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MERCANTILE LAW 193

STUDY UNIT 4

LABOUR LAW

This material is reproduced under licence and may not be sold.

Reproduced by the Department of Mercantile Law.

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LEARNING OBJECTIVES:

The aim of this study unit is to introduce students to the legal principles applicable to contracts of
employment and the employment relationship. Although the general principles of contract law, which
were discussed in Study Unit 2, will apply here as well, one has to keep in mind that when you enter
into a contract of employment, the law will deviate from the general principles in some respects.
These aspects are discussed in more detail in this section with special mention to the requirements
for the conclusion of a contract of employment and the obligations of the parties to the contract of
employment.

Students will be equipped with basic theoretical knowledge but also with the know-how and skills to
find solutions to every day practical problems related to the contract of employment and the
employment relationship

Study Unit 4 will be assessed in the form of short questions, i.e. multiple choice; true/false; complete
the missing word; write a paragraph/short notes as well as application questions. Note that both short
questions and application questions can test comprehension and application skills, albeit in a
different format.

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CHAPTER 1
INTRODUCTION TO LABOUR LAW & THE SOURCES OF LABOUR LAW

After having studied this chapter, you should have a sound understanding of the
following:
 The reason why employers and employees are not, in terms of the common
law, in equal bargaining positions
 The five fairness mechanisms imposed on the contract of employment by
labour legislation
 Provisions in the Constitution which have an impact on labour relations
 The areas of labour law covered by the BCEA, the LRA, the EEA, the UIA,
COIDA and the OHSA
 The importance of the common law for labour law
 The difference between collective and individual labour law

1 INTRODUCTION

Labour law is that part of the law that deals with the tri-partite relationship between the state, capital
(employers) and labour (employees). A number of relationships are governed by labour law, namely
relationships between an employer (whether it is a natural person or a juristic person) and its
employee, relationships between an employer and one or more trade unions, relationships between
a group of employers and one or more trade unions, and relationships between the state, employers,
employees, employers’ organisations and trade unions.

Labour law is an important branch of the law since it regulates the activity of working, which is a
central part of most people’s lives. A person may be an employee because he works to sustain
himself, or he may be an employer. Some people are employees and simultaneously act on behalf
of their employers.

Labour law is arguably the most dynamic branch of law since its content changes continuously. It is
influenced by social, economic, financial and political factors. Conversely, labour law influences
social, economic, financial and political decisions. Labour law directly impacts on the daily lives of
nearly every person in the country, and indirectly influences the lives of every person irrespective of
their position or age.

The relationship between the employer and employee is based on the employment contract which
is regarded as a species of the contract of lease. The relationship was traditionally regulated by the
law of contract, where the principle of freedom of contract has always played an important role.
Where parties did not specifically agree on some aspects, the common law regulated the
relationship.

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Gradually it was acknowledged that the common law and the principle of freedom of contract have
shortcomings in their application to the employment contract. The reason for this is that there exists
no real freedom of contract where one of the parties (the employer) is in a stronger bargaining
position than the other party (the employee). In the case of the prospective employee not possessing
any special skills, that person has virtually no bargaining power at the time of the conclusion of the
contract. A further problem was that the employer traditionally had the authority to dismiss the
employee on notice for any reason whatsoever. The employer would not have to provide any reason
for a dismissal. Accordingly, legislation was implemented to impose fairness onto the employment
relationship. Parties are no longer free to contract as they wish. By means of legislation five fairness
mechanisms were imposed on the contract to protect employees:

 Provision for minimum conditions of employment was made in the Basic Conditions of
Employment Act (BCEA).

 Provision for collective bargaining in terms of which employees may act together (in trade unions)
in order to bargain from a stronger position for better wages and employment conditions.

 Protection against unfair dismissal. The Labour Relations Act (LRA) provides that the employer
may not dismiss the employee merely by giving notice. The employer must have a valid reason
and must follow a fair procedure before the dismissal will be regarded as fair.

 Protection against unfair labour practices. The LRA also provides that the employer may not act
unfairly in respect of aspects of the employment relationship not concerning dismissal (so-called
unfair labour practices)
 Protection against discrimination. The Employment Equity Act (EEA) prohibits unfair
discrimination on arbitrary grounds such as race, sex, etc. and ensures equal opportunities for
all by making provision for affirmative action.

More recently, in 2018, legislation was enacted to establish a national minimum wage (see the
introduction to Chapter 3 below), which is also an example of a fairness mechanism introduced into
the employment relationship through the means of legislation. This brings not only fairness to the
employment relationship of individual low-earning and unskilled employees, but is also aimed at
contributing to the achievement of social justice, more generally (one of the overarching objectives
of labour legislation).

In chapter one of this study guide the sources of labour law will be discussed. Chapter two concerns
the individual employment relationship and the common law principles applicable to the employment
relationship. In chapter three, minimum employment conditions will be discussed. Rules for fair
dismissals will be discussed in chapter four. Chapter five will deal with unfair labour practices. In
chapter six, the prohibition on unfair discrimination and affirmative action will be discussed.

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Collective labour law will be discussed in chapter seven. Chapter eight will deal with dispute
resolution and remedies.

1 1 Individual and collective labour law

Individual labour law deals with legal rules concerning the “individual” relationship between an
employer and an individual employee. A contract of employment, for example, is concluded on an
individual basis and it is terminated on an individual basis.

Collective labour law deals with the “collective” relationship between collective entities: an employer
and a trade union (which acts on behalf of a number of employees), or between one or more
employers and one or more unions. Matters such as collective bargaining, strikes and lockouts form
part of collective labour law.

The rules of individual and collective labour law often interact and impact on one another.

1 2 Labour law and labour relations

The term “labour relations” refers to the relationships between employers and employees. The term
“labour law” refers to the legal rules that govern these relationships.

2 SOURCES OF SOUTH AFRICAN LABOUR LAW

2 1 Statutory law (legislation)

211 The Constitution of the Republic of South Africa Act 108 of 1996 (The Constitution)

The Constitution binds the legislature, the executive, the judiciary and all organs of state. The
Constitution further provides that a provision of the Bill of Rights “binds a natural person and a juristic
person if, and to the extent that, it is applicable taking into account the nature of any duty imposed
by the right” (sec 8(2)). The Bill of Rights therefore directly affects the relationship between all
employers and their employees.

The rights in the Bill of Rights which are of greatest importance to labour law are the following: the
right to equality (sec 9), the right to human dignity (sec 10), the prohibition on slavery (sec 13), the
right to privacy (sec 14), the right to freedom of association (sec 18), the right to freedom of trade,
occupation and profession (sec 22), the right to assemble, demonstrate, picket and petition, (sec
17), and an overarching right to fair labour practices (sec 23) which includes the right to strike.

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The Constitution provides that statutes must be enacted in order to give effect to these constitutional
provisions. The labour rights contained in the Constitution are given substance in the Labour
Relations Act 66 of 1995 and the Basic Conditions of Employment Act 75 of 1997, and the right to
equality in the Employment Equity Act 55 of 1998.

212 The Labour Relations Act 66 of 1995 (LRA)

Apart from persons in the South African National Defence Force, the South African Police Service,
and the National Intelligence Agency, all employers and employees in the country fall within the
ambit of the LRA. Amongst others, the LRA regulates the registration of trade unions, provides a
framework for bargaining collectively on wages, terms and conditions of employment and other
matters of mutual interest. The LRA regulates collective bargaining and also the law in regard to
dismissal and the resolution of labour disputes.

213 The Basic Conditions of Employment Act 75 of 1997 (the BCEA)

The BCEA regulates minimum standards of employment concerning (amongst others) working
hours, annual leave and sick leave, payment for overtime work and work on public holidays and
Sundays, and the termination of contracts of employment. Some of its provisions may not be varied
at all, the so-called core provisions, while others may be varied by collective agreement, by
individual agreement, or by Ministerial variation or sectoral determination.

214 The Employment Equity Act 55 of 1998 (the EEA)

The EEA aims to promote the Constitutional right of equality by prohibiting discrimination on certain
grounds and to redress the effects of discrimination on certain groups in the past by implementing
affirmative action.

215 The Occupational Health and Safety Act 85 of 1993 (OHSA)

The OHSA strengthens the employer’s common law duty to provide safe working conditions for
employees.

It provides for the health and safety of persons at work, and for the protection of members of the
public against hazards to their health or safety arising out of the activities of a workplace. It provides
for criminal liability for non-compliance.

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216 The Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA)

COIDA provides for the payment of compensation for the loss of earnings in circumstances where
employees were injured or killed in the course of their employment, and where they contracted
occupational diseases. The employee no longer has a common law claim against the employer, but
can claim from the Compensation Fund (“Fund”) to which the employer has to contribute. The
amount that a specific employer has to pay to the Fund is calculated on the basis of the wages of
employees and the sector in which the business falls. In some sectors the risk of injury is higher and
the contribution of the employer will accordingly be higher in such sector.

Following a decision by the Constitutional Court1, COIDA was amended in 2023 to include domestic
workers within its scope. Domestic workers who are injured or who contract a disease covered by
the legislation during the course of their employment will therefore now be able to claim
compensation from the Compensation Fund.2 This means that all employers of domestic workers
must register with the Compensation Fund. All employers of domestic workers must therefore also
contribute and report to the Compensation Fund on an annual basis.

The term “domestic worker” has not been defined in the amendment act. The National Minimum
Wage Act, 2013 may provide interpretive assistance, as this Act defines a domestic worker as any
worker who performs domestic work in a private household and who receives or is entitled to receive
a wage and includes a gardener, a person employed by a household as a driver of a vehicle, a
person who takes care of children, the aged, the sick, the frail or the disabled, and also includes
domestic workers employed or supplied by employment services.

217 The Unemployment Insurance Act (UIA)

The UIA provides for the payment of contributions by both the employer and the employee to the
Unemployment Insurance Fund and the payment of benefits by the Fund during periods of
unemployment, illness, maternity and adoption. Dependants of an employee can also claim benefits
for a certain period after the death of such an employee. Both the employer and employee have to
contribute1% of the employee’s wage to the Fund. The amount to which the employee will be entitled
is based on the employee’s wage calculated on a graduated scale. The higher the employee’s wage,
the smaller the percentage of the wage that will be paid out. The Unemployment Contributions Act
provides that an employer who is registered with SARS as a taxpayer will pay contributions to SARS
and an employer who is not registered as such will pay contributions to the Commissioner of the
Fund.

