HR Pulse




Menu Style


Draft your employment contracts properly – or end up in court

Ivan Israelstam

Badly written employment contracts can backfire and leave you a sitting duck for all sorts of legal action your employees could institute against you. This means that you need to be acutely aware of any undertaking or implied undertaking you make in an employment contract because you can be sued if you don’t hold up your end of the bargain.

For example, in an employment contract you may undertake to provide your employees with:

  • A commission,
  • The use of a vehicle,
  • Medical aid, and
  • Retirement benefits.

If you do not provide these things, or withdraw them at a later stage, you are breaching your contractual duties and can be sued for this.

Watch what you put in your contracts!

If the contract mentions the need to comply with security, grievance, retrenchment, disciplinary or other procedures, you are legally required to follow these procedures.

In many cases, there is no problem with this but sometimes employers don’t keep to these requirements. This can occur for a variety of reasons, such as:

  • The employer forgets that the employment contract exists,
  • The employer does not realise that a contract is binding on both parties,
  • At a large employer with a management structure, the manager who implements procedures is not aware of the terms of the employee’s contract,
  • The employer does not believe that the employee will take action against the breach of contract,
  • The employer and its management do not know how to carry out contractually agreed or implied procedures, and
  • The employer did not realise that certain clauses in the contract implied legal obligations.

Regardless of the reason for non-compliance, if you do not adhere to the terms of an employment contract, this could open you up to a CCMA dispute as well as a civil suit.

In the case of Denel (Pty) Ltd vs Vorster (Contemporary Labour Law Vol. 13 No 9 page 83):

  • The employee was summarily dismissed and the employer did not strictly adhere to his disciplinary procedure, i.e. accused employees were supposed to have their cases heard by a disciplinary committee. The committee’s decision regarding the outcome of the hearing would be referred to an assistant general manager for approval in consultation with the assistant general manager: HR.
  • However, in this case:

- The assistant general manager (the outcome was supposed to be referred to him) chaired the hearing himself.
- The assistant general manager: HR acted as the prosecutor in the case instead of as an advisor about the outcome decision.

This left no-one in the hierarchy (referred to in the disciplinary code) to approve the disciplinary committee’s decision.

  • The employee who was dismissed sued the employer for breach of contract because the employee’s conditions of service did not allow for the prescribed procedure to be deviated from.
  • The Supreme Court of Appeal found that, even though the procedure used may not have been unfair, the procedure did deviate from the terms of the employment agreement and thus constituted breach of contract.

What can you learn from this case?

1.    If you breach an employment contract, your employee can take you to civil court even though the matter is a labour related.

2.    Even if it is found in the civil court that the employee’s dismissal was fair in every respect, if you do not follow procedure your employee could still win because you did not follow the contracted procedure – a mere technicality.

3.    If an employee loses an unfair dismissal case at the CCMA or Labour Court, he could have another go in the civil court system if there is a contractual breach that the CCMA or Labour Court has no jurisdiction to hear.