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Chapter 8 - Labour Law

The contract of employment

A contract of employment must comply with terms and conditions of employment in the Basic Conditions of Employment Act (BCEA) or collective agreement or sectoral determination (depending on which the worker is covered by), and any other laws which protect workers 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 enforcable.

If a worker 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 worker than those in the BCEA.

See section 29 (1) (a) – (p) for particulars of employment which must be provided in writing to employees when they start their employment with someone.

The contract between worker and employer

If you say you will do something for another person, and in return that person agrees to pay you something, then you and that person have made a contract.

If you agree to work for someone, and that person agrees to pay you for this work, then you and the employer have a contract of employment.

If you work for another person you are called the employee or worker. The person who gives you the work, and pays you for the work, is called the employer or boss.

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

Even if you and the employer did not talk about some conditions of employment, for example, taking annual leave, and it is the custom that all workers 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.

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.

Section 29 of the Basic Conditions of Employment Act says that except for employees working less than 24 hours per month, domestic workers and employers who employ less than 5 people, before the job starts the employer must give the worker written particulars about the job, including:

• a description of the job
• the hours that the worker will be expected to work
• ordinary and overtime rates of payment, including payment in kind and its value
• any deductions to be made
• how much leave the worker will get
• the notice period

This document is like a contract of employment, but the worker doesn't have to sign it. If a worker can't read, the particulars must be explained in a language the worker understands.

If you have a contract, but you do not do the thing that was agreed, 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. Breaking a contract is also called a breach of contract.

See 529 (a)-(p) of the Basic Conditions of Employment Act (BCEA) for particulars of employment which must be provided in writing to employees when they stop their employment with someone
See CONSUMER LAW, What is a contract?

How can a contract of employment be used?

If the employer breaks a contract of employment, then a worker can sue the employer in a civil court case for breach of contract. 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 worker's word against the employer's word.

See COURT CASES, Civil claims
See CONSUMER LAW, Breaking a contract

The worker 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 a worker can go to the Department of Labour and lay a complaint. The Department will 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 worker 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 worker and must negotiate the new terms and conditions with the worker.

If the employer and worker/s cannot agree about the changes in the contract, then the employer may just implement the changes. If the worker then just accepts the new conditions and goes on working, then the new conditions become part of the contract. If the worker does not agree to the changes, then he or she can:

• refuse to accept the changes. If the employer then dismisses the worker it is an automatically unfair dismissal.
• he or she can choose to stop working for the employer. If the worker 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, for what to do about an automatically unfair dismissal

Types of contracts

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

Indefinite contracts

Most employment contracts are indefinite contracts.

This means that when a worker starts working for the employer, no-one knows when the contract will end.

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

• by dismissal
• by cancellation of the contract by the worker or the organisation.

Fixed-term contracts

If the worker and the employer both agree at the start of the contract when that contract is going to end, then it is a fixed-term contract.

Contract workers and seasonal workers are two kinds of workers 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 workers then leave their homes and go to work on this farm. These workers may be referred to as contract workers.

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

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

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

Differential wage

If the employer tells a worker to do someone else's job in a higher category of pay than the worker's own job, then the worker deserves to get the higher wage. ("Equal pay for work of equal value’). An employer can ask a worker to do work below his or her own pay category, but the worker should not get paid less than his or her own wage.

The BCEA doesn't have a rule about differential wages. But if an employer refused to pay the higher wage, the worker could take a dispute about an unfair labour practice to the Commission for Conciliation, Mediation and Arbitration.

See Solving disputes under the LRA

Bonus pay

'Bonus pay' means money paid to workers which is over and above their wages and overtime money. The law does not say that an employer must pay a bonus to workers. 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 workers at the end of every year in the past
  The employer created an 'expectation' in the workers that they will get a bonus every year. And it has become the custom to get the bonus. The workers then have a right to demand the same bonus every year. If the employer suddenly decides not to give a bonus, the workers can claim the bonus as a common law right.
• if it says in a contract of employment that the worker will get a bonus
  Then the employer must pay the bonus as agreed (unless it depends on the worker doing something which the worker did not do). For example, if a contract of employment says that an employer must pay a 13th cheque to a worker then the employer must pay this.

Long Service Awards

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

Job References

A job reference letter is a letter from an old employer saying whether the employer thought the worker was a good worker or not. Often when a worker approaches a new employer for a job, the new employer will telephone the old employer for a job reference before employing the worker.

The Basic Conditions of Employment Act (BCEA) says workers are entitled to a written certificate of service when the worker stops working for that employer. The certificate of service sets out the full name of the employer and the worker, the job/s that the worker was doing, the date that the worker began working and the date that the worker ended work, and the wage at the time that the job ended, including payment in kind.

See section 42 (a) – (g) of the BCEA for details on what has to be included on the Certificate of Service