MRL3702
Learning unit 1: Introduction to labour law
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Learning unit 2: The contract of employment and its relationship with labour legislation
A contract of employment, just like any other type of contract, is regulated by common law. In cases
where a specific labour matter is not covered by the LRA or any other labour legislation, common
law will apply.
In Roman law, a distinction was made between letting and hiring of some physical object or thing
(the locatio conductio rei) including locatio conductio operis and locatio conductio operarum
The locatio conductio operis related to the letting and hiring of a specific piece of work, for example,
the contract for an independent contractor engaged to do a specific piece of work.
The locatio conductio operarum related to the letting and hiring of someone’s personal services in
exchange for remuneration, for example a contract of employment.
The continued importance of the employment contract
The contract of employment links the employer and the employee in an employment relationship.
Take note that if there is no employment relationship between the parties, the rules of labour law
do not apply to that relationship. The contract of employment is important for the following
reasons:
- if a contract of employment exists, the person who renders service to the employer in terms
of that agreement will be an ‘employee’, not only in contractual terms, but also for purposes
of the application of labour legislation.
- the contract of employment is an important source of the terms and conditions of
employment of any employee.
- in cases where a statutory right coincides with an employee’s contractual right the employee
will usually be entitled to elect to enforce either the statutory right or the contractual right.
Labour law today is largely contained in legislation and employees most often rely on breach of their
rights contained in legislation (as opposed to the rights in the contract of employment) when they
feel aggrieved by the conduct of their employers.
It is possible (in exceptional cases) to be an 'employee' for purposes of labour legislation without a
valid contract of employment.
Labour legislation limits the freedom of employer and employee to agree on terms and conditions of
employment This is done through:
- the Basic Conditions of Employment Act 75 of 1997 (BCEA) and
- the process of collective bargaining between employers and trade unions resulting in
collective agreements regulated by the Labour Relations Act 66 of 1 (LRA)
These limitations do not completely exclude the contractual freedom of parties. The contract, for
example, may provide for terms and conditions employment more favourable to employees than
those provided by legislation.
An example of a term and condition not regulated by legislation is a restraint of trade clause.
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Definition of the employment contract:
The contract of employment can be defined as ‘an agreement between two parties in terms of which
one party (the employee) works for another (the employer) in exchange for remuneration’.
The key elements in a contract of employment are therefore the following:
- voluntary agreement; (section 13 of the Constitution which that 'no one may be subjected to
slavery, servitude or forced labour')
- to work;
- for remuneration. Mpanza & Another v of Justice and Constitutional Development and
Cortectionet Services & Others (20i 7) iLJ i675 (LC).
- The contract has to comply with the general requirements of our law for a valid contract.
- The contract of employment is therefore reciprocal in nature.
- the employer remunerates the employee in exchange for the employee offering to place
his/her labour potential at the disposal and under the control of the employer
The element of control - not necessary for there to be actual control on a day-to-day and hour-to-
hour basis. It is sufficient, for the purposes of the employment contract, that the employer merely
has the right to exercise control over the activities of the employee.
Requirements for a valid employment contract
• There must be consensus between the parties.
• Parties must have legal capacity to act. A minor cannot enter into a valid and binding employment
contract.
• Performance must be legally possible. Thus, employing a foreigner or even a prostitute will
constitute an unlawful contract.
• Performance must be physically possible; and
• If there are formalities, they must be complied with.
Negotiation and formalities
In terms of common law both the employer and the employee have a freedom to contract as they
can agree to terms and conditions of employment that suit them both. However, in reality the
employer will usually hand the employee a written contract of employment, carefully drafted by its
legal representatives, and there will be little choice for an employee other than to sign. The common
law, in short, offers little protection against arbitrariness. lt allows the party the greater bargaining
power to extract any bargain he wants, provided that it is not illegal or immoral.
It is a common misconception that all employment contracts must be in writing. (This misconception
stems largely from section 29 of the BCEA. It does not force the employer and the employee to sign
a contract). In only a few cases employment contract must be in writing (e.g., the contracts of
merchant seamen and learnership agreements). An oral employment contract is as binding and valid
as a written one and its terms may be express or tacit. - Rumbles v Bat Marketing (Ply) Ltd.
