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Chapter 6 - Labour Law

The contract of employment

If you agree to work for someone, and that person agrees to pay you for this work, then you and the employer have entered into a contract of employment. You are called the employee.

The type of work that you must do, hours of work, wages, a place to live (where appropriate), and so on can all be part of your agreement with your employer. These are called terms and conditions of employment. They are express terms of the contract.

Even if you and the employer did not talk about some terms and conditions of employment, for example, taking annual leave, and it is the custom that all employees take annual leave, then you can also take annual leave. This is part of your contract, even if you did not talk about it. These are implied terms of the contract.

The law says that a contract does not have to be in writing. If two people speak and they agree about the contract, then this contract is called a verbal contract. A verbal contract is also legal and enforceable.

A written contract is better. If all the conditions of the contract are written on a piece of paper, and the employer signs the paper, then you have proof of what was agreed. This is useful if ever there is a dispute about what was agreed between you and the employer.

Section 29 of the Basic Conditions of Employment Act says that, except for employees working less than 24 hours per month and employers who employ less than 5 people, the employer must give employees certain particulars in writing about the job; these particulars include:

  • a description of the job
  • the hours that the employee will be expected to work
  • ordinary and overtime rates of payment, including payment in kind (for example accommodation) and its value
  • any deductions to be made
  • how much leave the employee will get
  • the notice period
  • the name and address of the employer
  • the date of payment

If an employee can't read, the particulars must be explained in a language the employee understands.

If you have a contract, but you do not do what was agreed in the contract, then you break the contract. The law says that if one person breaks a contract, then the other person can use the law to force that person to do what was agreed or they can stop and withdraw form the contract. Breaking a contract is also called a breach of contract.

(See s 29(1)(a)-(p) of the Basic Conditions of Employment Act for particulars of employment that must be provided in writing to employees when they start their employment with someone)

A contract of employment must comply with terms and conditions of employment in the Basic Conditions of Employment Act (BCEA), Bargaining Council Agreement or collective agreementor Sectoral determination (depending on what the employee is covered by), and any other laws which protect employees such as the Labour Relations Act and the Occupational Health and Safety Act. If a contract breaks any of these protective laws, it is not enforceable unless the conditions are more favourable to the employee.

If an employee is covered by the BCEA, terms and conditions of employment in the BCEA override those in any contract of employment which are less favourable to the employee than those in the BCEA. In other words the contract cannot be less favourable to the employee than the conditions laid down in the law.

See Model Contract of employment.

How can a contract of employment be used?

If the employer breaks a contract of employment, then an employee can sue the employer in a civil court case for breach of contract or can refer the dispute to the Department of Labour (for example if you have not been paid your annual leave or overtime payment). It is easier to prove that an employer broke a contract of employment if the contract is in writing. If the contract is verbal, it is always better to have witnesses. If you don't have witnesses, then it is the employee’s word against the employer's word.

The employee is always entitled to at least the terms and conditions in the Basic Conditions of Employment Act (BCEA). If the breach of contract goes against a term or condition in the BCEA then an employee can go to the Department of Labour and lay a complaint. The Department will investigate the complaint and if it is found that the employer has not followed the contract of employment, then the Inspector may issue a Compliance Order which tells the employer to comply with the BCEA. This is a much easier and cheaper way to deal with problems that fall under the BCEA.

Changing the contract

An employer can change the contract even if the employee does not agree to the changes. But a change in a contract is like a new contract. To change the contract, the employer must give notice of the change to the employee and must negotiate the new terms and conditions with the employee.

If the employer and employee/s cannot agree about the changes in the contract, then the employer may decide to go ahead and introduce the changes. If the employer then just accepts the new conditions and goes on working, then the new conditions become part of the contract.

If the employee does not agree to the changes, then he or she can:

  • Refer a dispute to the CCMA or Bargaining Council in terms of section 64(4) of the Labour Relations Act. The employee can ask the CCMA to issue a notice to instruct the employer to restore the terms and conditions which applied before the change took place. The employer must comply with this notice within 48 hours of receiving it.
  • Refer a dispute to the CCMA or the Bargaining Council (if one is in that industry) for conciliation. If conciliation fails, than that employee and other employees covered by the dispute may go on strike after giving the employer 48 hours notice of the strike.
  • Refuse to accept the changes. If the employer then dismisses the employee it is an automatically unfair dismissal.
  • Choose to stop working for the employer. If the employee was forced to resign rather than be forced to accept the changes, it may be an automatically unfair dismissal.

