Employment Contracts Workshop.20241024
Employment Contracts Workshop.20241024
Employment Contracts Workshop.20241024
EMPLOYMENT
CONTRACTS
Presented by Grant Herrmann (LLB)
Regional Manager
24 October 2024
Employment Contracts
Purpose of Workshop
The purpose of this workshop is to provide business owners, managers and HR/IR managers
with guidance regarding contracting with employees.
Workshop Objectives
The objectives include providing delegates with an understanding of:
TEMPORARY
EMPLOYMENT PART-TIME
EMPLOYMENT
CONTRACTS EMPLOYMENT
SERVICES
Discussion Outline
1 Employment Contracts:
a. Importance of employment contracts;
i. Permanent; and
ii. Fixed term.
c. Content: written particulars of employment – Section 29 of the Basic Conditions of Employment Act;
3 Part-time Employment
1. Employment Contracts
Importance Of Employment Contracts
Employment contracts are important as they regulate the terms and conditions of employment between the employer
and the employee. Contracts create rights and obligations.
The Labour Appeal Court in Minister of Justice & Constitutional Development v Myburgh JA46/15 confirmed the finding in
Goldblatt v Fremantle 1920 AD 123 at 128–9, in which Innes CJ said: ‘Subject to certain exceptions, mostly statutory, any
contract may be verbally entered into; writing is not essential to contractual validity. And if during negotiations mention is
made of a written document, the Court will assume that the object was merely to afford facility of proof of the verbal
agreement, unless it is clear that the parties intended that the writing should embody the contract. (Grotius 3.14.26 etc). At
the same time it is always open to parties to agree that their contract shall be a written one (see Voet 5.1.73; V. Leeuwen
4.2, sec. 2, Decker’s note); and in that case there will be no binding obligation until the terms have been reduced to writing
and signed. The question is in each case one of construction.’
Section 29 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) requires an employer to supply
employees with certain particulars in writing. These will be discussed later.
1. Employment Contracts: Categories of Employment
Permanent Contracts
Permanent contracts are often the default form of employment contract. Permanent employment contracts are
concluded with the intention that there will be an on-going employment relationship between the employer and
employee until termination due to resignation, retirement, death, misconduct, incapacity or operational requirements
(i.e. no end date). Permanent contracts of employment can be part-time or full time.
In terms of section 37 of the BCEA, a contract of employment is also terminable at the instance of a party to the
contract on notice, which notice periods will be discussed in more detail below. However, please be advised that
even though section 37 alludes thereto that employers may terminate the employment contract on notice, this is not
the case. A contract may only be terminated at the instance of the employer for reasons related to the employee’s
misconduct, incapacity or the employer’s operational requirements as per section 188(1) of the Labour
Relations Act 66 of 1995 (hereafter “LRA”) read with Schedule 8 thereto. Please note, dismissals are dealt with in
more detail in some of our other workshops.
1. Employment Contracts: Categories of Employment
Fixed-Term Contracts
A fixed-term contract is defined in section 198B (1) of the LRA as a contract of employment that terminates on:
• a probation period – i.e. “Let’s put this person on a fixed term contract and if they work out, we’ll
employ them permanently”; or
• any reason not related to the temporary nature of the work / position.
1. Employment Contracts: Categories of Employment
In terms of Section 198B (3), a fixed term contract or successive fixed term contracts for longer than 3
months, can only be used in the following circumstances:
1. When the nature of the work for which the employee is employed is of limited or definite duration;
or
2. The employer can demonstrate any other justifiable reason for fixing the term of the contract such as:
• may not be treated less favourably than an employee employed on a permanent basis and who performs the
same and / or similar work, unless there is a justifiable reason for different treatment;
• must be given equal access to opportunities to apply for vacancies;
• would be entitled to 1 weeks’ remuneration for each completed year of the contract upon termination of the
contract - if the fixed term contract was for a specific project that exceeded 24 months and no further
employment was offered on the same or similar terms.
