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Contracts of Employment


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How to Avoid the Pitfalls - 19 March 2014



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Contracts of Employment

  2. 2. A. Employees vs Independent Contractors “Employee” means – a) any person, excluding an independent contractor, who works for another person… and who receives, or is entitled to receive, any remuneration; and b) Any other person who in any manner assists in carrying on or conducting the business of the employer In terms of Section 213 of the Labour Relations Act 66 of 1995: “Remuneration” means – any payment in money or in kind, or both money and in kind…in return for that person working for any other person
  3. 3. B. LRA Presumptions (Apply to employees below threshold) Section 200 A provides that, until the contrary is proved, a person who works for, or renders services to, any other person is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present: (a) The manner in which the person works is subject to the control or direction of another person; (b) The person’s hours of work are subject to the control or direction of another person; (c) In the case of a person who works for an organisation, the person forms part of that organisation;
  4. 4. (d) The person has worked for that other person for an average of at least 40 hours per month over the last three months; (e) The person is economically dependent on the other person for whom he or she work or renders services; (f) The person is provided with tools of trade or work equipment by the other person; or (g) The person only works for or renders services to one person. NOTE: CCMA / Labour Court look past labels by determining substance of the relationship (Dominant Impression Test) B. LRA Presumptions (Apply to employees below threshold)
  5. 5. C. Contracts vs Letters Of Appointment (& Other Appointments) (i) WRITTEN PARTICULARS OF EMPLOYMENT - Section 29 of the BCEA - Contemplates letter of appointment (iii) EXECUTIVE APPOINTMENTS - Directors per se are not employees - Directors may also be employees - Managing members of CC’s are employees (ii) CONDITIONAL APPOINTMENTS - Suspends employment? - Non-fulfillment not a dismissal?
  6. 6. D. Formalities (i) NO FORMALITIES - Employment is a factual enquiry - Does not have to be in writing - Offer and acceptance results in employment (ii) IMPLIED TERMS (BCEA OR COLLECTIVE AGREEMENTS) - Read into employment agreement by law even if not expressed (iii) EXPRESS TERMS - Cannot be lower than BCEA / CA minimums - Can be higher than BCEA / CA minimums - Incorporation of annexures where appropriate
  7. 7. D. Formalities (iv) Fixed Term Contracts - Written formalities under LRA Amendments - Restricted to written offers and renewals - Must express limited nature of work (v) Evidence Of Type Of Employment / Verbal Arrangement - Temporary or part-time employment - Overarching arrangement vs piece-meal arrangements - Day-workers / “casuals” vs part-time staff - Probationary employment (unilateral extensions) - No objection to written confirmation of terms?
  8. 8. A “Fixed Term Contract” means: Section 198B Contract of employment that terminates on - a) the occurrence of a specified event; E. Fixed Term Contracts (LRA Amendment Bill) b) The completion of a specified task or project; or c) A fixed date, other than an employee’s normal or agreed retirement age, subject to subsection 3
  9. 9. Contracts longer than 3 months only if: a) Nature of work of a limited or definite duration; or b) Employer can demonstrate any other justifiable reason for fixing the term E. Fixed Term Contracts (LRA Amendment Bill)
  10. 10. Section 198 B (4): Justifiable Reasons: if employee – a) Replacing another employee temporarily absent; b) Engaged on account of temporary increase in volume of work not beyond 12 months; c) Is a student /graduate for training or experience purposes; d) Engaged to work exclusively on project of limited / defined duration; E. Fixed Term Contracts (LRA Amendment Bill)
  11. 11. e) A non-citizen with work permit for defined period; h) Engaged for position funded by external source for limited period; i) reached normal or agreed retirement age applicable in employer’s business. f) Engaged to perform seasonal work; g) Engaged for public works scheme; E. Fixed Term Contracts (LRA Amendment Bill)
  12. 12. Deemed Permanent Employment, Formalities and Onus: Contravention = Deemed Indefinite Duration E. Fixed Term Contracts (LRA Amendment Bill) Offer to employ or renew or extend on fixed term must: (a) be in writing; and (b) state the reasons Onus on employer to prove: - justifiable reason for fixed term; and - term was agreed
  13. 13. F. Terms And Conditions vs Policies (i) Incorporating Policies into contracts - Precludes amendments - Invites unilateral change disputes (ii) Workplace Practices - Fall into managerial prerogative - May indicate a tacit term (iii) Policies fall within managerial prerogative - Consultation may be a pre-requisite to amendment - No consent required for amendments - ULP scrutiny broadened by Apollo Tyres decision of LAC
  14. 14. G. Unlawful And Unfair Clauses (i) Circumvention clauses - BCEA contraventions - Waiver of LRA protection - EEA / OSH Act contraventions (ii) Waiver Clauses - May amount to LRA / BCEA contravention e.g. leave forfeitures - May offend the Constitution e.g. strike forfeitures (iii) Deductions - Regulated by BCEA (iv) Resolutive Conditions (Automatic Terminations) - May amount to LRA circumvention - Subject to CCMA scrutiny
  15. 15. H. Terms Implied By Common Law & Statute (i) Duty of Good Faith - Best interests of employer - Duty of confidentiality - Extends after employment (ii) Harmonious Inter-Personal Relations (iii) Companies Act of 2008 (MOI) (iv) Professions Legislation and Accreditation Bodies (v) BCEA Provisions (vi) Section 197 (LRA) transfers of business
  16. 16. I. Contentious Clauses (i) Performance Management Provisions - Subject to LRA scrutiny - Appropriate for managerial and executive competencies (ii) Consent To Medical Records - Blanket provisions? - Consent to medical examinations? (iii) Consents to Self-Incrimination - Polygraphing - Breathalising - Zones of privacy waivers
  17. 17. I. Contentious Clauses (v) Alternative Dispute Resolution Clauses - Pre-dismissal arbitrations to comply with LRA requirements - Private arbitration clauses subject to CCMA discretion (vi) Variation Clauses - May require consultation prior to exercising - Cannot be exercised arbitrarily (require rational basis) (iv) Consents to Liquidated Damages - Subject to Conventional Penalties Act
  18. 18. I. Contentious Clauses (vii)Restraint of Trade Clauses - Cannot amount to anti-competition - Must be supported by protectable proprietary interests - For the protection of trade secrets and / or trade connections - Must pass judicial scrutiny of reasonableness - Must be appropriate to the relevant position occupied (viii) Advance Consents - Agreements to work overtime - Agreements to time-off in lieu of overtime - Consents to short-time (ix) Waiver and Substitution of Common Law Rights - Express inclusion of LRA into fixed-term contracts
  19. 19. J. Conclusions • Compliance aspects • Increasing discretionary powers • Entrenching proprietary protection • Defining performance / competence management • Atypical employment methods subject to higher scrutiny Motivational Reasons For Upgrading Contracts Of Employment • Aligning Contents of Contracts with Job Profiles / Functions • Securing affirmations and warranties from employees
  20. 20. QUESTIONS?
  21. 21. Thank You