Employment Contract & Labour Legislation

The Contract of Employment and its Relationship with Labour Legislation

Introduction

• The origin of the modern employment contract is in Roman law
• Roman law distinguished between locatio conductio rei (letting and hiring of an object) and other forms of letting and hiring
• Locatio conductio operis involved letting and hiring a specific piece of work
• Locatio conductio operarum, related to hiring personal services for remuneration, and was the forerunner of the modern one
• This contract wasn't common in Roman times due to reliance on slaves as property

Development of the Employment Contract

• Letting and hiring personal services received relatively little attention in Roman-Dutch times
• The modern employment contract rapidly developed during the Industrial Revolution with the employment of large numbers in factories
• The modern contract reflects both Roman law origins and considerable English law influence

Importance of the Employment Contract Today

• The employment contract remains the foundation of the employer-employee relationship
• It links the employer and employee, irrespective of the employment relationship's form
• An employment relationship's existence is the starting point for applying all labor law rules
• Labor law doesn't apply if no employment relationship exists

Development of Labor Law and Employee Rights

• Labor law development aims to enforce fairness in the contractual relationship
• Labor law is largely in legislation, with employees often relying on legislated rights rather than contractual rights
• Most of texts relating to employment relationships deal with how legislation regulates said relationships

Importance of the Employment Contract

• A contract determines if someone is categorized as an employee, determining the terms and conditions of employment
• Contractual freedom is limited by labor law
• Limitations do not exclude contractual freedom for parties to determine an employee's terms
• Agreements may be more favorable to workers and not regulated by legislation
• An example of a term that is not regulated is is restraint of trade clause
• The contract can dictate terms and conditions of employment
• When statutory and contractual rights coincide, employees can enforce either or both
• Legislative remedy availability doesn't preclude reliance on the contract of employment

Contractual and Legislative Causes of Action

• Disputes may lead to causes of action from contract or legislation
• Senior employee contracts may detail suspension circumstances and processes
• An employee can challenge their employer's conduct with contracts or legislation
• Breach of contract and "unfair suspension" under the Labour Relations Act can occur simultaneously

Contractual Claims

• Contractual claims may be pursued if the contractual right exists & is breached
• Employees typically enforce clear rights in legislation due to quick and inexpensive statutory procedures
• Employment contracts remain an important source of rights, duties, and legal remedies
• The Commission for Conciliation, Mediation, and Arbitration (CCMA) now has limited jurisdiction in contractual disputes

Defining the Employment Contract

• An employment contract can be defined as an agreement between two parties
• One party (employee) works for another (employer) in exchange for remuneration

Essential Elements of the Employment Contract

• The employment contract is based on voluntary agreement and compliance with general legal requirements for a valid contract
• No one can be forced to enter an employment contract, as this would constitute forced labor, violating the Constitution
• A valid employment agreement has to comply with the with s48 of the BCEA and section 13

Defining 'Work' in Employment Contracts

• One employee's "work" differs from another's
• 'To work' means to place one's labor potential at the disposal, and under the control, of another
• By working, people offer their services to another person or a juristic person
• Parties may specify the work the employee will do
• Employers can direct employees on how and when to perform tasks, and issue reasonable commands

Remuneration

• Remuneration is a key aspect of the employment contract, normally paid with money or paid in kind
• Remuneration is defined in section 213 of the LRA as:
  • 'any payment in money or in kind, or both in money and in kind, made or owing to any person, in return for that person working for any other person, including the State'

Employment Contracts as Reciprocal Agreements

• A contract is a contract wherein one promise is made for another
• The employee offers labor, and the employer offers remuneration in return

Control as an Element of Employment

• Control or subordination remains important to modern employment contracts
• The employer may have very little control over how the the tasks are performed, especially if the employee is highly skilled
• Actual control doesn't need to be on a day-to-day basis, but it is sufficient that the employer merely has the right to exercise control
• This isn't as pertinent nor obvious as in earlier times

Difficulties in Contract Identification

• Employment contracts can be difficult to identify, especially compared to contracts with independent contractors
• The employer has very little control over how the works is done
• It may be necessary to consider the agreement conditions to ascertain whether the relationship between the parties is an employment relationship or some other relationship
• Only legally defined 'employees' are entitled to protection from unfair labor.

