CONTRACT OF EMPLOYMENT

From a Lecturer
 COMMON LAW
 Common law principles of the service contract relate to the earlier master and servant relationship that
characterized employment relations and to an era of minimal labour legislation and little trade union
activity.
 Common law that is all legal rules are not found in legislation
 Sources of the common law are Roman-Dutch law, English law, discussion of the High court and custom
and practice.
 Common law places the individual employee in a weak position vis-á-vis his or her employer and offer
little or no protection to the employee.
 Common law rule does not provide for maximum working hours and paid leave.
 Common law rule of ‘no work’, ‘no pay’ prevails.
 In terms of common law a job applicant having the freedom to contract has the choice to commit himself
contractually to work (e.g. seven days a week, 15 hours per day and with no provision for paid holiday or
sick leave)
 Under common law, employees have a duty to tender their services as required by the contract to
maintain reasonable efficiency to commit themselves faithfully to furthering the employer’s business
interests
 COMMON LAW

 Common law views the employment contract as an ordinary commercial contract , voluntarily
entered into by two people.
 Individual contracts of employment override the common law and will take priority over the
Basic Conditions of Employment Act only if the contractual provisions are more favourable
than those contained in BCEA.
 BCEA takes precedence over common law and a contract of employment. However, if the
contract of employment provides for more favourable conditions of employment, the contract
will prevail and not the BCEA.
 CONTRACT OF EMPLOYMENT
 Contract of employment or service is traditionally considered to be a sub-species of the common law
contract of lease, with its origins in the Roman law.
 Roman law distinguishes three types of lease agreement:
1. Locatio conductio rei or the rental of a thing
2. Locatio conductio operarum or the hiring of services – the so called ordinary contract of employment (service)
3. Locatio conductio operis or the hiring of a peace of work.
 Locatio conductio operarum or the ordinary contract of employment will be considered as it forms the
basis of the ‘modern’ employment contract or the foundation upon which more complicated relationship
are constructed.
 Ordinary contract of employment involves the rendering of labour or services by the employee to his or
her employer for remuneration while the employee subjects himself or herself to the supervision and
control of the employer.
 Common law contract principles applicable to contracts of employment form part of individual labour law,
which means that the parties to the agreement, the employer and employee, negotiate terms of their
contract individually and freely.
 DEFINITION OF CONTRACT OF EMPLOYMENT
 Contract of employment can be defined as a legally enforceable agreement between two
parties, whereby one party places his or her personal services at the disposal of and under the
control of the other party.

ELEMENTS OF A CONTRACT OF EMPLOYMENT

 A time must exist
 The agreement must be permissible by law
 The parties must have legal capacity
 The employer must have the power to control and the employee must place his or her services
at the employer’s disposal
 Remuneration must be paid and must be fixed or readily ascertainable.
 There must be consensus between the parties; they must have the serious intention to create
mutual rights and duties and be legally bound.
 EXISTENCE OF CONTRACTS

 A contract of employment comes into existence when both parties agree that the employee
will work for employer.
 A contract may be written, verbal or it may be understood.
 The very fact that one person is working for another means that a contract exist.
 The parties will agree on the kind of work required and on the wage to be paid by the
employer.
 Once a contract of employment has been entered into, whether in writing, verbally or
tacitly, it is accepted that the parties have agreed to certain rights and duties at law.
 DUTIES AT COMMON LAW
DUTIES OF EMPLOYER AT COMMON LAW DUTIES OF EMPLOYEE AT COMMON LAW
 Pay the employee  Perform his or her work faithfully and diligently
 Provide safe and healthy working conditions  Obey reasonable orders given in the normal
 course of employment
Provide work for the employee
 Not deal dishonestly with the property of the
 Not contract the employee’s services to
employer
another employer without the employer’s
consent  Not compete in his or her private capacity with
the business of the employer
 RIGHTS AT COMMON LAW
EMPLOYEE RIGHTS EMPLOYER RIGHTS
 Employer expect the employee to:
To remuneration
 Do the work to the best of his or her ability
 To work
 Obeys reasonable orders
 Not to be demoted
 Be honest
 Not to be forced to work for any employer but
his or her own  Not compete with the employer’s business
 To safe and healthy working conditions
It is accepted that the employer has the right to select whomever
he wishes to employ.
He or she can say how work should be done and has the right to
dismiss the employee if the latter’s performance is not
satisfactory.
 WRITTEN CONTRACT
 Section 29 of the BCEA obliges the employers to issue written contracts to employees.
 The letter of appointment or contract must in terms of the BCEA state the following:
 Full name and address of the employer
 Name and occupation of the employee or a short description of his or her job
 Place or places where the employee is expected to work
 Date of commencement
 Ordinary hour and days on which employee is expected to work
 Wage or the wage rate and the method of calculation
 Rate of pay for overtime
 Any other cash payments to which the employee may be entitled
 Any payment in kind and the value of such payment
 Employee’s leave entitlement (annual, sick, maternity and family responsibility)
 Notice periods in the event of proposal termination
 In case of a fixed term contract, date or event of termination
 Any period of service with a previous employer that will count towards the employee’s tenure
 Pension or provident fund and medical aid contribution
 Tax deductions in terms of directives from SARS
 A confidentiality clause of that necessary
 DEFINITION OF EMPLOYEE
Industrial Conciliation Act (currently known as Labour Relations Act) 28 of 1956 stated that:
 An “employee” means any person (other than a Bantu) employed by, or working for any employer and
receiving, or being entitled to receive, any remuneration, and any other person whatsoever (other than
a Bantu) who in any manner assists in the carrying on or conducting of the business of an employee (Nel,
Kirsten, Swanepoel, Erasmus & Jordaan, 2016).

