This article looks at the continued relevancy of the employment contract in legal practice today. In 2014, the legislator amended section 186(1)(a) of the Labour Relations Act, 66 of 1995 (LRA), which deals with unfair dismissals, by removing the words “contract of” within the definition, leaving only the word “employment”. This gives the idea that the legislator accepts that the employment relationship goes beyond just the employment contract.
On being offered employment, not everyone tends to ask for an employment contract first, yet the employment contract is the first thing everyone turns to when the employment relationship turns sour. It was accepted that the contract of employment is the cornerstone of the employment relationship. It links the employer and the employee in an employment relationship.
The initial idea was that the contract of employment regulates all aspects of the employment relationship. However, in practice this is not the reality. The employment relationship tends to go beyond just the contract of employment. This is because of statutory intervention, collective contracts, customs, and practices as well as common law implied terms which are often read into the contract. In terms of the section 186(1)(a) of the LRA, the old definition of dismissal was defined as the termination of the employment contract with or without notice. To accommodate the abovementioned factors, the legislator amended the section, expanding the definition of a dismissal to entail more than just the termination of the contract of employment.
This begs the question: do you need to sign an employment contract to be protected by labour legislation in South Africa?
The Labour Relations Amendment Act, 6 of 2014 (LRAA) changed the definition of dismissal in terms of section 186(1)(a) of the LRA. This means that the test for a dismissal will now hinge on whether employment or the employment relationship is terminated. This change from the contract of employment to just employment and/or employment relationship is also noticeable in section 186(1)(e) and (f).
So, what is meant by employment relationship? The contract of employment contains most of the terms and expected duties of both the employer and employee but it seldom happens that it covers the full spectrum of the employment relationship. Some obligations and rights are derived from a variety of sources, including the common law, collective bargaining, statutes, custom and practices, and in some instances, oral contracts between the employer and the employee. Other factors which may be taken into account, such as the employee’s obedience, care, economic dependency between the parties, fidelity, and the employer’s duty of care towards the employee, are not often referred to in the contract of employment. Initially, when employees entered into the contract, these rights and obligations may not have seemed as important but may have later turned out to be the core of a dispute. Therefore, there was a need for the concept to go beyond that of just the contract of employment, as it needed to cover the full scope of the practical realities of the workplace.
The world of work has changed over the years and employers always try to bypass labour legislation, which means that working arrangements may go beyond the employment contract and the protection provided for in labour legislation should also adapt. In Denel (Pty) Ltd v Gerber 2005 9 BLLR 849 (LAC) the court held: “In this regard it is important to bear in mind that a contract between any two persons may represent form and not substance or may not reflect the realities of a relationship…”
In State Information Technology Agency (SITA) (Pty) Ltd v CCMA & others 2008 7 BLLR 611 (LAC) the Labour Appeal Court also used the “reality test” to determine an employment relationship. In WL Ochse Webb & Pretorius (Pty) Ltd v Vermeulen 1997 18 ILJ (SA) 361 (LAC) the court highlighted that neither the employer nor employee benefit from the employment contract when it is “cast in stone”.
The legislator has now shifted the focus to the abstract relationship between the employer and employee, rather than just focusing on the contract between them. This amendment changes the entire idea we had about the employment relationship, even expanding the protection offered by labour legislation.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)