1
Mahlangu and Another v Minister of Labour and Others 2021 (1) BCLR 1 (CC)
2
Compensation for Occupational Injuries and Diseases Amendment Act 10 of 2022

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2 2 International and foreign law

221 International law

Section 39 of the Constitution further provides that a court or tribunal or forum, when it interprets
the Bill of Rights, is obliged to consider international law. International instruments such as the
Conventions of the International Labour Organisation (ILO) play an important part in our labour law.
Section 1 of the LRA states that one of the purposes of the LRA is to give effect to obligations
incurred by the Republic as a member state of the International Labour Organisation.

222 Foreign law

Section 39 of the Constitution provides that a court or tribunal or forum, when it interprets the Bill of
Rights, is permitted (but not obliged) to consider foreign law (i.e. the interpretation of law by foreign
courts). Prior to the Constitution it was already a well-established principle that a judge may turn to
foreign law for guidance if a particular issue cannot be resolved with reference to any of the above
sources in South African law. The court may be persuaded by the foreign decision but is under no
obligation to follow it.

2 3 Common law

The common law of South Africa is the Roman-Dutch common law which was brought to South
Africa when the Dutch colonized South Africa. English law also influenced the common law when
Britain colonized South Africa in 1806, especially in certain areas of the law which were not
addressed by Roman-Dutch law.

Until the coming into operation of the Constitution the common law was the foundation of our legal
system, and the central framework providing the basic concepts and principles of our law. A
common-law rule remained the source of law in respect of a particular issue until abolished by
legislation. All statutes were read and applied against the background of the existing substratum of
common law. Where a particular issue had not been altered by legislation, or where legislation was
silent on a particular issue, the court would resolve a dispute on the basis of common-law rules.

The Constitution provides specifically that the entrenchment of certain rights in the Bill of Rights
does not deny the existence of any rights or freedoms recognized or conferred by common law, to
the extent that they are consistent with the Bill of Rights (sec 39(3)).

Common law rules determine whether an agreement is enforceable as a valid contract. The
common law is therefore of great importance to labour law. Common law forms the basis of the
mutual rights and duties of employers and employees. Statutes and collective agreements have

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done little to derogate from these basic rights and duties and have supplemented them in many
cases.

2 4 Case law

In terms of the system of judicial precedent, courts have to take previous decisions on similar cases
into consideration in their judgments. Courts are bound to decisions which stated legal rules
concerning a certain matter. A hierarchy of courts exists in South Africa. The Constitutional Court is
the highest court in all constitutional matters and any matter that, in the view of the Constitutional
Court, raises a matter of law that is of general public importance. The Constitutional Court has the
final say in determining if a matter falls within its jurisdiction and if leave to appeal to the
Constitutional Court will be granted. All other courts are bound to the decisions of the Constitutional
Court.

The Supreme Court of Appeal (SCA) no longer has jurisdiction to hear appeals from lower courts in
labour matters. The decisions of the SCA are binding on all High Courts, Magistrate’s courts and
tribunals (bodies which are not courts but which exercise a judiciary function) such as the
Commission for Conciliation, Arbitration and Mediation (CCMA).

The term case law refers to the body of law arising from the courts’ interpretation of the above
sources. The most important judgments of the Supreme Court have been reported for more than
100 years.

A considerable body of labour law has been built up by the civil courts of law (especially the Supreme
Court, which later became known as the High Court) in connection with issues such as the contract
of employment, breach of contract, specific performance, delictual liability and vicarious liability.
Before the coming into operation of the Labour Relations Act 66 of 1995, the Industrial Court, the
Labour Appeal Court and the Supreme Court developed a body of labour law in connection with the
unfair labour practice in terms of the 1956 Labour Relations Act. These legal principles have been
to a large extent been codified in the 1995 LRA.

Disputes between employers and employees, especially disputes regarding dismissal on the
grounds of misconduct and incapacity are referred to the CCMA. The decisions of the CCMA do
not bind any judicial forum. The LRA provides that disputes on automatically unfair dismissal,
dismissal on operational requirements, disputes about strikes and disputes about discrimination
must be heard by the Labour Court. Decisions of the Labour Court are binding on the CCMA as well
as other jurisdictions of the Labour Court. Parties may appeal from the Labour Court to the Labour
Appeal Court. The decisions of the Labour Appeal Court are binding on the LAC, the LC and the
CCMA.

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2 5 Collective agreements

Collective agreements are also a source of law since the provisions of these agreements
automatically form part of an employment contract to which they are applicable. If the collective
agreement is applicable to a certain matter, employers and employees are bound to the terms of
the collective agreement. The so-called conditions of service applicable to a workplace, which are
normally incorporated into the contract of employment in the letter of appointment, usually arise
from a collective agreement. Collective agreements will be discussed in chapter seven.

2 6 The contract of employment

The contract of employment is the basic source of reciprocal rights and duties of employers and
employees. It may be concluded verbally, in writing or by conduct, except where formalities are
prescribed by legislation. Where terms and conditions in the employment contract are in conflict with
the common law, legislation, jurisprudence or collective agreements, the terms agreed on by the
parties will be invalid and unenforceable. However, terms and conditions that is more beneficial to
the employee than those prescribed by these sources will be enforceable. The contract of
employment will be discussed in more detail in chapter two.

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CHAPTER 2

THE CONTRACT OF EMPLOYMENT AND THE INDIVIDUAL EMPLOYMENT

RELATIONSHIP

After having studied this chapter, you should be familiar with the
following concepts:
 The essentialia of the employment contract
 The definition of an employee in the BCEA and the LRA
 The three tests formulated by the courts to establish whether someone is an
employee or an independent contractor
 The list of factors (in the BCEA and the LRA) that will each create a presumption
that someone is an employee
 The duties of employees and the duties of employers
 The circumstances in which a restraint of trade agreement in a contract will be
enforceable
 The circumstances in which an employee may refuse to comply with an order of
an employer that may be seen as a unilateral variation of the contract of
employment
 The circumstances in which the employer – in addition to remunerating the
employee – will also have a duty to provide the employee with work
 The three requirements for the vicarious liability of an employer

1 THE CONTRACT OF EMPLOYMENT

A contract of employment is generally described as an agreement between two persons in terms of

which the one (the employee) will make his or her personal services available to, and subject to the
control of, the other (the employer) in return for remuneration. The essentialia (essential elements)
of the contract of employment are that there is agreement on the rendering of personal services, for
remuneration and subject to a relationship of subordination by the employee to the employer.

2 THE PARTIES

2 1 Who is an employee?

It is important to establish whether a worker is an employee, as labour legislation is only applicable

to employees and not to independent contractors. It is sometimes difficult to differentiate between
these two categories of workers. Neither the LRA nor the BCEA defines an independent contractor.

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One must thus refer to the common law and especially to court decisions to establish whether
someone is an employee or an independent contractor in any given case. An employee is defined
as follows in both Acts:

(a) any person, excluding an independent contractor, who works for another person or for the
State and who receives, or is entitled to receive, any remuneration; and

(b) any other person who in any manner assists in carrying on or conducting the business of
an employer.

The courts have applied different tests through the years to establish whether someone is an
employee or an independent contractor.

211 Control test

According to this test someone is an employee if the employer exercises control over the person.
This test, however, is not effective if the worker is an expert in a field of which the employer has little
or no knowledge.

212 Organisation test

This test implies that the worker must be part of the organisation (undertaking) of the employer to
qualify as an employee. Certain factors such as whether the employee occupies an office, whether
the employee drives a company car, etc. will be taken into account. This test fell into disrepute as
the courts have found it to be too vague to provide a satisfactory yardstick in most cases.

213 Dominant impression test

The courts presently prefer the dominant impression test. This test implies that the court on the one
hand weighs all factors indicating that the worker is an employee and on the other hand all factors
indicating that the person is an independent contractor. The dominant impression will determine the
type of the contract. Criticism against this test is that it is not based on legal principles.
More recent court judgments have established that courts will consider three main factors:
 The measure and degree of control over the employee by the employer;
 The degree of integration of the employee into the employer’s business or organisation; and
 The measure of the employee’s economic dependency on the employer (e.g. does the
employee only work for the employer, or also for other persons?).

Both the LRA and the BCEA list a number of factors that will each create a presumption that a
person is an employee. The tests discussed above are included in the list. If one or more of these
factors are present, the onus is on the purported employer to prove that he/she is not an employer.

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If the employer cannot prove that the worker is not an ‘employee’, the worker will be regarded as an
employee for the purposes of the legislation. The list of factors in sec 83A of the BCEA and sec
200A of the LRA includes the following:

 Whether the manner in which the person works is subject to the control or direction of
another person;

 Whether 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 organisation, whether the person forms part of that
organisation;

 Whether the person has worked for the other person for an average of at least 40 hours per
month over the last three months;

 Whether that person is economically dependent on the person for whom he or she works or
provides services;

 Whether the person is provided with his or her tools of trade or work equipment by another
person;

 Whether the person only works or supplies services to one person.

Persons who earn more than a certain amount are not protected by this presumption. The Minister
regularly determines this amount, which is then published in the Government Gazette. At present
this amount is R241 110.593.

2 2 Non-standard employers

In 2014, the LRA was amended to extend the protection of the Act to three additional categories of
employees:
(a) Fixed-term employees;
(b) Part-time employees, and
(c) Temporary employment employees

All other informal or non-standard employees are protected by the provisions of the LRA and by
other labour legislation such as the Employment Services Act of 2014.

The purpose of extending the reach of the LRA to these categories of employees is to provide such
vulnerable groups with protection against employers who often exploit these employees.

3
With effect from 1 March 2023.

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221 Fixed-term employees:

Fixed-term employees are employees who are employed for a fixed term; until completion of a
particular project, or the occurrence of a future specified event (e.g. seasonal workers, replacement
workers or someone who is appointed for a specific operational requirement, as well as workers
who are employed on a daily basis –so-called “casuals”).

Often workers are employed on this basis, instead of being appointed as a permanent employee,
because it is easier for employers to terminate the employment contracts of these workers without
being accused of unfair dismissal as they simply can argue that the term or purpose of employment
has expired. Section 186(1)(b) LRA therefore seeks to protect these types of employees. In terms
of this section, where a fixed-term employee has the reasonable expectation that his/her fixed-term
contract will be renewed, or that he/she will be employed on a permanent basis, and that does not
occur, this is deemed to be a dismissal.

Section 198B LRA, furthermore, stipulates that an employee cannot be employed on a fixed-term
contract for longer than three months unless the type of work for which he is appointed is of a fixed
or limited duration or if there is another justifiable reason for the appointment.

