiterate. On termination of a contract
of employment, the employer must furnish the employee with a certificate
of service.
The Code of Good Practice appended to the LRA deals with some of the key
aspects of individual dismissals for reasons related to “conduct” and “capacity”
(sec. 1 of the Code). Termination of employment due to operational
requirements, if they involve collective dismissals, is not regulated by
the Code (sec. 7 of the Code).
Although special reference is made to probationary employees with regard
to terminations on the grounds of “capacity”, the Code of Good Practice does
not distinguish between temporary, casual or managerial employees.
The legislation provides consultation rights for trade unions, workplace
forums and employees’ representatives when collective dismissals are contemplated.
An employer is obliged to disclose in writing all relevant information for
the purpose of consultation (e.g. reasons for dismissal, number of employees
affected, period during which the proposed dismissals are to occur, proposed
method of selecting employees for dismissal, assistance which may be rendered
by the employer to the employees, possibilities of future employment and
other alternatives to dismissals). The employer must also allow employees
to respond, and in turn reply to the response of the workers’ representatives
to these issues. If selection criteria for the dismissals have not been agreed
to by the parties, the employer must follow fair and objective criteria.
The employer’s failure to comply with these procedural requirements renders
any dismissal unfair (sec. 189, LRA).
As far as misconduct is concerned, the Code of Good Practice demands that
disciplinary rules should be adopted according to the size and nature of
the employer’s business and should promote certainty and consistency. These
rules should be clearly formulated and made available to all employees (sec.
3(1) of the Code).
In deciding on the imposition of a disciplinary penalty, all relevant facts
should be taken into account, including the employee’s disciplinary record,
length of service and personal circumstances. However, the procedure does
not necessarily have to take on a formal nature (sec. 4(1) of the
Code). In any case, the employee has to be informed of the allegations against
him or her and has to be given a chance to respond (where necessary, with
the assistance of trade union or employees’ representatives) (sec. 4 of
the Code).
Sec. 3(4) of the Code states that generally it is not appropriate
to dismiss an employee for a first offence. For a first infringement, the
employee should receive a written warning (for more serious infringements,
a final warning). Dismissal should be saved for cases of serious misconduct
or repeated infringements of disciplinary rules which make a continued employment
relationship intolerable. Gross dishonesty or wilful damage to property,
wilful endangering of other persons, physical assault, and gross insubordination
are examples of serious misconduct.
Disciplinary proceedings against a trade union representative should not
be instituted without first informing and consulting the union (sec. 4(2) of
the Code).
As far as incapacity is concerned, the legislation distinguishes between
poor work performance, on the one hand, and ill health and injury, on the
other.
With regard to poor work performance, the legislation further distinguishes
between probationary employees and employees not on probation. A probationer
should be given the proper instruction, training or counselling that he or
she requires in order to render satisfactory service (sec. 8(1) of
the Code). Dismissal during the probationary period should be preceded by
an opportunity for the employee to state a case in response and to be assisted
by a trade union representative or fellow employee (sec. 8(1) of the
Code). After probation, an employee should not be dismissed for incapacity
unless the employer has given the employee appropriate instruction, training
or counselling, and, after a reasonable period of time for improvement, the
employee continues to perform unsatisfactorily (sec. 8(2) of the Code).
The procedure leading to dismissal should include an investigation to establish
the reasons for the unsatisfactory performance and the employer should consider
any available alternatives to dismissal (sec. 8(3) of the Code).
With regard to incapacity due to ill health or injury, the investigation
conducted by the employer should establish the extent of the incapacity and
the prognosis, and consider counselling or rehabilitation. The employer should
also consider any available alternatives to dismissal (sec. 10 of
the Code).
Severance pay
The LRA requires severance pay in the case of dismissal for economic reasons
(sec. 196), unless the employer is exempted from this obligation by
the Minister. A basic rate of at least one week’s wages per year of service
is required by both the LRA and BCEA (sec. 41) but only for dismissals
for operational requirements. This rate, which accords with current industry
norms, may be adjusted by the Minister from time to time. It may also be
improved on by collective agreement. Where a dispute over severance pay forms
part of a dispute over unfair dismissal for economic operational reasons,
it is determined as part of the latter dispute by the Labour Court (sec.
196, LRA). [14]
Avenues for redress
The LRA establishes an independent, tripartite Commission for Conciliation,
Mediation and Arbitration and a Labour Court (Chapter VII of the LRA). Sec.
191 of the LRA states that if there is a dispute about the fairness of
a dismissal, the employee may refer the dispute in writing within 30 days
of the date of the dismissal to a special bargaining council or to the Commission,
if no council has jurisdiction. If the council or the Commission does not
succeed in resolving the dispute through conciliation, it is referred to
arbitration. No appeal is available against an arbitration award (sec.
143, LRA).
Automatically unfair dismissals should be referred to the Labour Court.
The Director of the Commission may also refer other dismissals to the Labour
Court where:
- the
dismissal is for discriminatory reasons;
- it
is a very complex case;
- there
are conflicting arbitration awards that have to be resolved;
- it
is in the public interest; or
- a
question of law is involved.
