SETTING THE STAGE FOR THE EMPLOYMENT RELATIONSHIP

THE CONTRACT OF EMPLOYMENT

Colette Tanner, Operations Director, DRG

A duly drafted employment contract sets the stage for the employment relationship and is a balanced document that sets out the rights, responsibilities and expectations of both parties.

All employment starts with the offer of employment, an offer and acceptance of a job on the terms offered brings an employment contract into existence. An offer and acceptance of the job on the terms offered results in an employment relationship regardless of whether the employee has started work.

An employment offer ends the selection process and is an invitation for a successful candidate to accept an offer to work in the position advertised by the employer. A job offer has three requirements in law, the employee must be hired for a specific task and there must be an agreement on the hours of work and the remuneration. It is advisable that the employer makes the employment offer in writing, providing the successful candidate with a reasonable time period in which to respond to the offer.

Should the prospective employer withdraw the accepted offer prior to the employee commencing work, the employer may face an unfair dismissal dispute in which the employer is likely be considered as acting unlawfully.

While a written contract of employment is not strictly necessary for the validity of the employment relationship, it serves as the foundation between the employer and employee as it regulates the terms and conditions of employment, benefits, duties and responsibilities and protects both parties through legal compliance.

Types of Contracts

An employee is defined as someone who in any matter assists in carrying on or conducting the business of the employer. There are two broad categories in which to contract the employee, an open-ended contact or fixed or limited term contract. An open-ended contract does not have an end date where the presumption is that the contract will continue until such time as either party ends the contract, provided of course due process is followed. A fixed term contract is an agreement in which the length of the relationship is fixed and agreed as part of the contract. The employer may either specify a date that the contract will end or may identify a specific event, that on account of its completion, terminates the employment contract. It is not a requirement to serve notice to an employee on a fixed term contract as the employee will be aware, as this is a vital part of the agreement.

Minimum Terms and Conditions

The Basic Condition of Employment Act (BCEA) sets out the minimum terms and conditions of employment that form the basis of protective rules. These rules govern the substance of the employment relationship where employers may contract for more favourable conditions however employers may not contract with an employee for less than what is provided for in the BCEA. It is important to note that legislation is typically not included into employment contract for example it is not possible to argue that an employee is not entitled to leave or overtime simply because the contract was silent regarding leave or overtime. Section 4 of the BCEA sets out the basic conditions of employment and is automatically a term of an employment contract, unless more favourable terms in law exist.

Moreover, contracts denying statutory provisions are invalid and cannot be enforced

Section 29 of the BCEA outlines the minimum requirements that must be included in an employment contract which include in summary, the full name and address of the employer, name and occupation of the employee, brief description of duties, place of work, employment start date, notice periods, hours of work, remuneration and other cash payments the employee is entitled to, frequency of payment, leave days the employee is entitled to.

It is not advisable to include the employers’ company policies in the employment contract, reference to policies can be included, however not the actual policy, as these then become the terms of employment, for example, including a maternity leave policy with enhanced benefits. In the event where there is an operational requirement to revise the policy, the employer is required to consult with the employee. If an employer makes unilateral changes without securing employee consent, employees have the right to declare a labour dispute with the Commission for Conciliation, Mediation, and Arbitration (CCMA). This legal recourse aims to restore the original terms and conditions of employment. The CCMA provides a platform for employees to challenge unjust changes and seek redress, thereby upholding their rights and maintaining fairness in the workplace.

Contract Recommendations

What is recommended to include in an employment contract are the following:

■  Probation: If such a clause is included, the terms and duration thereof must be stipulated in the contract.

■  Duration: Where the contract is a limited duration contract, and especially if the employee earns less than the earnings threshold under the BCEA, then the reason for fixing the duration of the contract must be stipulated in the contract. “The Labour Relations Amendment Act” came into operation on 1 January 2015 and places significant restrictions on the use of ‘non-standard’ employees, including fixed term and part time contracts. The use of fixed-term employment contracts in South Africa has evolved significantly following legislative changes brought about by the Labour Relations mendment Act of 2014 (LRAA), which took effect on 1 January 2015. These amendments were designed to provide greater protection to employees, ensure compliance with fair labour practices, and prevent the misuse of fixed-term contracts by employers attempting to circumvent the responsibilities of permanent employment.

The legislative changes, encapsulated under section 198B of the Labour Relations Act (LRA), have drastically changed the landscape of fixed-term contracts, imposing stricter requirements on employers and protecting employees against exploitation.

Section 18 of the Protection of Personal Information Act (POPIA) – with reference to the privacy statement applicable to collecting and processing the employee’s personal information.

Confidentiality obligations, and possibly restraint of trade conditions.

Intellectual property applications for products or systems developed during the employee’s employment.

Security, risk management, loss control – consent for searches, breathalyser tests, etc.

Validity of Contract: Warranties by the employee confirming their ability to do what they sign up for and the truthfulness of their declarations about aspects such as qualifications, experience, health, accreditations, etc.

Termination of employment – specific notice requirements.

The value of a well-constituted employment contract must not be underestimated – it is a strategic instrument that empowers employers in navigating the complexities in a highly regulated labour market. By carefully drafting contracts that align with legal requirements, address unique business needs, and proactively manage potential disputes, employers can safeguard their interests, foster productive relationships, and maintain their competitive advantage as a business.

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For more information, please contact Colette Tanner:

T: +27 (0)31 767 0625

E: colette@drg.co.za

W: www.drg.co.za

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