1. Employment Contracts: Categories of Employment
Employers/Employees that are excluded from section 198B of the LRA:
One
Two
Three
Employees who earn in Four
excess of the threshold Employees employed in
Employers who employ
prescribed by the Minister terms of a fixed term Employers who employ less
less than 10 employees;
of Employment and contract/successive fixed than 50 employees and
Labour in terms of term contract which is whose business has been in
section 6(3) of the BCEA, permitted by any statute, operation for less than two
currently being sectoral determination, or years, unless:
R241 110,59 per annum; a collective agreement; a) The employer conducts
more than one business;
b) The business was formed
by the division or
dissolution of an existing
business.
1. Employment Contracts: Categories of Employment
A fixed term contract must:
• be in writing;
• set out the reasons for utilising a fixed term contract (the nature of work/other justifiable reason as discussed
above);
• set out the time period OR specific project for which the employee is employed.
A danger of using fixed term contracts arises when the employer continues to renew the contract. The use of successive
fixed term contracts is commonly known as ‘rolling’ contracts.
Where the employer has failed to renew a fixed term contract where there was a reasonable expectation of such renewal
(or where the employer offered to renew it on less favourable terms), the employee can be deemed to have been dismissed.
The basis for an unfair dismissal claim has been extended to include an expectation of indefinite employment. This
deeming provision is expressly set out in section 186(1)(b) of the LRA.
The court in Dierks v University of South Africa set out a test to establish whether or not the employer created such a right to
expectation of renewal. The test is as follows: “Are there facts that, in the ordinary course, would lead a reasonable person to
anticipate renewal”? Note that the expectation must be reasonable given the circumstances, thus, on an evaluation of all the
surrounding circumstances; including the significance or otherwise of the contractual stipulation, agreements, undertakings by
the employer, or practice or custom in regard to renewal or re-employment, the availability of the post, the purpose of, or reason for
concluding the fixed term contract, inconsistent conduct, failure to give reasonable notice, and the nature of the employer's
business, are all criteria that must be included in the evaluation of whether or not a right of expectation was created by the
employer.
1. Employment Contracts: Categories of Employment
Termination of a fixed term contract
A fixed term contract expires on the occurrence of a specified event; the completion of a specified task or
project or on a fixed date other than the employee’s normal or agreed retirement age.
Please be advised that the employer may only terminate the contract before the end date for reasons related
to serious misconduct/incapacity, and after the correct procedure for such dismissal has been followed. The
employee may be retrenched before the end date if this is provided for in the contract of employment. The
employee may however resign before the end of the contract.
Content: Written particulars of Employment – Section 29 of the BCEA
Section 29 of the BCEA requires employers to supply employees with certain particulars in writing upon commencement of
employment. Usually, these particulars are included in a written contract of employment (permanent or fixed term); however,
it does not need to take the form of an employment contract.
Members, please visit our online Resource Library (www.neasa.co.za), or contact our Hotline on 08601 NEASA (08601
63272) or [email protected] for pro forma employment contracts.
Illiterate Employees:
Where an employee is not able to understand the written particulars, the employer must ensure that they are explained to
the employee in a language and in a manner that the employee understands.
Record Keeping:
Please be advised that the written particulars must be kept by the employer for a period of three years after the termination
of employment.
Other:
Matters such as transport/allowances/bonuses/increases are not regulated by the BCEA and are thus open to negotiation
between the parties – unless the parties are bound by a collective agreement. We suggest that employers do not bind
themselves by including these in the employment contract, and to rather regulate same in terms of company policies.
Examples of Pro-Employer contractual clauses
CLAUSES REGARDING TIME PERIODS
Hours of work
• “The Employee will work 45 (forty-five) hours per week, from Monday to Friday, according to the work schedule
determined by the Employer from time to time. The Employee can be expected to work on Saturdays and
Sundays in case of emergency and when requested by the Employer with the provision that reasonable notice
will be given in advance”.
• “The Employee shall be entitled to a meal interval of 30 (thirty) minutes after 5 (five) consecutive hours of work,
unless the Employee works for 6 (six), or fewer, hours on a day. The Employee will not be remunerated during
the meal interval unless the Employee is required to work during the meal interval to perform duties that cannot
be left unattended and cannot be performed by another Employee”.