The Labour Court also has jurisdiction with regard to disputes concerning
dismissal as a consequence of operational requirements.
In any proceedings concerning any dismissal, the employee must establish
the existence of dismissal and the employer must prove that the dismissal
is fair (sec. 192, LRA).
In the case of dismissals adjudicated by the Labour Court, an appeal against
the decision of the Court is possible. Appeals from the Labour Court will
be heard by the Labour Appeal Court. However, no appeal to the Appellate
Division of the Supreme Court of South Africa is possible.
Common law claims for breach of contract in the ordinary civil courts are
also possible.
The primary remedy envisaged by sec. 193 of the LRA in cases of unfair
dismissal is reinstatement or re-employment. Urgent interim relief (including
temporary reinstatement) may also be available. [15]
Alternatively, the Labour Court or the arbitrator may order the employer
to pay compensation to the employee (sec. 194 of the LRA deals with
the limits on compensation for dismissals that are not automatically unfair,
or not for operational requirements; the maximum amount is the equivalent
of 12 months’ pay). Sec. 195 states that such an order or award of
compensation is in addition to, and not a substitute for, any other amount
to which the employee is entitled in terms of any law, collective agreement
or contract of employment. [16]
Further information
[1] Murray v Minister of Defence (2006) 27 ILJ 1607 (C); Avril Elizabeth home fro the Mentally Handicapped
v CCMA and Others (2006) 27 ILJ 1644 (LC); Fry’s Metal (Pty) Ltd v NUMSA
and Others (2003) 24 ILJ 133 LAC.; Irvin and Johnson v CCMA and Others
(2006) 27 935 (LAC).
[2] Buthelezi v Municipal Demarcation Board [2005] 2 BLLR 115 (LAC) –
the Labour Appeal Court in this case held that an employer has no right to terminate a fixed
term contract (even on due notice given), before the expiry of the term
of the contract, unless the contract provides otherwise. This means if
an employer decides to retrench such employees, he/she commits a breach
of contract and is liable to that extent. Similarly, the employee will
be liable for breach of contract if he/she terminates the contract before
the expiry of the term of the contract.
[3] P.A.
K Le Roux, Contemporary Labour Law, September 2005, volume15, no. 2, page 11, ‘Employees, independent
contractors and intermediaries: The definition of an employee re-visited.’
[4] In SA Rugby (Pty) Ltd v CCMA and Others [2006] 1 BLLR 27 (LC), the Labour Court held that the onus is on the employee to prove that there was a reasonable
expectation of renewal of the fixed-term contract on the same or similar
terms. In this case the court could not accept that there was a dismissal
because the employees were on three-month contracts, which were terminated,
and they were claiming that they had a reasonable expectation of one-year
contracts.
[5] P.A.K Le Roux, Contemporary Labour Law, May 2006, volume 15,
no 10, page 91, “The disciplinary sanction: When is dismissal appropriate?”
[6] P.A
K Le Roux, Contemporary Labour Law,
June 2006, vol 15, no. 11, page 102, “When is dismissal automatically unfair:
Labour Appeal Courts consider shop steward misconduct, normal retirement
age and aspects of section 197 transfers.’
[7] P. A. K Le Roux, Contemporary Labour Law, February 2006, vol
15, no.7, page 68, ‘Onus of proof in automatically unfair dismissals:.’
[8] P. A. K Le Roux, Contemporary Labour Law, March 2005, vol 14,
no. 8, page 71, ‘Incompatibility as a ground for dismissal: Difficult
employees, eccentrics and the employer’s right to harmonious relationships.”
[9] P.A. K Le Roux Contemporary Labour Law, July 2006, vol 15,
no.12, page 111, “Procedural fairness and dismissal: Recent cases explore
the limit.”
[10] Schedule 8 of the LRA. This Code is drafted in general
terms and is not intended to substitute “codes of discipline” which have
been provided for in the applicable collective agreement, contract of employment
or workplace forums. In assessing whether the employer has given effect
to the underlying principles of the Code, the courts take into account
the size and nature of the undertaking.
[11] Kruger v Jigsaw Holdings Ltd and Others [2006] BLLR 670 (LC)
[12] SACCAWU and Others v Gallo Africa (2006) 1 BLLR 36 (LC)
[13] P.A.K Le Roux, Contemporary Labour Law, December 2005, vol
15, no. 5, page 42, ‘Parity, fairness, and dismissal: What does consistency
mean in the context of dismissal for misconduct.”
[14] P. A. K Le Roux , Contemporary Labour Law, February 2006, vol
15 , no. 7, page 61, “Disputes regarding severance benefits : Paying more
than the minimum and calculating remuneration.”
[15] P.A K Le Roux, Contemporary Labour Law, July 2006, vol 15,
no.12, page 119, “Reinstatement and resolutive conditions.”
[16] The Office thanks Halton Cheadle for his comments on this
section.
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