These reasons are:

(i) Where the employee replaces another employee who is temporarily absent from work;
(ii) is employed as a result of a temporary increase in the volume of work which is expected
not to endure for longer than 12 months;
(iii) is a recently graduated student who is appointed to be trained or to obtain work
experience;
(iv) is employed to work on a specific project that has a limited duration;
(v) is a non-citizen who has been issued a work permit for ‘n limited duration of time;
(vi) an employee who has to do seasonal work;
(vii) is employed to take part in a public works scheme or in a job creation scheme;
(viii) is employed in a position which is funded from outside for a limited period of time; or
(ix) who has reached the normal or agreed upon retirement age applicable to his employer’s
business.

Section 198B furthermore provides that fixed term employees may not be treated less favourably
than any other permanent employee unless there is a justifiable reason for the differentiation in
treatment. Subject to provisions of any collective agreement, where a contract is concluded for a
specific project and for a period longer than 24 months, the employer must pay the employee on
expiry of the contract, remuneration of one week’s salary for every completed year of service.

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All fixed-term contracts must be in writing and state the reasons why a fixed-term contract is entered
into. The same applies to any renewals or extensions.

However, the protection of the LRA would not apply in the following circumstances:
(i) Where an employee earns more than the prescribed threshold set out in sec 6(3) of the
BCEA (presently R241 110.594).
(ii) Where an employer has less than ten employees, or less than 50 and the business has
been in operation for less than two years.
(iii) Where the fixed-term contract is legal in terms of statute, collective agreements or
sectoral determination.

222 Part-time employees:

These employees only work for one employer, but they are wholly or partly remunerated on the
basis of the time (hours) they work. They work less hours than full-time employees. In terms of sec
198C LRA, these employees may not be treated less favourably than comparable full-time
employees who do the same work, unless there is a justifiable reason for the differentiation. They
must also receive the same training, and they must be given the same opportunities to apply for
vacancies.

It should be noted that, for various reasons (e.g. in order to take care of children) women will often
be employed on a part-time basis. Hence when part-time employees are treated differently than full-
time employees such differential treatment may affect women disproportionally, and this might
constitute indirect unfair discrimination against such employees on the basis of sex (see section 2
4 in chapter 6 below).

The following part-time employees will not enjoy the protection of the LRA:
(i) Where a part-time employee earns more than the prescribed threshold set
out in sec 6(3) of the BCEA (presently R241 110.59).
(ii) Where an employer has less than ten employees, or less than 50 and the business has
been in operation for less than two years.
(iii) Employees who work less than 24 hours per month for an employer;
(iv) All persons during the first 3 months of continuous employment with an employer.

4
With effect from 1 March 2023.

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223 Temporary employment services (labour brokers):

Temporary employment service providers are people who, for reward, provide employees to a client,
or procures them for a client. The employees render a service to the client but are remunerated by
the employment service.

These services consist of a triangular relationship: There is a service contract between the labour
broker and the client for whom the service is rendered in terms of which the labour broker is paid a
fee for its service. However, the actual service is rendered by a person who does not have a contract
with the person (client) for whom the service is rendered, but who has a contract with a labour broker
and who is paid by the labour broker. Although there is no formal contract in place between the
person rendering the service and the person to whom the service is rendered, the person who
renders the service often has to act under the orders and supervision of the person to whom the
service is rendered. These people are often paid less than the “employer’s” (client’s) own employees
and they are also not protected against unfair labour practices, unfair dismissal or unfair
discrimination by the person to whom they render the service.

Section 198 LRA clarifies that these workers are the employees of the labour broker. Only in very
limited circumstances, the labour broker will be jointly and severally liable together with the client.
The labour broker, therefore, is to be held liable in cases of unfair dismissal. However, in practice,
these brokers devise ways in which they can escape liability under the LRA by treating these
employees as independent contractors and not as employees. Alternatively, the contract with the
employee is structured in such a manner that the employment relationship is dependent on the
wishes of the person to whom the service is rendered, or for as long as the contract between the
broker and its client exists. This way, when the terms of the resolutive condition are fulfilled, the
services will be immediately terminated and the contract dissolved, and it will not be regarded as
unfair dismissal.

Recent case law in this regard, FMW Admin Services CC v Stander & Ors 2015 (16) ILJ 1051 (LC),
warns against abuse of the construction of independent contractors in order to circumvent the
protection afforded by the Act, and that it will only be acceptable in cases where a real independent
contractor relationship exists. In Nape v INTCS Corporate Solutions (Pty) Ltd (2010) 31 ILJ 2120
(LC), the court held that an automatic termination clause can only be invoked in cases where the
client’s termination of the person’s services is justifiable, and therefore if it is a case of fair and lawful
dismissal. The same would apply for termination of the contract between the labour broker and the
person to whom the service is rendered. In Enforce Security Group v Fikile & Ors 2014 (38) ILJ
1041 (LAC), the Labour Appeal Court held that, depending on the circumstances of the case, a
clause that makes the continuance of the employment relationship between the person and the
labour broker subject to the continuance of the service relationship between the labour broker and

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its client, could be enforceable. It would therefore depend on the wording of the clause and the
surrounding circumstances whether the termination of services would be seen as (unfair) dismissal.

As a result, as of 1 September 2015, sec 198A LRA has come into operation, which provision is
aimed at protecting vulnerable people in this context. This provision distinguishes between
temporary and non-temporary employment services (labour brokerage). Temporary service is
defined as service rendered to a client by an employee
(i) for a period not exceeding three months;
(ii) as a replacement for an employee who is temporarily absent; or
(iii) in a work sector or for any period of time which is indicated as a temporary service in a
collective agreement concluded in a bargaining council, a sectoral determination, or as
determined by the Minister of Labour.

If the service is not rendered within the framework of a temporary service as discussed above, the
employee will no longer be considered to be an employee of the labour broker but an employee of
the person to whom the service is rendered (the client), and the latter will be deemed to be the
employer of such person. If no fixed-term contract exists between the employer and the employee,
it will be deemed to be a permanent indefinite contract of employment. Such an employee may not
be treated less favourably than any other permanent employee and he may only be dismissed on
fair and justifiable grounds. In the judgment of the Constitutional Court in the Assign Services case
it was held that if an employee resorts under section 198A the above-mentioned deeming provision
will mean that the employee will be the employee of the client of the labour broker.

It should be noted that the protection of the Act is only extended to employees who earn less than
the threshold amount determined by sec 6(3) of the BCEA (presently R241 110.59).

2 3 General requirements for a valid contract

A valid contract of employment must meet the requirements for contracts in general:

231 Parties must have reached consensus (agreement).

For example: If the employer thinks that he/she has concluded an employment contract with A, but
the other party is actually B, there is an error in regard to the identity of the party and therefore no
consensus. The contract will not be regarded as valid and enforceable. There could also be a lack
of consensus regarding the type of contract concluded, the material contents of the agreement (e.g.
the type of services to be rendered, the remuneration payable in exchange for such services, etc),
or other terms and conditions. A lack of consensus regarding material terms will make the
agreement invalid and unenforceable.

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232 Parties must have legal capacity

An insane person cannot conclude a valid contract of employment. A valid contract can be
concluded by a person under the age of 18 (a minor) with the assistance of his/her guardian, but if
the minor concludes the contract without assistance he/she will only acquire rights and no duties.

233 It must be possible to perform in accordance with the contract

An agreement that the employee will do something that is physically impossible will be invalid.

234 The agreement must be legal

An agreement that the employee will sell drugs or commit murder will not constitute a valid contract.
Such agreements are either contrary to legislation or are viewed as contrary to the public morals
and accordingly illegal and unenforceable.

235 Formal requirements

The contract of service need not be in writing to be valid. It may be concluded verbally or tacitly (by
the conduct of the parties). In certain cases legislation will require written contacts. (auditor’s clerks,
attorney’s clerks etc.). The BCEA provides that the employer must provide certain written
information to the employee (see chapter three). If the employer does not provide such information
the contract is still valid, but the employer may be liable to pay a fine.

2 4 Essentialia of the employment contract

Each type of contract has to comply with certain special requirements over and above the general
requirements for a valid contract. The contract of employment has two extra requirements:

 The employee must make his /her services available to the employer
 The employer must pay the employee

If these two requirements are not met, there will be no contract of employment. The second part of
the definition of an employee in the LRA and the BCEA extends the common law definition of
employee by which persons who are not paid (such as family members of the owner of the business)
are also protected by legislation.

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Grogan51 suggests that at least the following should be included in the contract of employment:

1) A job description: the hours of work and whether the employee will be required to work
overtime, the location of the workplace, the type of work that the employee will be
required to do

2) The remuneration: Do wages include commission? Are there allowances for food,
clothing or accommodation to be provided by the employer? What will the payment be for
overtime? Will there be deductions? Will an annual or productivity bonus be paid?

3) Duration of the agreement: When will employment commence and when will it end? Is it a
fixed-term contract? Will the employee serve a probationary period? How will notice of
termination be given and what is the retirement age?

4) Relocation: will the employee’s relocation expenses be paid?

5) Benefits, such as medical aid, housing and transport allowance should be spelled out.

6) Leave: the entitlement to different kinds of leave.

7) Contracts in restraint of trade: what will the area and time limit be?

8) Closed shop and agency shop agreements.

9) Disciplinary code.

10) Dispute resolution: Will a dispute be arbitrated or will it be adjudicated by a court?

The freedom of contract of the parties to the employment relationship will be limited by labour
legislation. Parties may not agree on terms that are contrary to provisions of the BCEA (chapter
three) or to terms of an existing collective agreement (chapter seven). The parties may however
agree on more beneficial terms for the employee.

3 DUTIES OF EMPLOYEES

Parties do not have to expressly spell out all the terms of the employment contract. There are also
common law duties of an employer and an employee that constitute terms of the employment
contract by operation of law even if parties have not agreed on these terms. These terms are the
so-called naturalia of the employment contract. Parties will commit breach of contract if they do not
perform these duties. These common law duties will be discussed below:

5
Workplace law 9th ed (2007) 34-35

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3 1 Duty to tender service

The employee may not claim wages if he/she does not work. A failure of the duty to tender services
can take on different forms, namely desertion, absenteeism, being late for work on a regular basis
and participation in a strike. The courts have taken the following factors into consideration in
determining whether the employer will have a right to dismiss the employee:

 the nature of the work

 whether the employee’s absence disrupted the business
 the length of the employee’s employment with the employer
 the reason for the absence
 duration and periods of the absence and
 provisions of the disciplinary code

Where the employee was prevented from working due to factors not in his/her control (as in the
case of illness) the employer may normally not terminate the contract immediately. The contract will
be suspended until the employee can return to work. Where labour legislation is applicable, the
employee is entitled to paid sick leave in terms of the BCEA and protection against dismissal in
terms of the LRA save where the period of absence is unreasonably long.

