Contract of Employment

Adv. Sharon Henkel

Chapter 23 – Guide to Business Law
Shawn Kopel

University of the Western Cape

May 2020
 Introduction

 The employee leases his services to the employer

in return for remuneration:
 Law of letting and hiring have three categories:
 Hiring of Services: Labour law regulates the relationship
between employer and an employee.
 Hiring of work:. An independent contractor is hired to
perform a piece of work, for example install a swimming
pool.
 Hiring of things: The law of lease.
 Common Law Contract of Service

 Definition: A contract of service is a reciprocal

contract in terms of which an employee places
his services at the disposal of another person
or organisation, as employer, at a determined
or determinable remuneration in such a way
that the employer is clothed with authority over
the employee and exercises supervision
regarding the rendering of his services.
 Cont.

 The employer has to possess a degree of control, enabling

him to decide how the labour of employee is to be utilized.
This is referred to as the control test.
 Control test – inadequate –
– Courts started to look at other tests to assist them in
determining the existence of an employment contract.
 Preference has now been given to the so-called:
 Dominant impression test:
 Does the employer have the right to discipline?

 Does the employer have the right to decide the

hours of work?
 Cont.

Factors indicating the existence of an

employment relationship:
 Is obliged to render his services personally and may
not delegate the obligation.
 Has to keep fixed hours and is paid a regular wage or
salary.
 Is subject to the alleged employers disciplinary code.
 Is entitled to benefits.
 To subject to a degree of control by the employer
These factors are not conclusive.
 Sec 83A BCEA and Sec 200A LRA

 Person presumed to be employee if following factors are

present:
 The manner in which the person works is subject to the
control or direction of the person.
 The persons hours of work is subject to the control or
direction of the other person.
 In the case of a person who works for an organisation, the
person is a part of that organization.
 The person has worked for that other person for an average
of at least 40 hours per month over the last three months.
 Cont.
 Threshold
 “Code of Good Practice:
 Who is an employee”?
 Has been issued to provide assistance in
determining whether a person is an employee
or an independent contractor.
 Conclusion of Contract

 General rule:
 No formalities
 Verbal or written agreement, However, in
terms of the:
– BCEA certain particulars must be in writing to
the employee.
 Conditions of Employment
 Parties negotiate conditions such as hours of work, wages or
salaries and leave.
 Legislation, of course, provides for basic conditions of
employment.
 At common law vacation or annual paid leave is a privilege
 Meaning the employee is not entitled to any paid vacation
leave
 However: In terms of Legislation the employee is entitled to
paid vacation leave.
 The BCEA provides for a minimum of 21 consecutive days
annual leave.
 Sick leave in terms of common law is not paid leave
employee only paid for period actually worked.
 Duties of the Employer

 To accept the employee into his service.

 To provide the employee with work.
 To pay the remuneration agreed upon.
 Not to make the employee carry out work
junior to the status for which the employee
was employed.
 To provide safe and healthy working
conditions.
 Duties of the Employee

 To make his or her personal services

available.
 To perform the work faithfully, diligently and
competently, and to subordinate himself or
herself to the employer.
 To obey reasonable orders given in the
normal course of employment.
 To act in good faith.
 To conduct himself or herself properly.
Termination of the Contract of Service

 Expiry of term of service, e.g. fixed term only.

 Notice of termination.
 Resignation.
 Repudiation.
 Transfer of business.
 Insolvency of the employee or the employer.
 Death of the employer or the employee.
 By agreement.
 Summary dismissal, e.g. gross misconduct.
 Remedies for termination

 Specific performance
 In terms of common law on reinstatement of employee:
 Form of reinstatement has been acknowledged as one of the
remedies available to employees and is now entrenched in the
LRA.
 Interdict
 A person may be ordered either to stop a particular activity
(example: excessive overtime) or
 To commence a particular activity (example: to perform work as
agreed upon).
 Damages:
 Compensation may be awarded in the form of money.
 Occupational Health and Safety Act 85 of
1993

 Provides for the health and safety of persons

at work and for the health and safety of
persons in connection with the use of plant
and machinery.
 Protection of outsiders against hazards to
health and safety arising out of working
activities.
Occupational Health and Safety Act 85 of
1993 Cont.

