M Forere

MBA employment contract

continued
Formation of individual contract of
employment
A contract of employment is an agreement
between two parties in terms of which
employee undertakes to place his personal
services at the disposal of employer for an
indefinite or specified period in return for fixed
remuneration, and which entitles the employer
to define the employees duties and to control
the manner in which employee discharges the
duties (Grogan, 2010)
Essential elements of employment
contract: agreement
From these definitions = a number of characteristics of a contract can be
identified:

Agreement is the basis of contract (true consensus ad idem or a meeting
of the minds of the parties
Not all agreements are contracts only where such agreement creates
obligations
There must be at least 2 parties to a contract
Only persons privy to a contract are bound by it (privity of contract)
The parties must not only have consensus, they must also have the
intention to create legally enforceable rights and obligations
A contract is enforceable by law therefore, where the law does not
countenance the type of contract (illegal) = not so enforceable and
therefore also not a valid contract
Essential elements of employment
contract: Parties
Parties:
There must be two parties to the contract of
employment employer and employee
Whereas employer can have contracts with more than
one employee, employee cannot ordinarily do so
NB. Despite plurality of employees, employer has an
individual contract with each employee
Whereas employer can be juristic person, employee
cannot
Cession without consent of other party not permitted
due to personal nature of employment contract


Essential elements of employment
contract: capacity
Capacity to act/perform a juristic act
Both parties, employer and employee, must have capacity to conclude
employment contract.
General principles of contract applies equally to employment contract.
Thus, minor below 7 cannot conclude employment contract = void
Contract involving a minor between 7 and 18 is voidable???????
Can it be ratified by the guardian?
BCEA criminalizes employment of minors below 15 - Exception: a child of any age
can be employed in advertising, sports and cultural activities
Therefore, employment contract with a minor below 15 cannot be ratified
But one with a minor between 15 and 18 can be ratified provided
The work is appropriate and does not place a minor at risk in relation to well-
being, education, physical and mental health
Unjustified enrichment: a minor who performed under voidable contract is not
liable to refund remuneration received
Edelstein v Edelstein & Others 1952 (3) SA 1 (A)
Essential elements of employment
contract: legality
Remember: Object of a contract is to create legally enforceable
obligations inter partes;
Also one of the key requirements for a valid contract to come into
being that the parties must both have this intention (animus
contrahendi)
Therefore: No valid contract will come into being where the law
would not enforce those obligations
E.g. where such a contract is illegal = law will not enforce
Illegality: A contract may be illegal due to
A statutory prohibition OR
In terms of the common law (the contract is contrary to public policy)

Compare Kyle v Van Zyl (2007) 28 ILJ 470 (CCMA) and Discovery Health
(2008) 29 ILJ 1480 (LC)
Where statute prohibits formation or performance of certain contracts =
contracts void, worker not given any protection
Where statute imposes a sanction for conclusion of certain contracts but
work performed therein is lawful, employee will be given protection
Essential elements of individual
employment contract: possibility
A contract that is at the time of contracting impossible to perform = void for impossibility,
ab initio
Equally, rights and duties agreed under employment contract must be possible to perform
Distinguish between physical and legal impossibility
Physical impossibility:
Absolute/objective impossibility = no-one can render the performance agreement is
void
Performance will be regarded as objectively impossible where, even though it is
physically possible, it is totally impracticable because it is extremely difficult,
dangerous or risky or costly
Subjective impossibility = contract valid, can be held liable for breach of contract
(claim for damages; not order for specific performance)
Therefore note: Subjective impossibility does NOT affect the validity of a contract
Legal impossibility:
Law does not recognise or make provision for a performance

Essential elements of individual
employment contract: formalities
Similar to other contracts, a contract of
employment comes into existence when
employee accepts employers offer & agreement
is perfecta
Therefore, no formalities are required under
common law
However, BCEA now requires employment
contract to be in writing where employer has
more than 5 employees, sec 28 & 29
Can a contract not reduced to writing be declared
void?


Essential elements of individual
employment contract: contents
BCEA requires written contract to contain the following:
Full name & addresses of employer
Name and occupation of employee
Place of work
Commencement date
Employee ordinary hours and days of work
Employees salary or calculation thereof
Any other cash payments employee is entitled
Any payment in kind and its value
Frequency of remuneration
Deductions on employees remuneration
Leave entitlement
Notice period for termination
List of documents forming part of employees contract & where copies can be
obtained
Essential elements of individual
employment contract: implied/tacit terms
2 Implied terms:
Distinguish
Tacit terms
Terms implied to give effect to a trade usage
Terms implied through common law principles or statute
(a) Tacit terms
Are implied to give effect to the parties intention actual or presumed
Parties were silent on an issue OR they failed to foresee some
contingency
2-pronged test: Business efficacy and the bystander test
NB note that the inference of a term must be a necessary inference - in
order to give business efficacy to a contract; NOT whether the implied term
is reasonable
Term must not contradict the express terms of the contract
Term must not be ambiguous
To promote fairness or justice or good faith?
Read: SA Forestry Co v York (2005)
Read: Wilkens NO v Voges (1994)

Essential elements of a individual
employment contract: terms
2 Implied terms (cont.):
(b) Terms implied to give effect to a trade
usage:
Usages in effect in a certain trade and/or locality
Requirements:
Must be certain
Must be reasonable and not contrary to law
Must be generally known and universally observed
Must be consistent with other provisions of the contract
Even though parties may not have known of the
usage

Essential elements of a individual
employment contract: terms
2 Implied terms (cont.):
(c) Terms implied through common law
principles or statute:
E.g. the naturalia in respect of certain specific types
of contract (sale, lease etc)
E.g Every employment contract is now subject to
BCEA parties may not exclude certain basic rights;
floor of rights/protection sec 4, BCEA
Collective Agreements: terms agreed upon between
unions and employers supersede individual
employment contract they are therefore read into it,
sec 23, LRA


Essential elements of individual
employment contract: commencement
Commencement date of contract of
employment is key
Upon concluding the contract, parties agree to
commence work at the particular future date
Failure by the employer to allow employee to
commence work = dismissal, LRA
Essential elements of individual
employment contract: Duration

1) Fixed term
Parties conclude contract for a specified period or upon completion of a particular task
Contract comes to an end upon completion of task or upon the date agreed upon
For contracts concluded for a specific tasks, the onus is on the employer to prove that the task has
be completed
For contracts with specified termination date, if the employee continues rendering services and
receives remuneration after termination date = tacit renewal
Employee will continue with the same terms as the previous contract
However, duration may not be the same as the previous contract
The duration of the new contract is a matter to be decided according to the circumstances of each
case
If employer does not renew a fixed term contract or renews it on unfavourable terms against
expectations of employee = dismissal
Similar to other contracts, it can be terminated by agreement or by material breach

2) Indefinite (permanent)
Parties do not specify termination date
Contract comes to an end upon death of employee or upon reaching retirement age
Otherwise, it can be terminated by agreement on notice or by fundamental breach
Essential elements of individual employment
contract: employers command power
Employee must subordinate himself to
employer
Employer must obey lawful instructions from
employer