A recent Labour Court judgment in Durban serves as a timely reminder for both employers and employees: what is written in your contract matters.
The court dismissed an application brought by a public sector trade union on behalf of two nurses who sought a salary upgrade and back pay from the KwaZulu-Natal Department of Health. Presiding over the matter, acting Judge G C Phakedi noted that the contracts signed by both employees expressly stated that their salaries would be based on salary level 9, with specified annual remuneration.
Because of this, the court concluded that the employees could not rely on an external letter from the DPSA to claim a contractual entitlement that was not included in their signed agreements. Judge Phakedi stated that the applicants were already being remunerated in accordance with their contracts, meaning that no breach had been established. The application was dismissed, and the applicants were ordered to pay the department's legal costs.
The case underscores a fundamental truth: the written contract of employment is the foundation of the employment relationship.
Yet it is quite staggering just how many employers do not provide employment contracts. Some employers believe that "if it is not in writing, then it does not exist," and others believe that "if there is no written contract, then we can do what we like with our employees."
They are absolutely mistaken. Such thinking is sure to land them in hot water at the CCMA.
Every employer is required by law, under Section 29 of the Basic Conditions of Employment Act, to provide the employee with a written contract of employment no later than the first day of commencement of employment. Failure to do so could result in imprisonment under Section 93 of the BCEA or liability for a hefty fine under Schedule 2.
A contract is entered into between two or more parties to protect them against breach or unlawful action. When you get married, you enter into a contract. When you buy a house or a car, you enter into a contract. When you get divorced, you enter into a contract. So why not have a contract of employment with your employees?
The contract of employment is a vital document. It regulates the terms and conditions of employment between employer and employee. It stipulates what the employer will provide in terms of benefits and labour legislation, and it specifies what the employee is entitled to receive under company policy, company benefits and the law.
It also regulates the behaviour of the employee in the workplace, because all company policies and procedures, as well as the disciplinary code, form part of the employment contract. If there is no contract regulating these matters, it is extremely difficult to take action against an employee. If there is no contract, or if the employee has never been informed of the rules, then they have the right to conclude that those rules do not exist.
There are various types of employment contracts, including permanent employment, fixed-term employment, probation employment and project employment.
Permanent employment contract
A permanent contract begins with a written offer of employment to the prospective employee. The prospective employee then accepts the offer in writing, and the permanent contract of employment is entered into.
Fixed-term contract
A fixed-term contract is almost identical to a permanent contract, except that it stipulates a starting date and an ending date. The contract will state that upon the attainment of the ending date, the employment relationship will cease. Benefits such as pension, medical aid, provident fund or group life assurance may or may not apply, and this should be clearly stated.
Employees on fixed-term contracts are still entitled to paid annual leave and paid sick leave from the first day of employment, as well as family responsibility leave after four months of employment, under the Basic Conditions of Employment Act. A temporary contract is another name for a fixed-term contract, and the same stipulations apply.
Project contract
A project contract is a fixed-term or temporary contract where an employee is employed to complete a specific project. Unlike a time-based contract, the completion date is unknown; it may be six months, 12 months or longer.
Probation
A newly hired employee may be placed on probation for a period that is reasonable given the circumstances of the job. The period should be determined by the nature of the job and the time it takes to determine the employee's suitability for continued employment. Employers should give employees whatever evaluation, instruction, training, guidance or counselling they require to render satisfactory service.
Dismissal during the probationary period should be preceded by an opportunity for the employee to state their case and to be assisted by a trade union representative or fellow employee.
After probation, an employee should not be dismissed for unsatisfactory performance unless the employer has given appropriate evaluation, instruction, training, guidance or counselling, and after a reasonable period for improvement, the employee continues to perform unsatisfactorily. The procedure should include an investigation to establish the reasons for the unsatisfactory performance, and the employer should consider alternatives short of dismissal.
In the process, the employee has the right to be heard and to be assisted by a trade union representative or fellow employee.
The recent Labour Court ruling is a clear warning: the terms you sign are the terms that bind you. Whether you are an employer drafting contracts or an employee signing them, it pays to get it right from the start.