 Provides for the appointment of health

and safety representatives and the
establishment of health and safety
committees.
 Scope wide – Applicable to private
sector, public sector, agricultural sector,
domestic workers in private households.
 Duties of Employers

 Provide an environment which is safe and

without risk to the health of his employers.
 Take reasonable steps to eliminate or
mitigate any hazard or potential hazard and
provide protective equipment.
 Appoint health and safety representative and
establish health and safety committees.
 Duties of Employers Cont.

 obliged to report to inspector when

someone dies, and any circumstances
related to the death of the person
Health and Safety Representatives Cont.

 If he employs more than 20 workers

appoint in writing one or more of his
employees as Health and Safety
Representative.
 Functions performed during normal hours.
 Investigate workplace, machinery and
safety equipment and identify potential
hazards.
 Health and Safety Representatives

 Collaboration with employer, they

investigate incidents and they may
attend an investigation undertaken by
an inspector.
 Investigate complaints by employees
relating to health and safety matters.
 Health and Safety Committees

 Once an employer has appointed 2 or more

H&S representatives, he must establish
one/more H&S Committees.
 Meet at least once every three months.
 Make recommendations to the employer
regarding health and safety matters.
 Keep a record of the recommendations.
 Report incident in which person was injured,
became ill or died to the inspector.
 Inspectors

 Appointed by Minister – given wide powers.

 Special powers to ensure safety at workplace.
 Inform employer in writing to stop a certain activity
within the workplace if he is of the opinion that the
activity may endanger the safety of the workers.
 Empowered to conduct investigations into
accidents at the workplace.
 Question witnesses and take reasonable steps to
gather information of accident and then compile a
report.
 Social Legislation
Compensation for Occupational Injuries and Diseases Act 130
of 1993

 Provides for payment of compensation in the event

of occupational injuries and diseases.
 Exclusions: permanent members of the SANDF and
the SAPS while they are acting in defence of the
country, persons performing military service or
undergoing military training who are not permanent
force members, domestic servants in private
households, independent contractors and sub
contractors.
 Duties of employer

 Notify Director General of fact of having started a

business.
 Keep record of all employees, wages and hours worked.
 Before 31 March every year must submit statement to
the DG in which the total amount of all wages and
salaries paid to his employees is reflected.
 Based on statement DG determines levy payable by
employer to Compensation Fund.
 Inform Commission when accident occurs at workplace
as soon as possible and supply information about
employee and his income, as well as the nature of the
accident and the injuries.
 Right to Compensation

 Accident must have occurred within the

scope of employment.
 Must have resulted in injuries or death of
an employee.
 The accident must take place in the
‘’scope of the employee’s
employment’’.
 Right to Compensation cont.

 Accident must result in injuries or death.

 Includes internal and external injuries.
 Occupational diseases.
 When accident occurs the employee must inform his
employer thereof in writing as soon as possible.
 Report the accident to the Commissioner within 7
days.
 Claim to be submitted within 12 months from the date
of the accident.
Unemployment Insurance Act of 2001

 Provides for benefits to be paid in the case

of unemployment, illness, maternity,
adoption and to the dependants of a
deceased contributor.
 Applies to all employers and employees to
contribute to Unemployment Insurance
Fund (UIF).
 To be paid to either to Fund directly or
Receiver of Revenue for benefit of Fund.
 Skills Development Act 97 of 1998

 Seta’s established in terms of Sec 9 for

specific sectors.
 Functions of SETA – incudes
development of a sector skills plan, the
establishment, promotion and
registration of learnerships, the approval
of workplace skills plan and allocation of
grants for education and training.
The employers liability for delicts committed by his
employee

 Rule –Vicarious Liability

 Employer liable to third parties for delicts
committed by the employee within the
course and scope of his employment.
 Requirements
 employer/employee relationship
 The delict must have been committed by
the employee in the course and scope
of the performance of his duties.
Employer’s liability for the delicts of an
Independent Contractor

 Not liable
 Only on basis of own delict
 In order to determine the liability of the
employer in these circumstances, its
neglect to take preventative action
must be taken into account.
 Social Legislation
Basic Conditions of Employment Act 75 of 1997

 Operation – 1 Dec 1998.

