Why Having An Employment Contract In Place, Is Not Just Talk | Legal Articles


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Why Having An Employment Contract In Place, Is Not Just Talk

Despite being recognised as valid in South African law, verbal agreements are like inscriptions on sand. As soon as strong winds blow over the sand dunes, the inscriptions disappear in the same breath as the wind itself. It is important for parties to reduce their agreements into writing, for record purposes and ease of reference.

During disputes where a verbal contract is involved, it normally becomes difficult to determine which party is presenting the true state of things and sequence of events, because they would be trying to ‘outdo’ each other to win the day.

The same holds true when it comes to employment relationships, where parties enter into an employment relationship without concluding a written contract. Sometimes it is due to the mistaken belief of the employer that when an individual who renders services to them has no written contract, it becomes easier to dismiss them. However, this is not so, as the principles of labour law provide for theories on how to determine whether someone is an employee or not, and how their services may be terminated lawfully.

The inconvenience of not having a written employment contract in place was laid bare in the matter of Mashabela v Octaves Security Services [2022] 31 CCMA 7.1.9, also reported as [2022] 4 BALR 393 (CCMA), wherein the applicant was stationed as a security personnel at the Department of Agriculture and Rural Development (Department), in Potchefstroom. The employees of the respondent embarked on an unprotected strike whereafter the department terminated the contract between itself and the respondent. Despite the fact that the applicant had not participated in the strike, he received a letter to say his contract had been terminated automatically when the department terminated the service level agreement between the department and the respondent.

There had been no written contract of employment between the respondent and the applicant. This then became the bone of contention as there was no procedural record of how the employment relationship between the respondent and the applicant could be terminated.

The issues to be decided were if the applicant had been dismissed, if so whether the dismissal had been substantively and procedurally fair and, in that event, what the appropriate remedy would be.

The respondent argued that the services of the applicant had been terminated upon the termination of the contract between the department and the respondent because this ‘is how things work in the security sector.” The applicant on the other hand argued that the verbal agreement between the parties was not dependent upon the termination of the agreement between the department and the respondent.

It is important to note that Section 198B (2) of the Labour Relations Act 66 of 1995 (LRA), sets out the categories of employees to which Section 198B applies. To this end, since the applicant earned below the threshold, the section was applicable as it was a fixed term contract which terminated upon the occurrence of a certain event (termination of contract with the respondent’s client). An employee may be employed on fixed term contracts for longer than 3 months under the circumstances in Section 198B (3) and (4), without which it would be regarded as permanent employment.

Whereas the applicant did not rely on 198B, the respondent also did not justify that the applicant had been employed on a fixed term contract for longer than 3 months.

Reference was made to the case of Khum MK Investments and BIE Joint Venture (Pty) Ltd v CCMA and Others [2020] 41 ILJ 1129 (LAC) wherein the employer had argued that the employment contracts had terminated upon the cancellation of orders by its client. However, it was found that the contracts of employment did not specifically provide for such and therefore it constituted a dismissal based on section 186 (1) (a) of the LRA (dismissal with or without notice).

Based on the case of Khum as mentioned above, it was found that the dismissal had been unfair and amounted to section 186 (1) (a). The applicant was awarded 6 months’ salary compensation as he no longer wished to continue within the employ of the respondent.

The above case highlights the importance of setting out the terms and conditions of employment between parties so as to have the benefit of records to resolve disputes. At Van Deventer and Van Deventer Incorporated we assist with labour law, civil and general litigation, criminal litigation, human rights law, family law matters such as maintenance, divorces, protection orders, Rule 43 applications, Rule 58 applications and others. We also assist in personal injury, company law and deceased estates amidst an array of others.

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