If the employee takes part in a strike, the employer need not pay the employee. In terms of the
common law a strike could be treated as breach of contract and the employer could cancel the
contract and dismiss the employee. The Constitution as well as the LRA now prohibit the employer
from dismissing the employee for taking part in a ‘protected strike,’ that is strike action that meets
the requirements of the LRA (see chapter seven).

3 2 The employee must perform competently

The competence of the employee will be measured against the standard of performance of other
employees doing the same kind of work, taking into consideration the level of training and
experience. If the employee created the impression at the conclusion of the contract that he/she is
able to deliver work of a certain standard, the employee will be bound by this representation and
the employer will be justified in dismissing such a person if they did not perform to the promised
standard. By undertaking to do a certain kind of job an employee warrants that he/she is able to do
that specific job satisfactorily. In terms of the common law the reason for incapacity is of no
importance.

However, the LRA prohibits the employer from dismissing the employee for poor work performance
before such employee has received appropriate evaluation, instruction, training, guidance and
counselling. These and other requirements will be discussed further in chapter four.

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3 3 To further the employer’s interests (duty of good faith)

Employees have a duty of good faith towards their employers. They must further their employer’s
interests during their working hours. Included in this duty is the prohibition against competition with
their employer. The employee may also not work for someone else if that work will be in conflict with
the interests of the primary employer. If there is no prohibition in the contract the employee may do
other work, as long as this is not detrimental to the employer’s interests. The employee may not
secretly compete with the employer.

331 Clauses in restraint of trade

A clause in restraint of trade may be incorporated into a contract of employment. This clause
prohibits the employee from competing with the employer when the employment contract is
terminated. Such a clause aims to protect the employer’s interest in respect of time and money
spent in training the employee, or the interest in protecting confidential information such as client
lists and/or trade secrets, etc.

The court will uphold such a clause if its restrictions are not unreasonable towards the employee in
terms of the time and the geographical area within which the former employee may not compete
with the employer. The court emphasized the principle of freedom of contract in Magna Alloys v
Ellis.6 However, if the contract is against public policy, the restraint will not be enforced. An
unreasonable limitation will be regarded as being against public policy. Labour legislation does not
regulate restraints of trade, so the enforceability of such clauses is to be determined under the
common-law rules regarding restraints of trade.

3 4 The employee must be respectful and obedient

In terms of the common law the employer can dismiss the employee summarily (without providing
a notice period) for insolence and disobedience. The Constitution emphasizes that employees
should also be treated with respect. Section 10 provides that everyone has inherent dignity and the
right to have their dignity respected and protected.

Employees do not have to obey instructions which would compromise their own or their co-
employees’ safety, neither do they have to obey illegal instructions. Failure to comply with such
instructions would not constitute grounds for dismissal.

Disobedience is regarded as a more serious transgression than insolence. One of the duties of an
employee is to place his/her services at the disposal of the employer. The disobedient employee
may thus be dismissed on the ground of breach of contract. A difficult situation is created when the

6
1984 (4) SA 874 (A)

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employer unilaterally changes the terms and conditions of the employment contract. Is the employee
still required to perform the ‘new’ duties? The employer’s right to vary the terms and conditions of
the contract will be discussed below.

3 5 The employee must refrain from misconduct

Any misconduct which will have the effect of impacting on the employment relationship to such an
extent that the relationship becomes intolerable will give the employer a right to terminate the
employment in terms of the common law. The Code of Good Practice: Dismissal, schedule 8 of the
LRA, provides a list of types of misconduct which would justify dismissal, namely: gross dishonesty
or willful damage to the property of the employer, willful endangering of the safety of others, physical
assault on the employer, a fellow employee, client or customer and gross insubordination (i.e.
insolence and insubordination). These are the same grounds on which an employer can dismiss an
employee in terms of the common law. However, the LRA now requires that before the employer
may dismiss the employee on one of these grounds, the employer must adhere to the requirements
of the LRA. The dismissal must be substantively as well as procedurally fair. These requirements
will be discussed in the chapter four.

4 DUTIES OF EMPLOYERS

The three most important duties of employers are

 To receive the employee into employment

 To remunerate the employee
 To provide safe working conditions

4 1 To receive the employee into employment

If the employer does not receive the employee in employment after the employment contract was
concluded, the employer would be in breach of contract. The general rule is that the employer need
not provide the employee with work, as long as he/she remunerates the employee. However, if the
intention of the parties was that the employer would train the employee, or if the employee’s wage
depends on the work done, for instance if the person works on a commission basis, or if it is essential
that the employee gains experience or exposure the employer will have a duty to provide work. If a
person’s status would be degraded7 if they are not allowed to work, the employer will also have a
duty to provide work. In the case of certain occupations the employer will have a duty to provide
work, e.g. in the case of a pilot who needs to stay in practice, an actress who needs exposure to
further her career, or a clerk who has to complete a learnership in order to qualify in his/her

7
Stewart Wrightson v Thorpe 1977(2) SA 943 (A)

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profession. The existence and content of this duty will thus depend on the circumstances of any
given case.

It is permissible to suspend an employee with pay pending a disciplinary enquiry. The employment
contract will remain intact until the enquiry is completed. The same is true if the employer should
lock workers out in terms of the LRA. The employer does not have to pay the employees, but the
employment contract is not terminated.

4 2 To remunerate the employee

This is the most fundamental duty of the employer (remember, this is a reciprocal agreement where
the one party must perform services in exchange for remuneration). If the parties have not agreed
on remuneration, the court will hold that there is no contract of employment (the absence of
consensus on a material term of the agreement), or that the remuneration is a tacit term of the
contract.

Employees who tender their services will be entitled to remuneration even if the employer does not
provide work. Payment could be partly in cash, partly in kind. Remuneration in natura refers for
example to food or clothing that is provided by the employer as part of the employee’s remuneration.
An employer may not make unilateral deductions from the employee’s wage (such deductions can
only be made by agreement, except where otherwise provided by legislation). When the employee’s
contract is terminated, the employer must pay the wage that he/she has earned up to that date. It is
possible that an employee’s sole remuneration could be commission on sales.

An employee may in certain circumstances be suspended without pay as a disciplinary measure.

However, this could be regarded as an unfair labour practice in terms of sec 186 of the LRA. (See
chapter five).

4 3 To provide safe working conditions

Employers must ensure that buildings and machinery are safe and that employees who work with
dangerous machinery are adequately trained. Employees may refuse to do work if the
circumstances under which they work are dangerous. The common law duty of the employer to
provide safe working conditions is enhanced by the Occupational Health and Safety Act 85 of 1993,
which imposes certain duties on employers in respect of the safety of employees. Compensation
for an injury at work can no longer be claimed from the employer, but is regulated by the
Compensation for Occupational Injuries and Diseases Act 130 of 1993. Employers make
contributions to the Compensation Fund and employees who have been injured have to claim from
this Fund and not from the employer.

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5 VARIATION OF THE CONTRACT

No contract may be varied unilaterally. Such conduct would constitute breach of contract. Parties
may vary the contract if both parties agree to such variation.

The requirements of an employer’s business may change or the business may expand while the
number of employees remains the same. The employer may require the employee to perform more
tasks than initially agreed upon or to work at another venue. If the employee agrees, there is no
problem, but what is the situation if the employer and employee cannot reach consensus? Is the
employee bound to do the new or extra work, or bound to go and work in another place if the
employer requires this? If he/she refuses to do the work the question is whether the employer may
dismiss the employee on the grounds of disobedience (misconduct) or on the ground of breach of
contract because the employee has withdrawn the offer of his/her services.

In A Mauchle v Precision Tools8 the employer expected the employee to operate two machines
(instead of one as initially agreed) for a certain period. The Labour Appeal Court held that an
employee does not have the right to preserve their working obligations unchanged for the duration
of employment with a specific employer. The employer does have the right to vary the amount of
work and the way it should be done. However, if changes are so dramatic that the employee has to
do an entirely different job, it would fall outside the ambit of the employment contract as agreed
between the parties.

The LRA provides that an employee may refer a dispute about the unilateral variation of terms and
conditions of the contract to the CCMA. The employee may require the employer not to unilaterally
implement the change to terms and conditions of employment. If the employer has already
implemented the change unilaterally, the employee may require the employer to restore the terms
and conditions that applied before the change within a period of 30 days. If the employer does not
restore the conditions, the employees may go on strike. If striking is not an option, for instance if
only one employee’s conditions of employment are varied, the employee may enforce the original
contract in the Labour Court or the High Court.

The LRA provides that it is an automatically unfair dismissal if the basis for the dismissal is a refusal
by the employee to accept a demand in respect of any matter of mutual interest between the
employer and employee (sec 187(c)). This aspect will be discussed in chapter four in the section on
automatically unfair dismissals.

8
(1995) 16 ILJ 349 (LAC)

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6 DURATION OF THE CONTRACT

An employment contract may be concluded for a certain period (a fixed term contract) or for the
performance of a specific task, or the contract may be concluded for an indefinite term. The
employment contract concluded for a specific period or a certain task will terminate as agreed and
the employer does not have to advance a reason for terminating the contract or give notice of such
termination. However, the LRA provides that such termination will be regarded as a dismissal if the
employee reasonably expected the employer to renew the contract (sec. 186(b)). In such a case
the employer will have to prove that there was a fair reason why the contract was not renewed. In
this way the legislature endeavours to restrain employers from simply appointing new employees
every time in order to avoid certain statutory responsibilities towards those already under contract.
The employment opportunities of (for example) seasonal workers who have been appointed for a
certain number of years on the same farm each season are protected in this way against
replacement by other workers without good reason.

Where parties have not agreed on a specific date on which the contract would terminate, it is an
indefinite contract and it will only terminate if parties agree to terminate the contract or if the parties
have agreed on the age for retirement or if the employee reaches the normal retirement age. If the
employer wants to dismiss the employee, the LRA requires substantive and procedural fairness.

7 TERMINATION OF THE EMPLOYMENT CONTRACT

7 1 Completion of the contract

A fixed term contract will terminate on the agreed date and a contract for a specific task will terminate
as soon as the task has been completed.

7 2 Termination on notice

One party to the employment contract may give notice to the other party that he/she terminates the
contract. The BCEA prescribes certain minimum periods in this regard. Employees who have
worked for a year must be notified four weeks in advance of termination, employees who have
worked for six months must be notified two weeks before such termination and employees who have
worked less than six months must be notified one week before termination.
Employees who want to resign are bound to the same notice periods (notice of resignation to the
employer).

