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EMPLOYEE LIABILITY REGARDING DAMAGES FOR FAILING TO ADHERE TO NOTICE REQUIREMENTS

Jacques van Wyk
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To what extent, if any, is an employee liable for damages for failing to adhere to the notice requirements when terminating a contract of employment?
May an employer impose a penalty provision in an employment contract which requires an employee who fails to adhere to a work-back requirement for training provided to him/her liable for the costs of such training?

Damages for breach of an employment contract, as with any contract, may only be claimed if there is a causal relationship between the breach and the loss and such loss is proved. Imposing liability for training costs on employees may result in such provision falling within the scope of the Conventional Penalties Act 15 of 1962 and thus may be reduced, or struck down entirely if the penalty is out of proportion with the prejudice suffered by the employer.

In Syrex (Pty) Ltd v Ramfolo (J1267/14) [2015] ZALCJHB 59, the employee was employed as an HR Officer and Administrator. A term of her contract of employment provided that she could only terminate the contract by giving two months written notice. When the employee resigned some three months after commencing work, she did so with immediate effect. This was clearly a breach of the two month notice provision. The employer sought to recover damages it claimed to have suffered as a result of this breach.

The employer claimed that it was forced to immediately source a temporary replacement for the employee in order for its HR department to continue functioning. However, the employer did not provide the court with any evidence as to the replacement HR Officer and to what extent it had suffered loss due to this.

In addition, the employer claimed it suffered loss in the amount of R45 900,00 in respect of training costs. In terms of the contract of employment, the employee would be provided with in-house training, the total value of which was three times the employee’s monthly cost to company salary. In return for the training, the contract provided for a work-back period of one year.

The Labour Court held that the employer had incorrectly proceeded on the assumption that once a breach had been proved, payment for damages purportedly suffered would automatically follow. The employer needed to prove that there is a connection between the breach and the loss suffered, which it failed to do. The claim for damages was therefore dismissed.

The court held further that the requirement of a work-back period amounted to a penalty stipulation as governed by section 1(1)

Conventional Penalties Act 15 of 1962. The clause had been inserted to force the employee to work for the employer for at least one year or be liable for an amount equal to three times her monthly salary. The Court found that even though the employee had not opposed the matter, was not before the court and had not raised this issue, it could reduce the penalty. The training costs were held to be excessive and the penalty was out of proportion with the prejudice the employer may have suffered. The employer did not provide evidence as regards the costs of training, whether the training was actually offered and for how long. The court therefore held that it would be just and equitable to dismiss the claim for repayment of training costs.

An employer wishing to claim to claim damages for an employee failing to adhere to a notice provision must be careful to provide clear proof to the court as to the extent to which it is out of pocket and that this loss was as a direct result of the breach. In addition, it will have to show that it attempted to mitigate its losses.  In other words, the damages must be proven by the employer as would be required in any civil case for damages.  There can be no automatic deduction of damages.

A work back provision in a contract falls within the scope of the Conventional Penalties Act and therefore must be reasonable and proportional to the actual prejudice the employer may suffer if the employee fails to adhere to the provision.   The employer must prove that the penalty accords with the prejudice.


Jacques van Wyk is the director: labour and employment law at Werksmans Attorneys. He has a BA (LLB) from the University of Cape Town. He practises labour and employment law, as well as business crime and forensics law. Jacques was named as a recommended lawyer in Labour & Employment by the Legal500 (2010 - 2012) and he co-authored Labour Law in Action – A Handbook on the new Labour Relations Act – 1997 with Frances Anderson.


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