 Aim – to give effect to the Constitutional
Right to fair labour practices by providing
for and regulating basic conditions of
employment, thereby complying with the
recommendations and Conventions of
the International Labour Organisations
(ILO).
 Cont.

 The BCEA -
 Applies to employees.
 Excludes independent contractors.
 Prohibits child and forced labour.
 Notice of termination

 Paid monthly: one month’s notice, given on

the 1st day of the month.
 Paid weekly: One week’s notice.
 Daily rate, but paid weekly or monthly: One
day’s notice.
 Casual or daily labourer: No notice
required.
 Yearly contract: Three months’ notice.
Unemployment Insurance Contributions
Act

 Purpose – provide for the payment of

contributions by employers and
employees.
 Applies to all employers and employees.
 Employers make monthly contributions for
benefit of the UIF.
 Employee contributes 1% every month.
Skills Development Levies Act 9 of 1999

 Makes provision for a compulsory levy

scheme and is administered by both
the DG of Labour and the
Commissioner of SARS.
 Employers liable to pay skills levy
equal to 1% of their monthly payroll to
SARS.
 Aim and application of the Labour
Relations Act

 To improve economic development.

 Social justice.
 Labour peace and democratization
within the workplace.
 To give effect to the fundamental rights
contained in the Bill of Rights.
 Dismissals

 Regulated by Chapter VIII of LRA and

the Code of Good Practice.
 Dismissals contained in Schedule 8 of
Act.
 The Code offers guidelines to
employers to ensure that dismissal of
an employee is fair.
 Dismissal - definition

 Section 186(1) defines a dismissal as:

 Termination of an employee with or without notice
 Constructive dismissal
 Selective re-employment
 Refusal after maternity leave
 Failure to renew a fixed term contract / permanent
employment
 Termination by employment by employee in terms
of section 197 or 197A.
 Requirements for fair dismissal

 Misconduct.
 Incapacity, including poor work performance.
 Operational requirements.
 Must be substantive fair and procedurally fair.
 Substantive valid reason – clearly misconduct.
 Substantive fairness to be considered.
 Unfair Labour Practices

 Definition
 An employer’s unfair conduct relating to
promotion, demotion, training and the
provision of benefits;
 Unfair suspension or disciplinary action
other than dismissal;
 The employer’s failure or refusal to
reinstate or re-employ;
 Unfair conduct to probation.
 Cont.

 An occupational detriment, other than a

dismissal, because an employee has made a
protected disclosure in terms of the Protected
Disclosure Act.
 An unfair labour practice dispute must be
referred to conciliation within 90 days from
the date on which the labour practice was
committed or from the day the employee
became aware of it.
Employment Equity Act 55 of 1998 (EEA)

 Came in operation on 9 August 1999.

 Objectives of the Act is to promote the
constitutional right of equality and true
democracy.
 Eliminate unfair discrimination in
employment.
 Promote economic development and
efficiency in workforce.
Application of the Employment Equity Act

 Applicable to all employees / employers

 Exclusions:
 National Defence Force
 National Intelligence Agency
 SA Secret Service
 Chapter II prohibits unfair discrimination and applies to
employees / employers.
 Chapter III deals with affirmative action and is applicable
to designated employers and groups only.
 Prohibition of unfair discrimination

 Chapter II of EEA deals with

discrimination issues.
 Every employer to take steps to
promote equal opportunity in the
workplace.
 Eliminating unfair discrimination in
employment policies and practices.
 Affirmative Action

 Regulated in Chapter III of the EEA.

 Are measures designated to ensure
that suitably qualified people from
designated groups have equal
employment opportunities.
 Equally represented in all occupational
categories and levels in the workplace
of a designated employer.
Thank You Very Much for Your Attention !