In terms of the common law the employer could dismiss the employee simply by giving notice. The
LRA now requires that the employer must have a fair reason and that a fair procedure must be
followed before the employee may be dismissed. Notice periods will only be applicable in the case

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of dismissal for operational requirements. There is no duty on the employer to give notice if an
employee is dismissed for misconduct or incapacity. The BCEA gives employers the option to pay
employees in lieu of notice and to terminate the contract immediately.

Employees who want to resign must give the required notice to employers. If a fixed term contract
was concluded and the employee resigns before the end of the term, the resignation will be seen
as breach of contract in the form of repudiation. The employer will then be entitled to make use of
common law remedies. If the employer terminates the fixed term contract the employee will be
entitled to make use of common law remedies,9 for breach of contract or procedures in respect of
unfair dismissal in terms of the LRA.

7 3 Cancellation

If one of the parties fails to fulfil their obligations as agreed, they commit breach of contract in the
form of repudiation. The other party may then claim specific performance, or cancel the contract
and also claim damages if that party did in fact suffer damages as a result of such repudiation.

7 4 Agreement

Parties may agree to terminate the contract. If the employee only agrees because he/she is under
pressure from the employer to agree to the termination, it will be seen as constructive dismissal (see
the definition of dismissal in chapter four) and the employee may refer the case to the CCMA.

7 5 Death

At the moment of the death of one of the parties, the contract will terminate. The employee can
claim against the deceased estate of the employer for arrear payment and an amount equal to the
prescribed notice period.

7 6 Insolvency

Insolvency of the employee will normally not terminate the contract. The Insolvency Act provides
that in the case of insolvency of the employer the contract will not terminate automatically.
Within a period of 45 days the trustee must endeavour (by consulting with the employees) to save
the undertaking. Employees may claim severance pay against the insolvent estate if the trustee
does not manage to save the undertaking.

9
Fedlife Assurance Ltd v Wolfaardt (2001) 22 ILJ 2407 (SCA)

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7 7 Impossibility of performance

When it becomes permanently impossible for one of the parties to perform, the contract will
terminate. In the case of a long-term illness or permanent disability the employee will in the first
place have the right to paid sick leave in terms of the BCEA. If the entitlement to sick leave is
exhausted, the employer must follow the procedures in the LRA in respect of dismissal on account
of incapacity due to ill health.

If an employee is incarcerated (imprisoned) for conduct not related to the employment relationship
it is technically a case where, for the duration of such incarceration, it is impossible for the employee
to tender their services to the employer. The courts have held that such cases should also be treated
by employers as cases of incapacity, and that the dismissal of such an employee will still need to
be substantively and procedurally fair.

In terms of the common law the employer will only have the right to terminate the contract if the
period of absence is unreasonably long.

8 BREACH OF CONTRACT AND SUITABLE REMEDIES

Traditionally, the courts were unwilling to grant an order for specific performance in the case of an
employment contract because of the close personal relationship between the parties. Reinstatement
of an employee who had been unfairly or wrongfully dismissed was therefore not ordered. The LRA
now explicitly states that the reinstatement of an employee who has been unfairly dismissed is the
preferred remedy. Reinstatement may be ordered by the Labour Court, High Court or by an
arbitrator. (See the discussion of remedies for unfair dismissal at the end of chapter four as well as
in chapter eight.) Other remedies available to employees include resignation, interdicts, a claim for
wages, a claim for damages, an application for reinstatement, an application for relief under the
company’s grievance procedure, a resort to private dispute resolution, withdrawal of labour or resort
to statutory dispute resolution.

The remedies available to employers are disciplinary action, interdicts, claims for damages, criminal
prosecution, lock-outs, statutory dispute resolution and private dispute procedures.

Where one of the parties is in material breach of contract, the other party may summarily terminate
the contract. The courts have identified several grounds (breach of express or implied duties of the
employee) which would justify summary dismissal. If there was no breach of a fundamental term
(express or implied duties) of the employee and he/she was dismissed, the employee may claim
damages for breach of contract (as the dismissal would then constitute a material breach on the
part of the employer).

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9 THE EMPLOYER’S VICARIOUS LIABILITY

The employer will under certain circumstances be vicariously liable for the conduct of an employee
that caused damage to another person. This is a form of no-fault liability. The reason for the liability
is based on policy considerations. The first of these considerations is that the employer will normally
be in a better financial position than the employee to compensate the third person. The second
reason is that it is regarded as just and equitable that the employer whose business creates a certain
risk in society must pay for damages caused by the business (where the employee caused the
damage while performing the work in terms of his or her employment – see below).

The requirements for this type of liability are the following:

 There must be an employer/employee relationship

 The act of the employee must have been unlawful, in other words the conduct must have
met with all the requirements for a delict:
o There must have been an act or omission on the part of the employee
o The act or omission must have been unlawful (some right of another person has
been infringed)
o The act or omission must have been intentional or negligent
o The act must have caused damage to the third party, either patrimonial loss or
damage to the person (personality) or both
o The act or omission must have caused the damages
o The act must have taken place in the scope of the employee’s employment

This last requirement causes the most problems in practice, especially where the employee does
not follow the instructions of the employee. In Viljoen v Smit10 the employee, a farm worker, acted
against the instructions of the employer by going to a neighbouring farm to relieve himself. He
caused a fire on the farm when he tried to light a cigarette. The owner of the farm where the fire
broke out claimed damages from the employer. The employer argued that the employee did not act
within his scope of employment since he abandoned his work and acted against instructions by
crossing the boundary between the farms. The court held that it was never the employee’s intention
to abandon his work. Furthermore, the distance to the neighbouring farm was not such that he
objectively speaking acted outside the scope of his employment. The court held that the employer
was liable for the damages incurred.

In K v Minister of Safety and Security11 the Supreme Court of Appeal held that the Minister of Safety
and Security (the employer) was not liable for the damages suffered by a woman who was raped
by three policemen while they were on duty. The rape could according to the court in no way be
seen as part of their duties and for this reason the acts of the policemen were regarded as being
performed outside the scope of their employment.

10
(1997) 18 ILJ 61 (A)
11
(2005) 26 ILJ 681 (SCA).

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The Constitutional Court12 overturned this decision on appeal and held that although subjectively
the policemen did not act in furtherance of their employment, objectively there was a close
connection between their acts (the rape) and their employment. The court based this finding on
the fact that they were on duty while committing the acts and that the police force had a constitutional
duty to protect the public. The acts were thus found to be in the scope of their employment and their
employer (the Minister of Safety and Security) was held liable and had to pay compensation and
damages to the victim.

Finally, note that the Employment Equity Act, 1998 provides (in its section 60) for a form of statutory
(by means of legislation, not in terms of the common law) vicarious liability for the employer in the
case of sexual harassment of an employee in the workplace. See section 2 6 in chapter 6 below.

12
NK v Minister of Safety and Security (2005) 26 ILJ 1205 (CC).

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CHAPTER 3

MINIMUM EMPLOYMENT CONDITIONS

After having studied this chapter you should have a sound understanding of the
following:
 The definition of an employee in the BCEA
 Groups who are excluded from the BCEA
 Hours of work (normal and overtime), rest periods
 Payment for overtime, work on Sundays and public holidays
 The regulation of night work
 Annual leave, sick leave, leave for family responsibility, maternity leave
 Notice periods for termination of employment and severance pay
 The regulation of deductions from wages
 Sectoral agreements
 The different ways in which provisions of the BCEA can be varied

Employers and employees do not have complete freedom of contract when they conclude an
employment contract, as they are bound to minimum employment conditions contained in

 the Basic Conditions of Employment Act (BCEA), and

 collective agreements which may be applicable to the parties to the contract.

The provisions of the BCEA will be discussed in this chapter and collective agreements will be
discussed in chapter seven.

Before one considers the content of the BCEA it is worth noting that the National Minimum Wage
Act 9 of 2018 (‘NMWA’) now provides for a national minimum wage. Certain provisions of the BCEA
were amended to regulate the payment of a minimum wage under the NMWA, and, for example, to
assist employees to claim payment from employers under the NMWA.

In terms of the NMWA the national minimum wage across all sectors and industries (including
farmworkers and domestic workers) is currently R25.42 for every ordinary hour worked13. Employers
are not allowed to reduce the minimum wage amount with the value of any additional benefits, such
as meals, accommodation, or uniforms provided to employees. All employers must there as a

13
With effect from 1 March 2023.

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minimum pay their employees the minimum wage of R25.42 per ordinary working hour. Any other
benefits and entitlements will be provided over and above the prescribed national minimum wage.

According to the Act, employers who are unable to pay the minimum wage may apply for
exemptions.

A National Minimum Wage Commission was established, which will consider the national minimum
wage on an annual basis in light of factors prescribed by the NMWA, in order to determine whether
adjustment is required.

The BCEA was amended in order to assist in the administration of the national minimum wage. It
now contains provisions, for example, which deal with employers being liable for payment of a fine
if they fail to pay the minimum wage, and for employees to claim outstanding payment in terms of
the minimum wage from the employer through the CCMA.

1 PURPOSE OF THE BCEA

The main purpose of the Act, as stated in section 2, is to advance economic development and social
justice by regulating the right to fair labour practices conferred by section 23 of the Constitution, by
establishing, enforcing and regulating basic conditions of employment. As explained in the
introduction to the course, imposing minimum conditions on a contract of employment is one of the
fairness mechanisms by which the unequal bargaining power between the employer and employee
is addressed. Employers and employees are bound to the provisions of the BCEA, but the Act allows
some flexibility. Some conditions may be varied by agreement between the employer and the
employee, other provisions may only be varied by collective agreement and provisions in respect of
rights of employees that are regarded as ‘core rights’ may only be varied by way of collective
agreements concluded in a bargaining council. The Minister may also vary some conditions in
certain circumstances.

2 APPLICATION OF THE BCEA

The provisions of the BCEA are applicable to all employees and employers except employees who
are members of the National Defence Force, the National Intelligence Agency, the South African
Secret Service and workers who voluntarily work, without receiving payment, for an organisation
serving a charitable purpose. The BCEA has limited application to persons undergoing vocational
training, since the Act applies to them only to the extent that another law does not regulate their
terms or conditions of employment. The Act also has limited application to persons employed on
vessels at sea.