• “The Employee agrees to work overtime as may be required by the Employer on 4 hours’ notice. This clause will
be renewed after 1 year of employment”.
Examples of Pro-Employer contractual clauses
Hours of work continued
• “The rate of pay for overtime worked (except on Sundays and Public Holidays), will be 1,5 (one and a half) times the
Employee's hourly salary/wage, alternatively the Employee's ordinary wage plus 30 (thirty) minutes paid time off for
every hour of overtime worked, alternatively 90 (ninety) minutes paid time off for each hour of overtime worked, at the
discretion of the Employer. The Employer shall grant the Employee the paid time off within 12 (twelve) months of the
Employee becoming entitled to it.”
• “The Employer shall allow the Employee a daily rest period of 12 (twelve) hours and a weekly rest period of 36 (thirty-
six) consecutive hours, which will not necessarily include a Sunday. Alternatively, the Employer may allocate the
Employee a rest period of 60 (sixty) consecutive hours every 2 (two) weeks or a weekly rest period of 28 (twenty-eight)
hours in the first week and 44 (forty-four) hours in the following week”.
• “The Employee’s ordinary hours of work may be extended by up to 15 minutes in a day but not more than 60 minutes in
a week to enable the Employee, whose duties include serving members of the public, to continue performing those
duties after the completion of ordinary hours of work”.
Examples of Pro-Employer contractual clauses
Compressed Working Week:
• “The Employee undertakes to work up to 12 (twelve) hours in a day, inclusive of meal and tea intervals, without
receiving overtime pay, subject to the maximum of 45 (forty-five) ordinary hours and a maximum of 10 (ten) hours
overtime per week, if so required by the Employer. Overtime will either be paid at 1.5 times the ordinary rate, or, at the
Employer’s discretion, the Employee will be given paid time off in lieu of overtime payment within the following 12
months”.
Sunday Work:
• “The Employee undertakes to work on Sundays, if so required by the Employer”.
• “If the Employee normally works on Sundays, the Employee will be remunerated at 1,5 (one and a half) times his/her
hourly salary/wage for each hour worked”.
• “If the Employee does not normally work on Sundays, the Employee will be paid double his/her hourly wage for each
hour worked, alternatively the Employer may grant the Employee paid time off equivalent to the difference in value
between the Employee's wage and the pay that the Employee is entitled to for working on the Sunday. The paid time off
shall be granted within 12 (twelve) months of the Employee becoming entitled thereto”.
Examples of Pro-Employer contractual clauses
Public – Holidays
• “The Employee agrees that he/she may be required to work Public Holidays.”
• “A public holiday is exchangeable for any other day which is fixed by agreement or agreed to between the Employer
and the Employee”.
Short Time
• “The Employee hereby agrees that the Employer may implement a system of short time under circumstances of
reduction of work due to circumstances not within the control of the Employer, on condition that, where possible, the
Employer gives 12 hours’ notice to the Employee. The Employee shall be entitled to payment only for hours worked
during said short time.”
Examples of Pro-Employer contractual clauses
Night work
• “The Employee undertakes to work after 18h00 and before 06h00, if and when so required by the Employer”.
Employees earning in excess of the BCEA threshold (Currently R 254 371,67 per annum)
• “The Employee will not be entitled to any of the following benefits for any period that his/her gross remuneration
package exceeds the earning threshold of the Basic Conditions of Employment Act, as determined by the Minister from
time to time:
a) limitation on working hours per week and day;
b) overtime pay or similar benefit;
c) meal intervals;
d) daily and weekly rest periods;
e) pay for work on Sundays;
f) payment or similar benefit for working at night;
g) availability of transport between the Employee’s residence and the workplace at the start and end of the shift;
h) payment for work done on public holidays on which the Employee would not ordinarily work.”
Examples of clauses regarding consent
Medical & Alcohol Testing
• “The Employee agrees to undergo any medical examination or examination by means of apparatus especially designed
for the purpose of testing for intoxication due to the consumption of liquor or other narcotic substance. The Employee
accepts the admissibility of such testing and result of such testing”.
