By Judith Griessel, Griessel Consulting – Business owners and managers constantly have to take decisions which could have far-reaching legal- and financial implications for their business – and this extends to employment-related issues.
Small businesses are especially vulnerable, but it is also a reality that even experienced HR practitioners sometimes feel overwhelmed by the ER/IR side of their portfolio.
It is not just a matter of keeping up with the continuous legal developments in the employment arena, but also understanding the full impact thereof and minimising the business’ risk exposure.
Top management, board members and other decision makers tend to focus on the operational and financial side of their business and do not always appreciate that strategic HR can make a significant difference to their bottom line. It requires an understanding of the potential risks, and a willingness to commit time and resources to pre-emptively address those. Here are a few pointers.
Contracts of employment
- A contract of employment need not be in writing to be enforceable. The fact that a prospective employee has not signed a contract, does not mean that an employment relationship does not exist.
- A contract of employment can also come into being even if all the terms had not yet been agreed upon and before being signed by both parties. As soon as there is agreement in principle on the essential elements of the contract, a valid contract can exist.
If an employer tenders an unconditional (and often abbreviated) offer of employment to a prospective employee and the employee accepts this, he/she will be regarded as having been employed by the employer. A subsequent “withdrawal” of the offer (even prior to the effective date of appointment) if, for example, the parties cannot agree on specifics of the package, working hours, overtime, etc., would then constitute a dismissal for the purposes of the Labour Relations Act and will be subject to the normal fairness requirements.
An employment contract can be subject to a suspensive condition (such as positive vetting) and terminate automatically if that condition is not fulfilled (see Nogcantsi v Mnquma Local Municipality and Others  38 ILJ 595 (LAC)) – however, the specific wording of the clause must be sufficient from a legal point of view to allow for cancellation of the contract without it constituting a dismissal. (See Du Preez v South African Local Government Bargaining Council and Others  ZALCCT 11)
- It will be prudent for employers to ensure that all of the terms and conditions of employment have been expressly agreed upon by both parties before confirming the appointment and/or allowing a prospective employee to commence work.
- Properly drafted disclaimers should be included in offers of employment and other recruitment documentation to ensure that there are no misunderstandings around if and when an employment relationship will come into being.
- The employment contract is a hybrid between labour law and contractual/common law. This means that its provisions can be enforced in terms of labour law; or in terms of contractual/common law; or both. The route that is followed (e.g. unfair dismissal or unlawful breach of contract), leads to vastly different outcomes. The employer may win a case at the CCMA based on fairness, but still have to pay damages to a disgruntled employee in terms of a civil suit for breach of contract or unlawful termination.
- The contents of the employment contract are important. Employers love to ask for a “simple” contract or a basic template, especially for lower level staff. For that matter, giving the employees a list of terms and conditions as set out in section 29 of the BCEA, would suffice. There are however other considerations that support something more substantial – depending on the extent to which the employer wants to be protected in terms of potential legal challenges.
While the employment contract is an important source of the employee’s rights, it is an equally valuable source of the employer’s rights. Conflicts of interests, confidentiality, protection of private information, consent to be searched or to submit to breathalysers, acknowledgement of surveillance, monitoring of electronic communications and equipment, agreement to work overtime, provisions relating to loss control and safety, recovering money from the employee, suspensive conditions, etc. are just some of these.
The wording of the various clauses must be clear and unambiguous, and cross-referenced properly with the rest of the contract and with any corresponding policy documents. Too often ‘cutting and pasting’ from other documents or previous contract versions lead to discrepancies and an adverse interpretation in the case of a legal challenge. (See Air Traffic and Navigation Services v Esterhuizen  ZASCA 138)
Stated undertakings by the employer as part of the employment contract, require caution. Perhaps the employer wants to impress upon new employees that it treats its employees well by incorporating prescriptive disciplinary procedures or other policy provisions into the employment contract. However, this could transform those provisions into additional contractual entitlements for the employee and place additional legal obligations on the employer, over and above those required in terms of labour law. (See Steven Motale v The Citizen 1978 (Pty) Ltd and Others LC  ZALCJHB 22; Ngubeni v National Youth Development Agency  ZALCJHB 269)
Example: The Labour Relations Act does not require a formal disciplinary hearing to be conducted prior to dismissal, although many employers still provide for this in terms of their internal disciplinary code and procedure. In the Motale case, the employer had such a procedure (incorporated into the employee’s contract of employment), prescribing a hearing before an independent chairperson prior to a dismissal for misconduct. The employee denied the allegations of misconduct and insisted on a disciplinary hearing – however the employer only invited him to make written representations on why he should not be dismissed for ‘breach of trust’. When he refused to comply, he was summarily dismissed. The Labour Court held this to be breach of contract on the part of the employer.