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A basic condition of employment constitutes a term of every employment contract, except to the
extent that any other law provides a term that is more favourable to the employee, or if the basic
condition has been replaced, varied or excluded in accordance with the provisions of the BCEA, or
if a term in the employment contract is more favourable to the employee. The BCEA takes
precedence over any agreement, whether entered into before or after the commencement of the
Act.

The BCEA defines an employee as follows:

(a) Any person, excluding an independent contractor, who works for another person or for
the State, and who receives, or is entitled to receive any remuneration.

(b) Any other person who in any manner assists in carrying on or conducting the business of
an employer.

The BCEA provides a wide definition of “employee” in order that as many employees as possible
may enjoy the protection of its provisions. Irrespective of whether a person works full-time or part-
time, on a permanent or temporary basis, or for an indefinite period or for a fixed period or on a
definite contract, he/she will be an employee if the above requirements are met.

The definition above indicates that the meaning of employee is wider than the common law
definition, since the second part of the definition does not require that the person be remunerated.
Family members of the employer who do not receive any remuneration for work would also enjoy
protection in terms of this definition.

An employer is not defined in the BCEA but is simply the person who employs an employee.

Independent contractors are excluded from the definition, but the BCEA does not define such
contractors. The reason for not including them is that the BCEA protects employees against
exploitation by employers and independent contractors do not (strictly speaking) work for an
employer. The common law has to provide the answer to the question as to who is an independent
contractor. The tests for establishing whether someone is an independent contractor are discussed
above in chapter 2. The test that is used at present is the dominant impression test. The list of
factors in sec 83 A of the BCEA that create a presumption that someone is an employee is also
discussed in Chapter 2.

3 REGULATION OF WORKING TIME

The regulation of working time is not applicable to senior managerial employees; employees
engaged as sales staff who travel to the premises of customers and who regulate their own hours
of work; employees who work less than 24 hours a month and employees who earn in excess of an
amount regularly determined by the Minister (at present R241 110.59 per year).

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Each employer must regulate the working time of each employee in accordance with the provision
of any Act governing occupational health and safety, with due regard to the health and safety of
employees, with due regard to the Code of Good Practice on the Regulation of Working Time and
with due regard to the family responsibilities of employees.

This Code of Good Practice, issued by the Minister of Labour, comprises measures in respect of
the safety and well-being of employees, shift work, night work, rest periods during work time, family
responsibilities and child labour.

3 1 Ordinary hours of work

The employer may not require or permit the employee to work more than 45 hours in a week. If the
person works for five days in a week, the person’s hours may not be more than nine hours per
working day, and if the employee works six days a week, the working hours may not exceed eight
hours in a day. The hours of a person who serves members of the public may be extended up to 15
minutes in one day, but not more than 60 minutes in a week to enable the person to perform those
duties after the normal hours of work.

Schedule one to the BCEA provides for mechanisms for the progressive reduction of maximum
hours of work to 40 hours per week and eight hours a day. Parties may by collective bargaining
reduce working hours. The Employment Conditions Commission may make recommendations to
the Minister on the possibility of reducing the working hours in a particular sector.

3 2 Overtime

The employer may not require or permit an employee to work overtime except in accordance with
an agreement. The employee may not work more than 10 hours overtime in one week and, in any
event, an agreement as to overtime may not require an employee to work more than a total of 12
hours in one day. A collective agreement may extend the period of overtime work to 15 hours in a
week, but only for a period of two months in a year.

The employer must pay the employee one and a half times the employee’s normal wage for overtime
worked. However, the parties may agree that the employer shall pay the normal wage for overtime
and that the employee is entitled to 30 minutes paid free time for every hour worked, or otherwise
that the employee is entitled to 90 minutes paid free time for every hour overtime worked.

Employees are obliged to work overtime during emergencies.

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3 3 Compressed working week

The legislature made some allowance for flexibility by making provision for a compressed working
week and the averaging of hours of work. The employee may in terms of a written agreement work
up to 12 hours in a day without being paid for overtime. However, the employee may not work more
than 45 ordinary hours in a week or more than five days in a week, or more than 10 hours overtime
in one week. In terms of an agreement the employee may for example work for 11 hours 15 minutes
from Monday to Thursday and receive full wages for the week. This arrangement could be beneficial
to employees who live far from work. They can save on transport and may enjoy extra time with
their families.

3 4 Averaging of hours of work

Normally the employer has to pay the employee within one month for overtime worked. In terms of
a collective agreement, the working hours may be calculated on average over a period of up to four
months. The employee’s ordinary working hours must still on average not exceed 45 hours in a
week.

In terms of such an agreement the employer will not have to pay overtime. The employee will work
longer hours during a certain part of the four months and shorter hours during another part of the
four-month period. This arrangement allows for some flexibility in sectors such as the agricultural
sector where intensive labour is only needed during certain seasons.

3 5 Regulation of working time by the Minister

The Minister may prescribe shorter maximum hours for any category of workers if the maximum
hours provided for in the BCEA could impact negatively on the health and safety of workers.

3 6 Meal intervals

An employee is entitled to a meal interval of one hour after having worked continuously for five
hours. An employee is normally not remunerated for a meal interval. A written agreement between
employer and employee may reduce the meal interval to not less than 30 minutes. The employee
will benefit from this agreement since he/she could go home 30 minutes earlier at the end of the
working day. If the employer expects the employee to work during the meal break (this can only be
required if the work is urgent and there is no other employee to do the work), the employee must be
remunerated. If the employee works less than six hours an agreement in writing may dispense with
the meal interval.

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3 7 Daily and weekly rest period

An employee must enjoy a rest period of at least 12 hours between working days. A weekly rest
period of at least 36 hours must include a Sunday unless agreed otherwise.

A daily rest period may by written agreement be reduced to 10 hours if the employee lives on the
premises and enjoys a lunch hour of at least three hours. The type of work done by domestic workers
and farm workers is accommodated by this provision. A written agreement can also make provision
for the reduction of the weekly rest period to only 28 hours provided that the rest period in the
following week is extended equivalently.

3 8 Pay for work on Sundays

An employer must pay an employee who works on a Sunday at double the employee’s wage for
each hour worked, unless the employee ordinarily works on a Sunday (where the contract makes
provision for regular Sunday work), in which case the employer must pay the employee one and a
half times the ordinary wage. The employer can also pay the employee the normal wage for work
on a Sunday and grant the employee paid time off equivalent to the extra pay that the employee is
entitled to.

3 9 Night work

Night work is described as work performed after 18:00 and before 06:00 the next day. The employer
can only require or permit the employee to perform night work by agreement with such employee.
The employee must also be compensated by the payment of an allowance or the reduction of
working hours at another time. Transportation must be available between the employee’s home and
the workplace at the commencement and conclusion of the employee’s shift.

An employer who requires an employee to perform work between 23:00 and before 6:00 the next
day on a regular basis (five times per month or 50 times per year) must inform the employee in
writing about the health and safety hazards associated with night work and the employee’s right to
undergo a medical examination. If the employee suffers from a condition associated with night work,
the employee must transfer the employee within reasonable time to suitable day work if it is
practicable for the employer to do so.

3 10 Public holidays

Only if the employee has agreed may the employer expect the employee to work on a public holiday.
If the public holiday falls on a day which the employee would ordinarily work, an employer must pay
the employee the ordinary wage if the employee does not work on such a day. An employee who
works on a public holiday must be paid at least double the ordinary wage. If the employee works

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longer hours than usual on the public holiday, he/she must be remunerated accordingly (thus more
than twice the ordinary wage).

If the public holiday falls on a day the employee does not normally work, such as a Saturday, he/she
must be paid their ordinary wage plus the amount earned for work on that day whether calculated
by method of time worked or any other method.

4 LEAVE

The provisions of the BCEA in terms of leave are not applicable to persons who work less than 24
hours in a month, or who is entitled to more leave than provided for in the BCEA, unless the parties
agree otherwise.

4 1 Annual leave

An employer must grant an employee at least 21 consecutive days leave for each year worked, or
by agreement one day paid leave for every 17 days worked, or by agreement one hour leave for
every 17 hours worked. This arrangement makes provision for pro rata leave even for employees
who work for 25 hours in a month.

The employer must grant the leave within six months after completion of the leave cycle of 12
months. The employer may not require the employee to take annual leave during any other leave
period (annual leave may thus not be taken in the same period as maternity leave or sick leave)
The employer may also not require or permit that leave be taken during any period of notice of
termination of employment. An employer must grant an employee an additional day of paid leave if
a public holiday falls on a day during the employee’s annual leave. Annual leave must be taken in
accordance with an agreement between the employer and the employee and if there is no
agreement, the employer may determine when leave may be taken.

The employer may reduce the period of leave to which the employee is entitled by the number of
days occasional leave on full pay granted to the employee. The employer may normally not pay the
employee instead of granting leave, except upon termination of employment.

4 2 Sick leave

During every sick leave cycle (the period of 36 months’ employment following an employee’s
commencement of employment or the completion of the previous sick leave cycle) an employee is
entitled to an amount of paid sick leave equal to the number of days that the person would have
worked during a period of six weeks.

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During the first six months of employment the employee will only be entitled to one day’s paid sick
leave for every 26 days that he/she has worked. The employee will be paid at the normal rate during
sick leave except in terms of an agreement that the employee will not be paid the full wage, but that
the period of sick leave will be increased commensurately with the reduction. However, the reduced
payment may not be less than 75% of the normal wage.

4 3 Proof of incapacity

The employer is not required to pay the employee if the employee has been absent from work for
more than two consecutive days or on more than two occasions during an eight-week period, if the
employee does not produce a medical certificate on request of the employer. The medical certificate
must be issued and signed by a medical practitioner. If it is difficult for an employee who lives on
the employer’s premises to obtain a medical certificate, the employer may not withhold payment if
he/she failed to provide assistance to the employee to obtain a medical certificate.

If the employee receives compensation in terms of the Compensation for Injuries and Diseases Act
(COIDA) for a work-related injury or disease, payment for sick leave is not applicable, except for
periods during which the employee is not entitled to compensation under COIDA.

4 4 Maternity leave

An employee is entitled to at least four consecutive months unpaid maternity leave. An employee
may commence maternity leave at any time from four weeks before the expected date of birth,
unless otherwise agreed or on a date from which a medical practitioner or midwife certifies that it is
necessary for the employee’s health or that of the unborn child. No employee may work for six
weeks after the birth of her child, unless a medical practitioner or midwife certifies that she is fit to
do so. The Unemployment Insurance Act makes provision for the payment of maternity benefits
calculated on the wage of the employee according to a graduated scale. The higher an employee’s
wage, the smaller the percentage of the benefit that will be paid out.