Polygraph Testing
• “The Employee hereby consents to undergo polygraph testing at management’s discretion, the results of which may be
used in evidence. If the Employee refuses to undergo such a test it will be seen as a breach of contract and may lead
to the Employee’s dismissal.”
Examples of clauses regarding consent
Business Vehicles
• “If the Employee as a driver of the business vehicle is involved in an accident caused by the negligent, willful or
unlawful conduct of the Employee, the Employer reserves the right to recover such loss or damage directly from the
Employee.”
• “In the event of the Employee incurring traffic fines as a driver in the course and scope of his/her employment, he/she
agrees to deduction of the value thereof from his/her salary or wage. This will not apply if the offense relates to the
maintenance of the vehicle.”
• “Business vehicles may under no circumstances be used for private purposes, and under no circumstances may any
private persons be transported in or on such vehicle. The Employer is indemnified against any action due to an
Employee’s failure to comply with this provision”.
Examples of clauses regarding consent
Loss Control- Cameras in the Workplace / Searching of Personal belongings
• “The Employee hereby consents to his/her person, property and vehicle being searched whilst in the workplace by the
Employer or his/her nominated representative, provided that female Employees shall be searched by female persons
and male Employees by male persons”.
• “The Employee acknowledges and associates him/herself with the fact that close circuit television and other camera /
audio surveillance equipment may be in use in the workplace. The Employee agrees that such material may be used in
evidence.”
Other NB! clauses
Confidentiality
• “All information that comes to the attention of the Employee due to the employment relationship shall be treated with the
utmost of confidence, and may not be disclosed to any unauthorized person, nor to any person not authorized in writing
to receive any such information, including any member of the Employee’s family. This Confidentiality Clause is
applicable indefinitely and applies even after the Employee leaves the employment of the Employer”.
• “The Employee undertakes not to disclose any confidential information to any third party or entity during the operation of
this agreement or after its termination, unless the Employer specifically agrees.”
Disclosure of Information
• “Should it be revealed at any time after the commencement of employment that the Employee has failed to disclose any
information that may have influenced the Employer’s decision regarding employment, whether inadvertently or not, or
has disclosed incorrect or false information, such omission or commission shall constitute grounds for the summary
dismissal of the Employee.”
Other NB! clauses
Restraint of Trade
• “The Employee undertakes not to be engaged in any business in competition with the Employer, be it directly or
indirectly, as a shareholder, partner, member of a close corporation, director of a company, or in any other capacity
within one year after termination of employment in the area known as THE CITY OF CAPE TOWN.”
• “The Employee acknowledges and agrees that the aforesaid restraint is fair, reasonable and necessary for the
protection of the Employer, the Employer’s trade name, and the goodwill attached thereto.”
• “Without prejudice to any other rights which the Employer may have in law, the Employee acknowledges that the
agreed damages due to his/her Employer will be an amount of R50 000-00 in respect of each calendar month during
which any breach of the aforesaid restraint continues, and that the Employer shall be entitled to recover such amount,
and any associated recovery costs, from the Employee in respect of such breach.”
Retirement Age and Use of Employer’s Facilities
Retirement Age
• “Upon reaching the age of 55 (fifty-five), the Employee may give notice to the Employer of his/her intention to retire but
will be obliged to retire upon reaching the age of 60 (sixty), upon which this contract will automatically expire at the end
of that calendar month”.
• A bargaining council agreement or sectoral determination takes precedence, unless they provide otherwise.
• Does not apply to domestic workers, public service, employers who conduct >1 business, any business formed by the
division or dissolution of an existing business.
• Maximum of 15 hours overtime per week. First 10 hours overtime at 1.3 x ordinary wage; thereafter 1.5 x ordinary wage.
• In terms of a written agreement, the working hours of an employee may be averaged over a period of up to 4 months,
subject to a maximum of 45 ordinary hours per week and 10 hours overtime per week. Such agreements lapse after 12
months.
• In terms of a written agreement the employer may reduce an employee's annual leave by the number of days of family
responsibility leave on full remuneration granted to the employee at the employee's request.