The common law contractual duties of the parties - Take note that there are duties implied into the
contract of employment by common law principles, unless otherwise specifically agreed between
the parties and a serious breach of any these duties may lead to lawful termination of the contract.
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- In terms of the Occupational Health a Safety Act 85 of 1993, the duty of an employer to
provide a safe working environment and an employee is obliged to comply with the health
and safety rules.
- The BCEA - the duty to give the employee annual, sick, maternity and family responsibility
leave.
The common law contractual duties of the employee: The employee has the following duties:
• To tender his/her services.
• To work competently and diligently.
• To obey lawful and reasonable instructions of the employer.
• To serve the employer’s interests and act in good faith.
The contractual duties of the employer: The employer has the following duties:
• To remunerate the employee.
• To provide work.
o Employee remunerated to sit idle is not breach of contract,
o However, employee depending on commission remuneration must be provided with
an opportunity to work for commission. Failure will amount to breach of contract.
o Must provide work where the employee requires work in order to acquire skills.
o where an actor, for example, who is not provided with work and can therefore lose
publicity.
• To provide safe working conditions.
• To deal fairly with employees.
Other terms and conditions of employment
Freedom to contract and basic conditions of employment: The National Minimum Wage Act 9 of
2018 (NMWA) and the BCEA influence the parties’ freedom to contract about terms and conditions
of employment. The NMWA provides for a general minimum wage that all workers are entitled to,
while the BCEA provides a number of other minimum standards to protect employees. Terms and
conditions of employment may also be negotiated upon during the collective bargaining process.
(Process by which employers and trade unions bargain about t &c’s of contracts of employment.) –
one of the express goals of the RLA.
What are terms and conditions of employment? The terms and conditions of employment of an
employee are derived from different sources:
- the terms agreed to by the parties (either verbally, in writing or through their conduct);
- common law implied terms;
- a statute; or
- a collective agreement.
Terms and conditions agreed to in the contract of employment may be changed in a limited number
of ways such as:
- an individual agreement with an employee; - practical if only a few employees are involved.
- collective agreement; - affecting hundreds of employees and between the employer and the
trade union
- operation of law
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Restraint of trade - A clause in restraint of trade is one that prevents an employee, in various ways,
from exercising his/her trade, profession or calling, or engaging in the same business venture as the
employer, for a specified period and within a specified area after leaving employment. The restraint
of trade clause must be judged by the criterion of public policy. – typically (but not exclusively)
‘confidential information’ and ‘trade secrets or connections'. The effect of a restraint of trade clause
continues even after the contract of employment has been terminated, regardless of the reason for
that termination. The employee will bear the onus of proving that the clause is contrary to public
policy.
Vicarious liability means that the employer may be held legally liable for the wrongful acts (delicts)
of its employees committed in the course and scope of their duties. Vicarious liability protects third
parties. In order for vicarious liability to apply, the following requirements must exist:
• There must be an employment relationship.
• The act must have happened in the scope and course of employment.
• The act must amount to a delict.
Vicarious liability links well with ubuntu and with African norms that are encapsulated in the
following proverb: Kgomo e wetswa ke namane ko bodibeng. This essentially means that if a child
from household A has caused damage to household B, his or her parents should be held liable.
Therefore, employers would, in terms of vicarious liability, be called in to pay damages and would
use the inherent disciplinary power they have over employees to get recourse from those employees
who were wrongdoers. This is fair to all parties and resonates with the culture of humaneness,
human dignity and respect for others.
There are two questions to be asked:
- Subjective - The first is whether the wrongful acts were done solely for the purposes of the
employee. This question requires a subjective consideration of the employee's state of mind.
- Objective- there is a sufficiently close link between the employee's acts for his own interests
and the purposes and the business of the employer. - to further the employer's interests.
E.g. -Bad conduct to further the employer's interests. = NOT Vicariously liable
-Management put an employee in a position of power/duty where a business setting allows
delict towards another citizen (management assaulting secretary / police raping woman) =
Vicariously liable
-An off-duty delict = NOT Vicariously liable
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