4 5 Protection of employees before and after the birth of a child

No employer may require or permit a pregnant employee or an employee who is nursing her child
to perform work that is hazardous to her health or the health of her child. During the employee’s
pregnancy and for a period of six months after the birth of her child, her employer must offer her
suitable alternative employment if she performs night work or if her work poses a danger to her or
her child’s health and safety. This is only required of the employer if it is practicable to do so.

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4 6 Family responsibility leave

An employee who has been in employment for longer than four months and who works for an
employer for at least four days in a week is entitled to three days paid leave in a year when their
child is sick or in the event of the death of the employee’s spouse or life partner, parent, adoptive
parent, grandparent, child, adopted child, grandchild or sibling. At the end of the leave cycle the
employee’s unused entitlement to this type of leave lapses. The employer may require reasonable
proof of the event for which leave is claimed. A collective agreement (written agreement between
the employer and a trade union) may vary the number of days and circumstances under which leave
is to be granted.

4 7 New forms of leave for parents

The Labour Laws Amendment Act of 2018 has amended the BCEA by introducing new forms of
leave, namely parental leave, adoption leave and commissioning parental leave:

 an employee, who is a parent of a child, is entitled to ten consecutive days of parental

leave;
 an employee, who is an adoptive parent of a child below the age of two, is entitled to:

o adoption leave of at least ten consecutive weeks; or

o at least ten consecutive days of parental leave.

 an employee, who is a commissioning parent in a surrogate motherhood agreement, is
entitled to:

o commissioning parental leave of ten consecutive weeks; or

o at least ten consecutive days of parental leave.

While these new forms of leave for parents are all forms of unpaid leave, the Labour Relations
Amendment Act provides for unemployment insurance benefits to be paid to parents who take
parental leave, adoption leave and/or commissioning parental leave (which benefits must be claimed
from the Unemployment Insurance Fund or UIF).

The establishment of these new forms of leave for parents has not displaced the existing maternity
leave (see 4 4 above) and family responsibility leave (see 4 6 above) provisions (in respect of
employees’ entitlement to 3 days family responsibility leave when a child is sick (younger than 18
years of age) or alternatively upon the death of a family member as listed in the Act – the previous
entitlement to 3 days of family responsibility leave for the birth of a child has now been replaced
with the 10 days as explained above).

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The new forms of leave for parents, which came into operation on 1 January 2020, are generally
seen as a major step towards gender equity for parents in the workplace, as well as greater equity
between different types of parental relationships. Also, it is clear that these new legislative leave
benefits undoubtedly also promote the constitutional imperative (in terms of sections 28(1)(b) and
28(2) of the Bill of Rights) for the promotion of the best interests of children.

5 PARTICULARS OF EMPLOYMENT AND REMUNERATION

The provisions of this section are not applicable to an employee who works less than 24 hours in a
month.

5 1 Written particulars of employment

An employer must supply an employee, when the employee commences employment, with the
following particulars in writing:

(a) the full name and address of the employer;

(b) the name and occupation of the employee, or a brief description of the work of the
employee;

(c) the place of work (and where the employee is required to or permitted to work at various
places, an indication of such places);

(d) the date on which the employment commenced;

(e) the employee’s ordinary hours of work and days of work;

(f) the employee’s wage or the rate and method of calculating wages; the rate of overtime
work;

(g) the rate of pay of overtime work;

(h) any other cash payments that the employee is entitled to;

(i) any payment in kind that the employee is entitled to and the value of the payment in kind;

(j) how frequently remuneration will be paid;

(k) any deductions to be made from the employee’s remuneration;

(l) the leave to which the employee is entitled;

(m) the period of notice required to terminate employment;

(n) a description of any council or sectoral determination which covers the employer’s
business;

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(o) any period of employment with a previous employer that counts towards the employee’s
period of employment;

(p) a list of other documents that form part of the contract of employment, indicating a place
that is reasonably accessible to the employee where a copy of each may be obtained.

When any matter listed changes, the written particulars must be revised to reflect the change and
the employee must be provided with a copy to reflect the change.

The employer must display at the workplace a statement of employees’ rights under the Act,
except if less than five persons are employed. The employer must keep a record of written
particulars for a period of three years after the termination of employment.

Sections 32 and 33 of the Act regulate the manner of payment of remuneration (cash, cheque, direct
deposit, etc) and information about remuneration that the employer is required to provide to an
employee (hours worked, deductions, etc).

5 2 Deductions and other acts concerning remuneration

The employer may not make any deduction from the employee’s remuneration unless the employee
agrees in writing to the deduction of a debt specified in the agreement or the deduction is required
or permitted in terms of a law, collective agreement, court order or arbitration award.

A deduction for a debt may only be made if the loss or damage (which forms the subject of such
debt) occurred in the course of employment and was due to the fault of the employee. The employee
must have had an opportunity to show why deductions should not be made. The amount of the debt
may not exceed the amount of actual loss or damage and the total deductions may not exceed one-
quarter of the employee’s remuneration.

Section 34A makes provision for deductions by the employer for pension-, medical- and similar
funds.

5 3 Calculation of remuneration and wages

An employee’s wage is calculated by reference to the number of hours the employee ordinarily
works. The monthly remuneration of an employee is four and one-third times the employee’s weekly
remuneration. If the employee’s wage is calculated on any other basis than time or if the employee’s
wage fluctuates, the employee’s wage must be calculated by reference to the wage the person
earned during the preceding 13 weeks. For purposes of calculating a person’s annual leave pay,
notice pay or severance pay, an employee’s remuneration includes the cash value of payment in
kind, but excludes gratuities, allowances paid to an employee for the purposes of enabling the

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employee to work (travel allowance etc.) and any discretionary payments not related to the
employee’s hours of work or work performance.

6 TERMINATION OF EMPLOYMENT

Provisions on the termination of employment are not applicable to employees working less than 24
hours in a week.

6 1 Notice of termination of employment

A fixed term employment contract may not be terminated by notice. A contract for an indefinite
period may be terminated on notice, provided that the employer adheres to the fairness
requirements of the LRA. If the employee has been employed for six months or less, the contract
may be terminated on notice of not less than one week. If the employee has been working for longer
than six months but less than a year, notice of two weeks is required. If the employee has been
working for longer than a year, a notice period of four weeks is required. A farm worker or domestic
worker who has worked for more than six months is also entitled to four weeks notice. A collective
agreement may not permit a notice period shorter than the periods prescribed, except if the
employee has been working for longer than a year. In such a case the notice period may be reduced
to not less than two weeks. Notice of termination must be given in writing, except when it is given to
an illiterate employee. In such a case the notice must be explained verbally. Notice of termination
may not be given during any period of leave to which the employee is entitled and may not run
concurrently with such period of leave, except sick leave. The employer or employee may terminate
a contract without notice for any cause recognised by law.

6 2 Payment instead of notice

Instead of giving notice, an employer may pay the employee the remuneration that the employee
would have received if he/she had worked during the notice period. If the employee resides in
accommodation situated on the premises of the employer, and the employer terminates the contract
of that employee before he/she was entitled to do so or on payment instead of notice, the employer
is required to provide the employee with accommodation of one month or until such time as the
contract of employment could lawfully be terminated, whichever period is longer.

6 3 Payment on termination

On termination of employment, the employer must pay the employee for outstanding amounts that
the employee is entitled to such as overtime pay and paid leave that the employee has not taken.

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6 4 Severance pay

An employer must pay an employee who is dismissed by reason of the employer’s operational
requirements (requirements based on the economic, technological, structural or similar needs of an
employer – these are the cases where we say that the employee has been ‘retrenched’) severance
pay equal to at least one week’s remuneration for each completed year of continuous service. The
employee will also be entitled to severance pay in the event of the employer’s insolvency. An
employee who unreasonably refuses to accept the employer’s offer of alternative employment with
that employer or any other employer is not entitled to severance pay.

If there is a dispute about the entitlement of the employee to severance pay, the employee may
refer the dispute to a bargaining council or the CCMA. If the dispute remains unresolved after
conciliation efforts, it may be referred to arbitration. If the Labour Court decides a retrenchment
dispute, it may determine the amount of severance pay.

6 5 Certificate of service

An employee is entitled to a certificate of service stating the particulars of the employee’s

employment. A certificate of service is not a testimonial. The certificate of service must state the
employee’s name, address, job, remuneration, etc.

7 PROHIBITION OF EMPLOYMENT OF CHILDREN AND FORCED LABOUR

The BCEA prohibits the employment of children under the age of 15 years or under the minimum
school leaving age in terms of any law (the South African Schools Act requires that a child go to
school until the last school day of the year in which the child turns 15 or reaches the ninth grade,
whichever is first).

No person may employ a child in employment that is inappropriate for a person of that age or that
places at risk the child’s well-being, education, physical or mental health, or spiritual, moral or social
development. A person who employs a child in contravention of these provisions commits an
offence.

The Minister of Labour may make regulations to prohibit or place conditions on the employment of
children older than 15 years and no longer subject to compulsory schooling. The Minister may make
a sectoral determination to allow the employment of children in the performance of advertising,
sports, artistic or cultural activities.

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7 1 Prohibition on forced labour

The BCEA prohibits forced labour in line with a similar prohibition in the Constitution. A person who
contravenes this prohibition commits an offence.

8 VARIATION OF BASIC CONDITIONS OF EMPLOYMENT BY AGREEMENT

A collective agreement concluded in a bargaining council may vary any basic condition of
employment, but not the protection of employees in respect of ordinary working hours, determination
of working hours by the Minister to protect the health and safety of certain groups or protection
afforded to employees in terms of night work. The annual leave of employees may not be reduced
to less than two weeks, and maternity leave and sick leave may not be reduced. The collective
agreement may not be in conflict with the provisions on child labour and forced labour.

A collective agreement not concluded in a bargaining council may replace a basic condition to the
extent permitted by the BCEA. A contract of employment may not contravene the provisions of a
collective agreement, and the terms of a collective agreement may not contravene the terms of a
collective agreement concluded in a bargaining council.

The Minister may make a determination to vary a basic condition of employment for a category of
employers or employees. Employers and employees and trade unions may apply for a variation by
the Minister. However, the Minister may not vary provisions for the protection of employees in
respect of their health and safety, ordinary working hours, night work, child labour and forced labour.
The prohibition on the employment of children under 15 may only be varied to allow the employment
of children in advertising, sport, artistic and cultural activities.