Termination of contract
The contract of employment will terminate under the following circumstances:
01 02 03
Upon completion of fixed Termination by agreement Termination on the
term contracts insolvency of employer
- the contract automatically - where the employer and – Section 38 of the Insolvency
ends once period agreed to has employee enter into a mutual Act, which deals with the
expired or when the project has agreement that the contract will effects of liquidation on
been completed. come to an end. employment contracts, provides
that employment contracts are
suspended from the date the
provisional order of liquidation
of the employer (or final order if
no provisional order) is granted.
This is followed by a
consultation process.
Termination of contract continued
The contract of employment will terminate under the following circumstances:
04 05
Termination as a result of a breach by the employee Termination by employee
- where the employee fails to perform his/her duties in terms of the • Resignation
employment contract, or is guilty of misconduct, the employer can o Does not include constructive dismissal, where the
employee resigns because his/her employer has made
dismiss the employee if the breach is sufficiently serious e.g.:
continued employment intolerable.
negligence/incompetence, or failure to obey a reasonable and lawful
• Notice periods in terms of the BCEA (must be in writing)
instruction. If an employer terminates the employment relationship, it is o 6 months or less = 1 weeks’ notice;
a dismissal. If it is a dismissal, it must be substantively and o 6 months to 1 year = 2 weeks’ notice;
procedurally fair: o 1 year + = 4 weeks’ notice;
• substance is about the fairness of the reason for the dismissal; o Farm / Domestic workers more than 6 months = 4
weeks’ notice
• procedure is about the process followed by the employer.
Termination of contract continued
The contract of employment will terminate under the following circumstances:
06 07 08
Summary Termination = Retirement Termination upon the death of
either party
Only for serious misconduct. - The employee has reached - The contract of employment
• Severance pay if the employee was dismissed due to the operational requirements of the employer, and no reasonable
alternative position was offered.
Refusal to sign the employment contract
Where an individual is presented with a contract of employment prior to the commencement of employment and the
individual refuses to sign the contract due to a disagreement on a material term, then no agreement has been reached
between the parties and the individual cannot be considered to be an employee of the employer.
However, if the individual was presented with a contract after the commencement of employment and the employee refused
to sign the contract, then the employee cannot be forced to sign the contract, nor can the employee be disciplined for failure
to comply with a lawful instruction. The employee should be given a copy of the contract and it must be recorded on the
original that the employee refused to sign, and a witness should sign to confirm this.
Employers must also take note that they cannot dismiss an employee by reason that they refused to sign an employment
contract if the employee for instance objected to specific provisions in the contract.
2. Temporary Employment
Services (TES) - Section 198 /
198A LRA
2. Temporary Employment Services (TES) – Section 198 / 198A LRA
What is a temporary service?
A “temporary service” means work for a client by an employee:
Temporary employment is generally obtained by the employer (client) through a TES, often referred to as a labour broker.
A comparable full-time employee is an employee who is remunerated wholly or partly by reference to the time that the
employee works and who is identifiable as a full-time employee in terms of the custom and practice of the employer of that
employee; and does not include a full-time employee whose hours of work are temporarily reduced for operational
requirements as a result of an agreement.
Employers that employ less than 10 employees or that employ less than 50 employees and whose business has been in
operation for less than two years, unless:
• the employer conducts more than one business; or
• the business was formed by the division or dissolution, for any reason, of an existing business;
THE
EMPLOYMENT
CONTRACTS
WORKSHOP
NEASA Branches
BLOEMFONTEIN
PRETORIA
HAMMAN KRIEL
Tel: (051) 430 4262 DEWALDT POTGIETER
Email: [email protected] Tel: (012) 331 5390
Email: [email protected]
KIMBERLEY
RENE CONRADIE
Tel: (053) 831 4503
Email: [email protected] DURBAN
LIANNE VILJOEN
Tel: (031) 266 3893
Email: [email protected]
EAST LONDON
STELLA PASIYA
Tel: (043) 721 1703
CAPE TOWN Email: [email protected]
GRANT HERRMANN
Tel: (021) 910 0220 GQEBERHA (PE)
Email: [email protected]
GEORGE MARCHELL HEYNS
Tel: (041) 365 5750
PIETER VENTER Email: [email protected]
Tel: (044) 873 6001
Email: [email protected]