See Solving disputes under the LRA.

Note: Where a registered trade union has signed a collective agreement with the employer and where the employer changes this agreement without the agreement of the union, the union and its members can go to the CCMA or the Bargaining Council, if applicable, to claim that the employer has broken the collective agreement.This referral of the dispute will be in terms of Section 24 of the Labour Relations Act

Types of contracts

There are two types of contracts: indefinite and fixed-term (temporary) contracts.

Indefinite contracts

Most employment contracts are indefinite contracts.

This means that when a employee starts working for the employer, no-one knows when the contract will end but it is expected that the employment will continue until the employee reaches the retirement age of the company.

An indefinite contract can only be ended in the following ways:

  • by dismissal or termination of the contract of employment as a result of misconduct of the employee, or the incapacity of the employee or on account of retrenchment.
  • when the employee reaches the normal retirement age laid down by the company or the industry
  • by the death of the employee.

Fixed-term contracts

If the employee and the employer both agree at the start of the contract that the contract is going to end within a fixed period or when certain work is completed, then it is a fixed-term contract.

Contract employees and seasonal employees are two kinds of employees with fixed-term contracts.

It often happens, particularly on the farms, that the employer goes to other areas to get people to work on the farm on a temporary basis. The employees then leave their homes and go to work on this farm. These employees may be referred to as contract employees.

Usually the farmer and these employees have a fixed term contract for a specified time. The contract is usually made before the employee gets to the farm. If an employee has a contract with the farmer, then the conditions of that contract are the conditions of employment.

Some farms have times when extra employees are needed. These times are called seasons. If an employee only works on the farm for a season, then he or she is called a seasonal employee. The seasonal employee knows when the contract starts and when the contract ends.

For both contract employees and seasonal employees, the employer must pay employees for the full contract time, even if there is no more work for the employees to do. If an employee's contract is for one year, then the employer must pay the employee for the full year, unless the contract ends because of the employee’s fault. If the contract is for one season, then the employer must pay the employee for the whole season.

The employer cannot stop the fixed term contract earlier than the contracted period unless the contract makes provision for this.

Differential wage

If the employer tells an employee to do someone else's job in a higher category of pay than the employee's own job, then the employee should get the higher wage if he / she performs this work for an extended number of days. ("Equal pay for work of Equal value’). An employer can ask an employee to do work below his or her own pay category, but the employee should not get paid less than his or her own normal wage and also provided the employer is not doing this to make the employee’s life at work intolerable.

The BCEA doesn't have a rule about differential wages. But if an employer refuses to pay the higher wage, the employee could take a dispute about unfair payment to a Bargaining Council if one exists for the industry, or the Department of Labour.

Bonus pay

'Bonus pay' means money paid to employees which is over and above their wages and overtime money. The law does not say that an employer must pay a bonus to employees. This is 'extra' money. It is usually paid out at the end of the year, for example, for good performance during the year, or for targets reached in production of goods.

Bonus pay must be paid in these cases:

  • if an employer gave a bonus to the employees at the end of every year in the past, the employer created an 'expectation' in the employees that they will get a bonus every year. And it has become the custom to get the bonus. The employees then have a right to demand the same bonus every year. If the employer suddenly decides not to give a bonus, the employees can claim the bonus as a custom and practice.
  • if it says in a contract of employment or collective agreement that the employee will get a bonus - the employer must pay the bonus as agreed (unless it depends on the employee doing something which the employee did not do). For example, if a contract of employment says that an employer must pay a 13th cheque to an employee then the employer must pay this.

Long Service Awards

The law does not say that employers must pay long service money to employees who worked for a long time for the same company. If the employee retires, it is up to the employer to decide whether to give any long service money to the employee.

Job References

A job reference letter is a letter from an ex-employer saying whether the employer thought the employee was a good employee or not. The Basic Conditions of Employment Act (BCEA) says employees are entitled to a written certificate of service when the employee stops working for that employer. The certificate of service sets out the full name of the employer and the employee, the job/s that the employee was doing, the date that the employee began working, the date that the employee ended work, and the wage at the time that the job ended, including payment in kind (See S 42(a) – (g) of the Basic Conditions of Employment Act for details on what has to be included on the Certificate of Service).

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