Employment Contracts – Frequently Asked Questions

Employment contract law in South Africa is highly regulated. Whether you are a permanent employee, fixed term contract employee, in terms of South African Labour Law you are an employee (there is an employment agreement) and your minimum rights and obligations are defined, largely by the Basic Conditions of Employment Act.

For a long time and still today I see employers not providing employment contracts to their staff believing that without one they will be able to bypass labour laws and easily reduce staff numbers when they want to. Many of them end up at the CCMA and/or Labour Court paying heavy fines. It never ends well!

It is advisable to give all employees written contracts at the commencement of their employment as this clearly sets out the terms and conditions of their employment and does not leave these matters to chance. This is the first step of building trust between a new employee and an employer. Employees will be more loyal and engaged if they have an agreement with their employer.

In this article, I will be sharing some of the most critical questions asked by my clients in and around employment contracts. Have a read, you may learn something new and avoid making some costly mistakes.

IF I DO NOT HAVE A WRITTEN OR SIGNED CONTRACT IS MY EMPLOYMENT STILL LEGAL UNDER LABOUR LAW?

Yes, very much so! As long as there is evidence that there is an employment relationship. Facts showing that you actually work for the employer which can be corroborated by witnesses, salary payments into your bank account, business cards, or other means will be enough evidence to prove that you are employed by the employer.

WHICH IS STRONGER, THE PROVISIONS OF THE LAW OR MY EMPLOYMENT CONTRACT?

Labour law is the foundation of any employment contract and the clauses contained therein must never contravene the law. It may however be more favourable than labour law but not less favourable.

IF I DO NOT HAVE AN EMPLOYMENT CONTRACT, AM I STILL REQUIRED TO DO MY WORK?

Yes, the law requires you to do your work because merely by accepting the job you have contracted (even in an unwritten way) to do your work properly and in exchange receive remuneration from the employer.

CAN I ADD AND IMPLEMENT A RESTRAINT OF TRADE CLAUSE TO MY STAFF’S EMPLOYMENT CONTRACTS AFTER THEY HAVE BEEN EMPLOYED FOR A WHILE?

Short answer, yes you can add it to their terms & conditions but it has to be agreed by both parties as this is a new condition of employment that wasn’t originally included in the employment contract.

An employee cannot be forced to sign the restraint of trade but have the discussion to get their buy-in.

CAN I CHANGE EMPLOYMENT CONTRACTS IF I CAN’T AFFORD TO PAY BONUSES?

No, you can’t unilaterally change their terms and conditions of employment, which includes their entitlement to a bonus if it’s guaranteed in their contracts. Discuss the issue with employees and try to get their consent.

If they don’t consent, you either live with it and risk a claim for unpaid remuneration or a strike or take action, e.g. initiate discussions about retrenching the employees who refuse to accept the changes (on the basis that the changes are required to keep your business viable). Your decision to retrench must be final and not a ploy to get them to accept your changes.

DO I NEED TO HAVE EMPLOYMENT CONTRACTS FOR MY EMPLOYEES?

Yes, according to the Basic Conditions of Employment Act if your employees work more than 24 hours in month you should have employment contracts or at least formal written letters to provide specific information in writing and to record important agreements.

WHAT IS THE PURPOSE OF AN EMPLOYMENT CONTRACT?

The key purpose of an employment contract is to make sure both parties understand and agree to the terms of the relationship they’re entering into.

SHOULD I INCLUDE A GRIEVANCE AND DISCIPLINARY POLICY IN OUR EMPLOYMENT CONTRACT?

I would advise against that. It is better to have a separate disciplinary policy contained in a Handbook. This will ensure that you can update the policy without needing to seek the employee’s agreement. Also, if you included this in an employment contract and then departed from them, your employee might be able to sue you for breach of contract.

CAN I CHANGE THE TERMS OF AN EMPLOYMENT CONTRACT?

Under the common law, an employer is not permitted unilaterally to change the terms of an employment contract without an employee, and if it does so without agreement the employee would have the right to either abandon the contract or to sue for damages in terms of the contract.

IS A POLYGRAPH TEST ENFORCEABLE?

If your employment contract contains such a clause and you signed the employment contract then the employer may enforce polygraph tests when a given incident requires for it. The employee can be requested to undergo the test and refusal can lead to disciplinary action for breach of contract. The polygraphist will however ask for consent as part of his testing procedure.

SCENARIO – I HAVE BEEN WORKING FOR AN EMPLOYER NOW FOR 9 YEARS AS A LABOUR BROKER EMPLOYEE ON A LIMITED DURATION CONTRACT WITH NO END DATE. I ALSO GET A MUCH LOWER WAGE THAN THE PERMANENT EMPLOYEES IN THE SAME FIELD OF WORK THAT I AM DOING.

Labour Broker employees are seen as vulnerable employees in terms of the new Labour Relations Amendment Act. Under the new legislation, these employees are protected and may not receive fewer benefits than the employees of the client. After 6 months the labour broker employee is deemed to be the employee of the client. This amendment Act is not yet promulgated but will be soon. These changes are all being made to legislation to ensure that the employer acts fairly towards all employees.

These were just some interesting questions I have received over the course of my career and some can be quite technical and difficult to understand.

It is always best practice to have an HR Consultant or someone with the necessary knowledge and experience write or review your employment contracts to ensure you as the employer are protected and that you have the perfect foundation for a beneficial working relationship with your employees.

If there is something I want you to know about me right away, it’s that I have a passion for supporting business owners. I believe in the future of South Africa and that there are so many opportunities out there to be successful and to make a change to our economy.

I want to be part of that change by providing businesses with core HR and Labour Solutions that will not only result in legislative compliance but actually positively impact their bottom line.

Over the years I have gained practical HR experience working in various sectors such as mining, construction, financial services, and corporate legal. As a business owner myself, I can relate well to businesses and what their needs are.