Limited duration contracts (for those earning less than the earnings threshold, currently R205 433 p/a) must be in writing and must reflect the reason for the employment being fixed as opposed to being permanent, and the employee’s agreement thereto.
- The reason must be a permissible / justifiable one in terms of the Labour Relations Amendment Act – otherwise the employee can be deemed to be permanent if employed for longer than 3 months, regardless of what the contract stipulates. Once such an employee is deemed to be permanent, letting the contract expire and not offering continued employment, could constitute dismissal.
- Any renewal of a fixed term contract must also be in writing and should be a new contract altogether, as opposed to just an extension letter.
- If the reason for the fixed term contract is linked to a specific project of a limited duration, employers should define the nature and duration of the project very carefully, especially where there are sub-components to a project. It should be clear if the contract will terminate on the completion of the sub-component or of the whole project. This is important, since employees who are employed on a specific project for longer than 24 months, will be entitled to severance pay unless the employer arranges an alternative job for them on the same or similar terms, or offers them permanent employment.
- It is strongly recommended that employers use a formal and properly drafted application form to be completed by short-listed applicants for employment. Using only CV’s to appoint applicants for employment is a risky practice. Even if using a recruitment agency, the employer has certain obligations and responsibilities. Important permissions and information relevant to the job need to be obtained from the applicant prior to making an offer of employment, e.g. to allow for reference- and other pre-employment checks. This will become essential once the Protection of Personal Information Act (POPI) becomes law.
- Mandates given to recruitment agencies must be clear and the service contract with the agency should be properly scrutinised or drafted by a legal professional, and include appropriate indemnities.
Example: The recruitment agency makes an offer to an applicant whose appointment the client has been considering. The applicant accepts, resigns and arrives at the company’s door a month later to start work – although the client had at the time decided to appoint someone else. There is now a dispute between the client and the recruitment agency around whether the client had given them the go-ahead to make the offer, since the service contract does not stipulate clearly what constitutes such authorisation. The client also faces a claim of unfair dismissal by the new employee.
- Employers should implement a policy of conducting exit interviews – not only as a good human resources practice, but also to ask the employee if references and other personal information may be given to prospective employers and if so, what may be disclosed. This permission should be obtained in writing to protect the employer.
Policies and practices
- A retirement policyis becoming a necessity for all employers to have. It does not have to be a complicated one, but it should stipulate the retirement age and also what happens once that age is reached, especially if there might be the option of further employment after retirement. The new relationship after retirement age should be clearly determined and a new agreement entered into. The policy should be consistently applied.
- Social media and internet policies are also becoming more and more important – especially if employees are permitted to have access to these sites for business purposes. Limitations should be set and the rules made clear about contents, purpose as well as time spent on social media or internet sites. Employees should be aware of, and consent to, their digital records being monitored by the employer. Even if employees use their own devices, there should be rules about time spent on non-work related use (or abuse) of the internet or social media. (See https://simplebooklet.com/electronicallyexposed)
Maternity leave – In keeping with the Constitution and anti-discrimination laws, the Labour Court has a while ago pronounced that maternity leave and –benefits should not be limited to female employees who have given birth. (See Mia v State Information Technology Agency (Pty) Ltd. 2015 (6) SA 250 (LC))
This could constitute unfair discrimination on the basis of marital status, sexual orientation, gender, etc.
Also, the court said that the right to maternity leave is not linked only to the welfare and health of the child’s mother, but should take into consideration the best interests of the child.
The court said that employment policies should recognise the status of parties to a civil union (e.g. same sex marriages). Surrogacy and adoption agreements should also be recognised. There may also be situations where a mother died in childbirth and the father has to assume the role of primary care giver.
This will necessitate changes to the Basic Conditions of Employment Act as well as UIF legislation, which at this stage only provides maternity benefits to female employees. A draft Bill has already been published in this regard.
When you run a business, the bottom line and getting on with the job, is the priority. Employment Relations are often regarded as ‘soft issues’ and have to stand in line behind operational considerations. Responsible decision makers will however appreciate that it is worthwhile to invest in expert advice and assistance in this area. After all, a stich in time saves nine.
For more information, please contact Judith at firstname.lastname@example.org