 Labour Relations Act 66 of 1995 defines an employee as:

a) any person, excluding an independent contractor who works for another person or State and who
received, or is entitles to receive any remuneration; and
b) any other person who in any matter assist in carrying on or conducting the business of an employer

INDEPENDENT CONTRACTOR
An organization may contract certain jobs to be performed by outside agencies. For example securities.
 PRESUMPTION AS TO WHO IS AN EMPLOYEE

To be an employee one or more of the following factors are suppose to be present:

 The manner in which a person works is subject to the control or direction of another person
 The person’s hours of work are subject to the control or direction of another person
 In the case of a person who works for an organisations, the person is part of that organization
 The person has worked for that other person for an average of at least 40 hours per month over the last three
months
 The person is economically dependent on the other person for whom that works or renders services
 The person is provided with tools of trade or work equipment by other person
 The person only works or renders services to one person
 TYPES OF EMPLOYMENT CONTRACTS
INDEFINITE/ PERMANENT CONTRACTS FIXED-TERM CONTRACTS
 Most of the contracts are indefinite or permanent  There are instances where the services of an
and there is no date for termination of the contract employee may be required only for a specific
is given. period or for a particular project.
 The parties expect the relationship to be a  In h=this instance the employer will conclude a
permanent one. fixed-term contract with the employee/s in
 question.
The employer by engaging in an indefinite or
permanent contract with the employee implicitly  Section 198B(1) of LRA defines a fixed-term
agrees that the employee will not be dismissed contract as one which will end on:
unless:
1. the occurrence of a specific event
1. He or she is in breach of contract or
2. Completion of a specific task or project
2. He or she becomes too ill or incapacitated his or
3. A fixed date (but not the employee’s normal
her duties
retirement date)
3. Operational requirements of the employer require
a reduction of the workforce
 FIXED-TERM CONTRACTS
 In terms of section 186 of the LRA an employee on a fixed-term contract may claim unfairly
dismissed if:
1. He or she expects the contract to be renewed on the same or similar basis and the employer did
not renew the contract or renewed it on his or her favourable terms
2. He or she reasonably expected to be retained indefinitely on the same or similar terms and he
was not retained or was offered a permanent position on less favourable terms

 A fixed-term employee like other employees can also claim that he or she was unfairly dismissed
if:
1. He or she resigned because the employer made it impossible for him or her to continue
2. His or her contract was transferred to another employer and the new conditions of servive are
substantially less favourable than those with the previous employer.
 PART-TIME EMPLOYEES
 Section 198C of LRA defines a part-time employee as someone who is
paid wholly or partly on the basis of time and who works for fewer hours
than comparable employees.
 Comparable employees are those who are also paid wholly or partly
according to hours worked but are employed on a full-time basis.
 The employer must also provide part-time employee with access to
training and the same opportunities as full-time employees.
PERSONS EMPLOYED BY LABOUR BROKERS

 LRA defines a temporary employment service (labour brokerage) on one

where an employee is provided to a client by a labour broker.
 The employee performs work for the labour broker’s client but is paid by
the labour broker.
 LRA specifies that the employee in question is regarded as the employee
of the temporary employment service and not of the client.