SU 2- INDIVIDUAL CONTRACT OF EMPLOYMENT
THE IMPORTANCE OF THE EMPLOYMENT CONTRACT:
• The foundation of the relationship between an employee and an employer
• Links the employer and the employee in an employment relationship, irrespective of
the form that the employment relationship takes
• Existence of an employment relationship is the starting point for the application of
all labour law rules
• No employment relationship- rules of labour law does not apply
1. 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
2. Contract of employment is an important source of the terms and conditions of
employment of any employee
➢ Labour legislation limits the freedom of the employer and employee to agree on
terms and conditions of the employment
➢ Basic Conditions of Employment Act 75 of 1997- BCEA
➢ Labour Relations Act 66 of 1995- LRA
3. 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
DEFINITION OF THE EMPLOYMENT CONTRACT:
A contract of employment is an agreement between two parties in terms of which one of
the parties (employee) undertakes to place his or her personal services at the disposal of the
other party (employer) in exchange for remuneration and which entitles the employer to
define the employee’s duties and to control the manner in which the employee discharges
them.
Elements:
• Voluntary agreement- Section 13 of the Constitution and Section 48 of the BCEA
• Contract has to comply with the general requirements of our law for a valid contract
• One of the pivotal concepts- work
• Remuneration- payment of money or the provision of another benefit
• Reciprocal contract- one promise is made in exchange for another and one
obligation is incurred in exchange for another
➢ Employee works in exchange for remuneration
➢ Employer remunerates the employee in exchange for the employee offering
labour
Element of control:
• Control or subordination- important concept
• Not necessary for there to be actual control on a day-to-day and hour-to-hour basis.
, • Employer merely has the right to control over the activities of the employee
• Fact that the employer does not exercise this right does not mean that the right is
absent and that it cannot be applied and enforced
• CONCILATION, MEDIATION AND ARBITRAATION- CCMA
REQUIREMENTS FOR A VALID EMPLOYMENT CONTRACT:
1. CONSENSUS
• Parties agree voluntarily on all key aspects
• No coercion allowed
• If the parties are under the wrong impression of the nature or the scope of the
agreement- NO VALID CONTRACT
2. POSSIBILITY
• It has to be possible to perform in terms of the contract
• It must be physically possible to do the tasks as stipulated in the contract
3. FORMALITIES
• Generally, there are no specific formalities for employment contracts
• Does not have to be written- can be verbal
• Must provide certain written particulars of employment as stated in section 29 of
the BCEA- important for clarity and certainty
• Certain types of employment do have to be in writing
4. LAWFULNESS
• A contract may not contain illegal provisions or breach the law as a whole
• Distinction between a contract which is formally illegal and one which entails the
performance of illegal tasks
5. CAPACITY
• Capacity to conclude a contract is determined by general rules of Law of Contracts
• A child under the age of 7 has no contractual capacity
• Children over the age of 7 can conclude employment contracts only in the assistance
of their parents or legal guardians
COMMON LAW CONTRACTUAL DUTIES OF THE PARTIES:
A. EMPLOYEE-
1. To tender his/her services
• At the time and place agreed by the parties, the employee must place his/her labour
potential at the disposal of the employer to do the work agreed on
• Employee’s duty is simply to “work”
• Employee tenders services- receives remuneration from employer
2. To work completely and diligently
• Employee must perform his/her tasks completely and without negligence
• Competence- ability to do the job
,Failure to comply- three forms-
i. Employee- capable of doing the agreed work but intentionally or deliberately
fails to do the work
ii. Employee- capable of doing the agreed work but negligently fails to perform the
agreed duties or performs the duties in a negligent manner
iii. Employee- despite having agreed to perform the work, is incapable of doing this
work
3. To obey lawful and reasonable instructions of the employer
• Duty flows from the nature of the employment contract, in terms of which an
employee is under the control of the employer
• Implied duty
• Not necessary for the contract of employment to state explicitly that the employee is
under the control of the employer
4. To serve the employer’s interests and act in good faith
