Our Labour Specialist Provides Insights
Practical Guide to Employment Contracts in SA
Melisa Matanhire
Melisa is a Third-Year BCom Human Resources Student & Aspiring HR Specialist. My love for humanity has steered me toward HR, a field where empathy and strategy intersect. Life is about embracing risk and uncertainty, and I’m ready to see where this exciting journey takes me as I pursue a career that blends purpose with progress.
Written under supervision and reviewed by Etienne Malan (LLB, LLM)
Author: Melisa Matanhire
Melisa is a Third-Year BCom Human Resources Student & Aspiring HR Specialist. My love for humanity has steered me toward HR, a field where empathy and strategy intersect. Life is about embracing risk and uncertainty, and I’m ready to see where this exciting journey takes me as I pursue a career that blends purpose with progress.
Written under supervision and reviewed by Etienne Malan (LLB, LLM)
An Introduction to Employment Contracts
An employment contract is a fundamental legal structure that governs the relationship between employer and employee. It clarifies duties, responsibilities, and entitlements while assuring compliance with the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA), and other relevant labour regulations.
The accurate classification of employment as permanent or fixed term is an important first step since it influences both legal duties and organisational procedures. Probationary periods must be properly stated and handled in accordance with the norms of justice and due process.
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Who is an Employee?
An employee is defined in section 213 of the Labour Relations Act no 66 of 1995 and section 83A of the Basic Conditions of Employment Act no 75 of 1997.
Essentially, an employee works for another person or the State and is entitled to remuneration, excluding independent contractors.
According to Section 83A, a person is presumed to be an employee if any of the following factors apply:
- The manner in which the person works is subject to the control or direction of another person
- The person’s hours at work are subject to the control or direction of another person.
- The person has worked for that other person for an average of at least 40 hours per month over the last three months.
- In the case of a person who works for an organisation, the person is a part of that organisation.
- The person is economically dependent on the other person for whom that person works or renders services.
- The person is provided with tools, trade, or work equipment by the other person, or
- only works for or renders services to one person.
The Definition of an Employment Contract
The standard employment contract, also called locatio conductio operarum, is a reciprocal agreement whereby an employee renders his services to another individual or organisation, the employer, for a predetermined or determinable fee in a way that gives the employer authority over the employee and allows the employer to supervise the employee’s performance.
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What Are the Legal Requirements?
Contracts must be freely and willingly signed. Forced labour is prohibited by Section 48 of the Basics Conditions of Employment Act, which states that no one may be made to work against their will. Employment contracts cannot contain illegal provisions and must adhere to all legal standards. The nature of the contract and its terms must be agreed upon by both parties.
Different Types of Employment Contracts
Permanent (Indefinite) Employment Contracts
Permanent (indefinite) employment contracts are the most common and traditional form of employment. These contracts have a clearly defined start date but no specified end date, which results in an ongoing employment relationship. Employers are required to meet the minimum standards outlined in section 29 of the Basic Conditions of Employment (BCEA). Employees on permanent contracts are entitled to a range of statutory benefits, including paid annual leave. This type of contract is typically used for long-term employment relationships.
Fixed-term Employment Contracts
Fixed-term contracts are characterised by a defined start date and a termination date. According to section 198B of the Labour Relations Act (LRA), if the contract extends beyond three months, the employer must provide justification for its duration. After 24 months, employees on fixed-term contracts may be considered permanent if no valid explanation for the temporary nature of the contract is given. Despite the fixed duration, employees on these contracts are entitled to the same basic statutory benefits as permanent employees. The key distinction between fixed-term contract and a permanent contract is the predetermined end date, which outlines the period of employment in contrast to the indefinite nature of permanent contracts.
The Essentials of an Employment Contract
- For the employment contract to be enforceable and legally effective, the employer must legitimately contain the written particulars of employment as defined by section 29 of the BCEA.
- Specific information regarding an employee’s job that must be given to them in writing by their employer, usually within a reasonable amount of time after they begin working, is known as written particulars of employment. This information is essential for guaranteeing openness and comprehension of the terms of employment between the employer and employee.
- The employer is responsible for making sure that the employee comprehends the material, maybe by providing an explanation in a language the employee can understand.