Concluding Employment Contracts

• All employment contracts must comply as legally being requirements for the law
• All processes and conclusions of the contract must be lawful

Valid Employment Contracts

• A typical unlawful contract will be one that contravenes legislation
• An agreement to employ an illegal foreigner or a prostitute is an unlawful contract
• The pivotal requirement for the conclusion of a valid and binding employment contract is, of course, that the parties reach consensus
• There must be agreement between the parties on the terms of the contract and that the parties intend to conclude a binding employment contract
• It is also necessary for the parties' performance of their obligations to be possible

Necessary Capacity to Conclude Contracts

• Both parties to the contract must have the necessary capacity to conclude a contract
• As a rule, a minor cannot enter into a valid and binding employment contract
• A child under the age of seven years has no contractual capacity and children over the age of seven years can conclude employment contracts only with the assistance of their parents or legal guardians
• Section 43 of the BCEA also imposes a statutory limitation by prohibiting employment of a child under the age of 15

Consensus and Intention in Contracts

• Consensus means, in essence, agreement
• The parties must agree on the same thing
• One party cannot be under the impression that an employment contract is being concluded while the other party is under the impression that they are concluding an agency contract
• For example, in Church of the Province of Southern Africa (Diocese of Cape Town) v CCMA (2001) 22 ILJ 2274 (LC) (at paragraphs 34-35) it was held that the

Balance of Power in Contract Conclusion

• An employment contract results from employer and employee consensus
• Employers and employees do not have same bargaining power
• Employers are usually in a position to dictate the contract

Imbalance Quotes

• Davies & Friedland Kahn-Freund's Labour and the Law (1983) 18 noted that the relation between an employer and an isolated employee or worker is the bearer of power and not the bearer of power
• M Brassey in Brassey, Cameron, Cheadle, and Olivier: The New Labour Law: Strikes dismissals and the unfair labour practices in South Africa. Law (1987) said that common offers offer more protection

Must Contracts be in Writing?

• Writing in contracts is a common misconception, as the law doesn't require it
• However, some statutes require that contracts must be in writing
• These requirements stem section 29 of the BCEA
• An oral employment contract is valid and binding

Implied Common Law of Contractual Duties

• All employment contracts have a right to safety due to section 85 of the occupational health and safety act

Employee Contractual Duties

• to render their services
• Work competently and deligently
• Obey lawful and reasonable duties of the employer
• and to serve the employer's interests and act in good faith

Tendering Services

• The first duty of Employees is to tender their services to the employer as and when required by their contracts
• In their contracts, at the time and place agreed by the parties, employees must place their labour potential at the disposal of the employer to do the work agreed on
• Employees comply with their primary contractual duty if they render of their services

Breaching of Contractual Services

• Employees can breach this duty by refusing to work, desert, abscond, or remain absent from work
• Other breaches include lateness, loitering etc
• These simultaneous services constitute misconduct, the are discussed at length in chapter seven

Obligation to Work Competently and Diligently

• Employees must perform their tasks competently and without negligence
• This failure can come in three parts, the first being if the employee is able but failed to or do the work properly
• It can be because of the failure of the employee to perform agreed duties
• Lastly, it could be if the employee isn't capable of doing the work due to illness, necessary aptitude, or skills

Duty to Obey Instructions

• Flowing from the nature of the employment contract is under control of the employer, and it is implied
• Serious insubordination amounts to a breach
• Employee needs to follow reasonable, lawful orders that fall into the scope of the work

Serving Employer's Interests and Good Faith

• Employment relationship based on trust and confidence
• 1996 judgement specified that there must act must be conduct that is clearly inconsistent in that the innocent party is able to cancel the agreement
• To maintain that, employees must explicit good faith to maintain employer's interests through contract

Fiduciary Duty

• Fiduciary duties are duties that apply to the affairs of the benificiary
• The two core fiduciary duties are no conflict duty and no profit duty

Employee Obligations

• Employees have an area in employment that they are able to act in their own interests, and contrary to the employer
• Employees can't violate contractual duty of good faith
• 1957 ruling on the case of SA on behalf of Nganezi& Othersv Dunlop Mixing: "the contractual is contested and must at be of a reciprocal nature"

Examples of Duty Breaches

• CyberScene 200 example showed number of senior employees resign to then form new company causing breaches
• Stealing is not allowed and information must be kept safe
• Other obligations, such trade, employment, etc must all be scrutinised to ensure quality and safety

Protecting Employment Status

• Only servants are protected to terminate employee
• Trade clauses that are over broad aren't to be practices and they shouldn't be encouraged

Vicarious Liability

• This is where an employer gets held liable for the wrongful acts of its employees
• One must consider if it is an employee's own will
• Section 38 of the Insolvency Act 24 deals with how, going forward, sequestration effect the previous act

Terminination of the Acts for employment

• Termination of the Acts 1936 covers both termination of the acts
• One major thing, that is repeated in the LRA, is that anything relating to death must be fair and should apply in the act

Termination

Termination If a worker were made unfairly and it involves and required information, 2013 minister case should apply to it as that's what happened with police officers One should evaluate the validity of the termination, as in cases relating to sexual harassment. If upper management doesn't handle it right, there is a breach of act

Termination and Breaches This is a section that is broken into two parts such as how the termination was breached and the remedy of it

Terms of Contract

• Summarizes contract, contract must not violate section 161a and 16 and to end it needs to be fair

Explore the employment contract's origins in Roman law and its evolution through the Industrial Revolution. Understand its increasing importance in modern labor relations. The modern contract reflects both Roman law origins and considerable English law influence