• Employment relationship is based on trust and confidence
• Contractual duty on every employee to act in good faith and to promote the interest
of the employer
Obligation on an employee to act in good faith manifests itself in two ways-
i. Some employees by the nature of their jobs and responsibilities owe the
employer a fiduciary duty
ii. More general contractual duty to act in good faith, part of any employment
contract
B. EMPLOYER
1. To remunerate the employee
• Wage or salary is determined in the contract by the parties
• Primary duty of the employer
2. To provide work
• Employer has no duty to provide the employee with tasks to perform if the
employee tenders his/her services
• As long as the employer pays the employee the remuneration agreed upon-
employer will not be breaching contract
3. Safe working conditions
• Safe work place, safe machinery and tools
• Safe procedures and processes are followed
• Section 8 of the Occupational Health and Safety Act 85 of 1993
4. General duty of fair dealing with employees
• Guarantee safety of employees
, FREEDOM OF CONTRACT:
• Parties has freedom of contract- they can regulate employment relationship as they
see fit Agreed provisions in the contract must comply with the minimum conditions
prescribed by the BCEA
• Employment conditions may not be less favourable than those in the act or
employee may not be contracted out of them
• “Statutory minimum terms and conditions”
TERMS AND CONDITIONS OF EMPLOYMENT: (Not covered by BCEA)
1. RESTRAINT OF TRADE
• To limit the partner from stealing business from other business when leaving the
partnership
• Must be judged by the criterion of public policy- nature, extent and duration of the
restraint and factor peculiar to the parties
• Will only be enforced to protect an interest which according to law deserves to be
protected
2. VICARIOUS LIABILITY
• If the employee does something that causes some form of damage- employer can be
held liable for the damages as if the employer committed the delict
• Can be excluded from a contract
BREACCH OF CONTRACT:
• If a party to a contract of employment fails to carry out his/her obligations in terms
of the contract- guilty of breach of contract
FORMS OF BREACH:
i. Serious breach
• FUNDAMENTAL BREACH
• BREACH OF A MATERIAL TERM OF THE CONTRACT
• One party breaches a contractual duty that goes to the heart of the employment
contract
• Failing to comply with core aspects
ii. Minor breach
The type of breach determines the contractual remedies that can be used
CONTRACTUAL REMEDIES:
• Put an end to the contract and sue for damages- Committed by employee
• Ignore the repudiation and hold the other party to the contract and claim specific
performance- Committed by employer
• Most of the time the employee goes to the CCMA
THE IMPORTANCE OF THE EMPLOYMENT CONTRACT:
• The foundation of the relationship between an employee and an employer
• Links the employer and the employee in an employment relationship, irrespective of
the form that the employment relationship takes
• Existence of an employment relationship is the starting point for the application of
all labour law rules
• No employment relationship- rules of labour law does not apply
1. 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
2. Contract of employment is an important source of the terms and conditions of
employment of any employee
➢ Labour legislation limits the freedom of the employer and employee to agree on
terms and conditions of the employment
➢ Basic Conditions of Employment Act 75 of 1997- BCEA
➢ Labour Relations Act 66 of 1995- LRA
3. 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
DEFINITION OF THE EMPLOYMENT CONTRACT:
A contract of employment is an agreement between two parties in terms of which one of
the parties (employee) undertakes to place his or her personal services at the disposal of the
other party (employer) in exchange for remuneration and which entitles the employer to
define the employee’s duties and to control the manner in which the employee discharges
them.
Elements:
• Voluntary agreement- Section 13 of the Constitution and Section 48 of the BCEA
• Contract has to comply with the general requirements of our law for a valid contract
• One of the pivotal concepts- work
• Remuneration- payment of money or the provision of another benefit
• Reciprocal contract- one promise is made in exchange for another and one
obligation is incurred in exchange for another
➢ Employee works in exchange for remuneration
➢ Employer remunerates the employee in exchange for the employee offering
labour
Element of control:
• Control or subordination- important concept
• Not necessary for there to be actual control on a day-to-day and hour-to-hour basis.