- In the Rumbles v Kwa Bat Marketing (Pty) Ltd [2003] 8 BLLR 811 (LC) 815 case, the court held that Section 29 of the BCEA required only written particulars, not a written contract of employment, and that there were no formalities involved in the formation of a binding contract of employment.
Probation periods and their management
A conditional contract known as a probationary term allows an employer to assess an employee’s performance and suitability for the position. Sections 213 of the Labour Relations Act and 83A of the Basic Conditions of Employment Act describe an “employee,” which includes probationary employees. Probation only applies to newly hired employees.
- Probationary durations have to be suitable. Depending on the intricacy of the task, the employee’s performance standards, and the nature of employment, a probationary period often lasts three to six months.
- Probation serves to uncover performance concerns before permanent employment is confirmed and to appropriately address these problems in various ways.
Item 8 (1) of the Code of Good Practice dismissal contained in Schedule 8 of the Labour Relations Act provides the guidelines for probation.
Once the following sub-items are met, the employer has the option to either extend the probationary period or terminate the employee.
The period of probation may only be extended for a reason that relates to the purpose of probation. The period of extension should not be disproportionate to the legitimate purpose that the employer seeks to achieve.
In the case of Tharratt vs Volume Injection Products (Pty) Ltd (2005, 6 BALR 652), the CCMA dealt with the dismissal of an employee during his probation due to alleged poor performance.
The employer had terminated the employment without conducting a proper investigation into the reasons behind the employee’s underperformance. The CCMA found that the dismissal was procedurally and substantively unfair, emphasising that even during a probationary period, employers are obligated to identify performance issues, provide guidance or training where necessary, and allow the employee an opportunity to enhance. As a result of the employer’s failure to allow the employee an opportunity to improve and its failure to follow a fair process, the CCMA ordered the company to compensate the employee with an amount equivalent to three months’ remuneration. This judgment reaffirms the idea that probation does not excuse companies from following fair labour practices.
An employer may only decide to dismiss an employee or extend the probationary period after the employer has invited the employee to make representations and has properly considered these. A trade union or fellow employee may make the representations on behalf of the employee.
In the case of Smith Vs Patient Focus Africa (Pty) Ltd (2009) 18 CCMA 7.20.1, the employee’s probation period was extended as a result of concerns regarding her performance.
Although the employer initially addressed the performance issues, it failed to provide ongoing feedback on intervention during the final two months of the extended probation. The commissioner found this lapse to be procedurally unfair, emphasising that an employee, even while on probation, is entitled to fair treatment.
Specifically, the employer should have counselled the employee on her continued underperformance and afforded her the opportunity to make representations before any decisions to terminate her employment was taken. Due to the employer’s failure to follow proper procedure, the CCMA awarded the employee compensation equivalent to one month’s salary.
This case emphasises how crucial it is to have fair procedures and consistent performance management during the probationary term.
Dismissal During Probation
If it is essential to terminate an employee under probation for reasons other than poor performance, the procedural and substantive requirements for dismissal must be followed.
Misconduct, disability due to illness or injury, and retrenchment are all possible reasons.
For example, if a probationary employee is accused of stealing or any other sort of misbehaviour, a disciplinary hearing must be convened following due process. In the event of retrenchment, a proper consultation procedure must be followed before any decision is taken to dismiss the employee.
It is also worth noting that probationary employees cannot be dismissed for automatically unjust grounds, such as participating in a legitimate strike.
Furthermore, an employer cannot utilise a probationary condition to remove an employee purely for operational reasons. All dismissals, including those under probation, must be handled in a fair and lawful way.
Any sort of unfair treatment of a probationary employee, other than stated unfair dismissal, may be considered an unfair labour practice under section 186(2)(a). In this situation, an unfair employment practice must be referred to the relevant bargaining council or CCMA for determination.
In Conclusion
A well-drafted employment contract is the cornerstone of a productive and legally compliant workplace by clearly outlining an employee’s role, obligations, duties and both parties’ expectations and managing probation (if applicable) in a fair and lawful manner. It further serves to clarify both employer’s’s and the employee’s obligations to prevent uncertainty and disputes.