, • Employer merely has the right to control over the activities of the employee
• Fact that the employer does not exercise this right does not mean that the right is
absent and that it cannot be applied and enforced
• CONCILATION, MEDIATION AND ARBITRAATION- CCMA
REQUIREMENTS FOR A VALID EMPLOYMENT CONTRACT:
1. CONSENSUS
• Parties agree voluntarily on all key aspects
• No coercion allowed
• If the parties are under the wrong impression of the nature or the scope of the
agreement- NO VALID CONTRACT
2. POSSIBILITY
• It has to be possible to perform in terms of the contract
• It must be physically possible to do the tasks as stipulated in the contract
3. FORMALITIES
• Generally, there are no specific formalities for employment contracts
• Does not have to be written- can be verbal
• Must provide certain written particulars of employment as stated in section 29 of
the BCEA- important for clarity and certainty
• Certain types of employment do have to be in writing
4. LAWFULNESS
• A contract may not contain illegal provisions or breach the law as a whole
• Distinction between a contract which is formally illegal and one which entails the
performance of illegal tasks
5. CAPACITY
• Capacity to conclude a contract is determined by general rules of Law of Contracts
• A child under the age of 7 has no contractual capacity
• Children over the age of 7 can conclude employment contracts only in the assistance
of their parents or legal guardians
COMMON LAW CONTRACTUAL DUTIES OF THE PARTIES:
A. EMPLOYEE-
1. To tender his/her services
• At the time and place agreed by the parties, the employee must place his/her labour
potential at the disposal of the employer to do the work agreed on
• Employee’s duty is simply to “work”
• Employee tenders services- receives remuneration from employer
2. To work completely and diligently
• Employee must perform his/her tasks completely and without negligence
• Competence- ability to do the job
,Failure to comply- three forms-
i. Employee- capable of doing the agreed work but intentionally or deliberately
fails to do the work
ii. Employee- capable of doing the agreed work but negligently fails to perform the
agreed duties or performs the duties in a negligent manner
iii. Employee- despite having agreed to perform the work, is incapable of doing this
work
3. To obey lawful and reasonable instructions of the employer
• Duty flows from the nature of the employment contract, in terms of which an
employee is under the control of the employer
• Implied duty
• Not necessary for the contract of employment to state explicitly that the employee is
under the control of the employer
4. To serve the employer’s interests and act in good faith
• Employment relationship is based on trust and confidence
• Contractual duty on every employee to act in good faith and to promote the interest
of the employer
Obligation on an employee to act in good faith manifests itself in two ways-
i. Some employees by the nature of their jobs and responsibilities owe the
employer a fiduciary duty
ii. More general contractual duty to act in good faith, part of any employment
contract
B. EMPLOYER
1. To remunerate the employee
• Wage or salary is determined in the contract by the parties
• Primary duty of the employer
2. To provide work
• Employer has no duty to provide the employee with tasks to perform if the
employee tenders his/her services
• As long as the employer pays the employee the remuneration agreed upon-
employer will not be breaching contract
3. Safe working conditions
• Safe work place, safe machinery and tools
• Safe procedures and processes are followed
• Section 8 of the Occupational Health and Safety Act 85 of 1993
4. General duty of fair dealing with employees
• Guarantee safety of employees
, FREEDOM OF CONTRACT:
• Parties has freedom of contract- they can regulate employment relationship as they
see fit Agreed provisions in the contract must comply with the minimum conditions
prescribed by the BCEA
• Employment conditions may not be less favourable than those in the act or
employee may not be contracted out of them
• “Statutory minimum terms and conditions”
TERMS AND CONDITIONS OF EMPLOYMENT: (Not covered by BCEA)
1. RESTRAINT OF TRADE
• To limit the partner from stealing business from other business when leaving the
partnership
• Must be judged by the criterion of public policy- nature, extent and duration of the
restraint and factor peculiar to the parties
• Will only be enforced to protect an interest which according to law deserves to be
protected
2. VICARIOUS LIABILITY
• If the employee does something that causes some form of damage- employer can be
held liable for the damages as if the employer committed the delict
• Can be excluded from a contract
BREACCH OF CONTRACT:
• If a party to a contract of employment fails to carry out his/her obligations in terms
of the contract- guilty of breach of contract
FORMS OF BREACH:
i. Serious breach
• FUNDAMENTAL BREACH
• BREACH OF A MATERIAL TERM OF THE CONTRACT
• One party breaches a contractual duty that goes to the heart of the employment
contract
• Failing to comply with core aspects
ii. Minor breach
The type of breach determines the contractual remedies that can be used
CONTRACTUAL REMEDIES:
• Put an end to the contract and sue for damages- Committed by employee
• Ignore the repudiation and hold the other party to the contract and claim specific
performance- Committed by employer
• Most of the time the employee goes to the CCMA