9 SECTORAL DETERMINATIONS

The Minister may make sectoral determinations establishing basic conditions of employment for
employees in a sector. A sectoral determination may regulate minimum wages, minimum standards
of housing, etc. Recently the Minister made sectoral determinations in respect of farm workers and
domestic workers by which minimum wages were determined for these groups. The Minister will
usually make sectoral determinations for groups in a sector where the employees are not organised
in trade unions and who are therefore not in a position to bargain for better wages, etc.

10 MONITORING, ENFORCEMENT AND LEGAL PROCEEDINGS

Labour inspectors may promote, monitor and enforce compliance with employment law by advising
employers and employees of their rights and obligations. They may also conduct inspections at
workplaces, and investigate complaints made to a labour inspector. A labour inspector may

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endeavour to secure compliance with an employment law by issuing compliance orders to

employers. The compliance order may be made an order of the Labour Court on application by the
Director-General.

11 JURISDICTION OF THE LABOUR COURT

Subject to the Constitution and the Labour Appeal Court, the Labour Court has exclusive jurisdiction
in respect of all matters regulated by the BCEA, except child labour and forced labour. The Labour
Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning
a contract of employment, irrespective of whether any basic condition of employment constitutes a
term of that contract.

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CHAPTER 4

DISMISSAL

After having studied chapter 4, you should be able to answer questions on the following:
 The definition of dismissal in terms of the LRA;
 The different forms of automatically unfair dismissal and the two grounds of
justification for discriminatory dismissals;
 The requirements for a fair dismissal based on:
o The misconduct of the employee;
o The incapacity of the employee; and
o The operational requirements of the employer.

1 INTRODUCTION

In terms of the common law the employer could dismiss the employee lawfully at any time as long
as the employer gave the required notice. The employer did not have to advance any reasons for
the dismissal. However, if an employee was dismissed summarily, without the necessary notice
being provided, the employer had to advance reasons for the dismissal. The common law also paid
attention to the fairness of a dismissal where the State was the employer, because the courts
regarded dismissal by the State as the exercise of an administrative function. The rules of natural
justice (audi alteram partem, etc.) are applicable to administrative law and had to be followed in the
case of dismissal of civil servants.

The industrial court, established under the amended 1956 LRA after the report of the Wiehahn
commission, ‘borrowed’ from administrative law to establish the concept of unfair labour practices.
These rules, developed case by case, provided guidelines for the distinction between fair and unfair
dismissal. Many of these rules have now been codified in chapter eight and the Code of Good
Practice: Dismissal in the 1995 LRA. Employers still have the right to dismiss employees, but this
right has been restricted.

In addition to the common law requirements for lawfulness, (see Chapter 2), fairness is now required
when an employee is dismissed. Section 185 of the LRA provides that every employee has the right
not to be unfairly dismissed.

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In a case about the fairness of the dismissal, the dispute will have the following structure:

 In the first place it must be established whether someone is an employee, if not, the person
will not enjoy the protection of the LRA. An independent contractor would have to bring a
claim of breach of contract against the employer in the civil courts. (See the discussion of
whether someone is an employee in chapter 2).
 In the second place it must be established whether there was a dismissal (see paragraph
2 of this chapter below) and, if so,
 whether the dismissal was automatically unfair (see the discussion below in paragraph 3
of this chapter). If the dismissal was automatically unfair, the employer will not have an
opportunity to prove that the dismissal was fair.
 If it is established that the dismissal was not automatically unfair, the onus rests on the
employer to prove that the dismissal was substantively as well as procedurally fair.
There are only three permissible reasons for dismissal, viz. misconduct, incapacity and
operational requirements. A fair procedure must also be followed prior to the dismissal.
The employer must thus adhere to the requirements of substantive as well as procedural
fairness. The requirements for substantive and procedural fairness will be discussed in this
chapter.

2 THE MEANING OF DISMISSAL

The definition of the term ‘dismissal’ in the LRA is much wider than the common law meaning of
dismissal

Dismissal is defined as follows in section 186: “Dismissal” means that─

(a) an employer has terminated employment with or without notice;

(b) an employee employed in terms of a fixed term contract of employment reasonably
expected the employer
(i) to renew a fixed term of employment on the same or similar terms but the employer
offered to renew it on less favourable terms, or did not renew it, or
(ii) to retain the employee in employment on an indefinite basis but otherwise on the
same or similar terms as the fixed term contract but the employer offered to retain
the employee on less favourable terms or did not offer to retain the employee.
(c) an employer refused to allow an employee to resume work after she took maternity leave
in terms of any law, collective agreement, or her contract of employment; or
(d) an employer who dismissed a number of employees for the same or similar reasons has
offered to re-employ one or more of them but has refused to re- employ another; or
(e) an employee terminated a contract of employment with or without notice because the
employer made continued employment intolerable for the employee.

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(f) an employee terminated a contract of employment with or without notice because the new
employer, after a transfer in terms of sec 197A provided the employee with conditions or
circumstances at work that are substantially less favourable to the employee than those
provided by the old employer.

The above definition only provides a description of actions that will be regarded as dismissal. It does
not provide a description of what is an unfair dismissal. The employee, who alleges that he/she was
dismissed, must prove that there was a dismissal (above definition). As soon as the dismissal is
proved, the onus is on the employer to prove that the dismissal was fair. The different parts of the
definition of dismissal will be discussed below.

(a) Dismissal with or without notice is now explicitly regarded as dismissal in terms of section
186(a) of the LRA. Employers who could in terms of the common law terminate the
employment lawfully simply by giving the required notice, will now have to prove that the
dismissal was fair.

(b) In terms of section 186(1)(b) it is possible that an employee could have a reasonable
expectation that a fixed term contract would be renewed if this has been done in the past
or if the employer has made promises of continued employment (past practices or
promises). The onus is on the employee to prove that he/she had a reasonable expectation.
A seasonal worker working year after year on the same farm, whose contract is without any
reason not renewed at the beginning of a new season, would for example be regarded as
having a reasonable expectation that the contract would be renewed. This extension of the
meaning of dismissal is meant to protect employees but has an adverse effect in that
employers are cautious to appoint the same persons year after year in order to prevent
employees from acquiring a reasonable expectation to be employed again.

(c) The Basic Conditions of Employment Act confers a right to maternity leave. This means
that the employment relationship is not terminated when the employee is on maternity leave
and that the employer may not employ someone in the employee’s place on a permanent
basis. If the employer should refuse to accept the employee back into employment, it would
be in contravention of the BCEA and it would also amount to dismissal in terms of the
Labour Relations Act. In certain circumstances the action of the employer would be
regarded as an automatically unfair dismissal.

(d) Employers who dismiss a number of employees for the same reason and only re- employee
some of them (selective re-employment) will now have to prove that there was a fair reason
and that a fair procedure was followed before the re-employment of some of the employees.
This protective measure conferred on employees is a codification of NUMSA v Borg-

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Warner14 in which the employer agreed with the trade union to re-employee employees
who were dismissed for operational requirements should a need for the services of extra
employees arise. Such need did arise, but the employer only re-employed some of the
employees who were dismissed initially and further employed persons outside the pool of
dismissed employees. The court held that the failure to re-employ these former employees
amounted to an unfair dismissal. This case established the principle that the employment
relationship will under certain circumstances continue even though the contract has been
terminated.

(e) Section 186(e) of the definition refers to so-called constructive dismissal where an
employee on the face of it takes the decision to resign, but the real reason for his/her
resignation is that the employer made continued employment intolerable. The behaviour of
the employer must be such that the employee has no other choice but to resign. The
employee must provide proof of the alleged circumstances. Mere subjective feelings of the
employee (that the employer renders it impossible to continue) are not sufficient. In Quince
Products v Pillay15 the court found that the employee was constructively dismissed when
the employer denied the employee the use of the company car (which was available to him
previously) and thus made it impossible for the employee to reach his workplace.

It should be noted that a constructive dismissal can also be an automatically unfair

(constructive) dismissal, if, for example, the employee resigns because of an intolerable
work environment caused by the employer in the context of sexual harassment of that
employee (see paragraph 3 below regarding automatically unfair dismissals, and Chapter
6 below regarding unfair discrimination and sexual harassment in the workplace).

(f) Section 186(f) provides that if the employee resigned as a result of less favourable working
conditions after the transfer of the business as a going concern in terms of sec 197, it would
amount to dismissal and the employer will have to prove that a fair reason existed and that
a fair procedure was followed when the less favourable conditions were implemented. This
is also a kind of constructive dismissal.

As soon as the employer proves that he/she was dismissed, the employer must prove that the
reason for dismissal is fair and that a fair procedure was followed (Section 188). The requirements
for fairness will be discussed below.

14
(1994)15 ILJ 509 (A)
15
[1997] 12 BLLR 1547 (LAC)

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3 AUTOMATICALLY UNFAIR DISMISSALS

There are certain reasons for which an employer may not dismiss an employee, as it would be
deemed to be unfair under any circumstances. Dismissal on one of these grounds could never be
justified and is called automatically unfair dismissal.

In terms of section 187

(1) a dismissal is automatically unfair if the employer in dismissing the employee acts contrary to
section 5 (section 5 confers protection in relation to the right to freedom of association) or if
the reason for the dismissal is—
(a) that the employee participated in or supported a strike, or indicated an intention to
participate in or support a strike or protest action that complies with the requirements of
the LRA for a protected strike or protest action;
(b) that the employee refused or indicated an intention to refuse to do any work normally done
by the employee who at the time was taking part in a protected strike, or was locked out,
unless that work is necessary to prevent an actual danger to life or personal safety;
(c) to compel the employee to accept a demand in respect of any matter of mutual interest
between employer and employee;
(d) that the employee took action or indicated an intention to take action against the employer
by—
(i) exercising any right conferred by the Act; or
(ii) participating in any proceedings in terms of the Act;
(e) the employee’s pregnancy, intended pregnancy or any reason relating to her pregnancy;
(f) that the employer unfairly discriminated against the employee, directly or indirectly, on
any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin,
colour, sexual orientation, age, disability, religion, conscience, belief, political opinion,
culture, language, marital status or family responsibility;
(g) a transfer or reason related to a transfer, contemplated in section 197 or section 197A
(business transferred as a going concern);
(h) or a contravention of the Protected Disclosures Act 26 of 2000 by an employer on account
of an employee having made a protected disclosure.

Despite section 1(f) (that prohibits unfair discrimination),

(a) a dismissal may be fair if the reason for the dismissal is based on an inherent requirement of
the particular job;
(b) a dismissal based on age is fair if the employee has reached the normal or agreed retirement
age for persons employed in this capacity.

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The individual grounds for automatically unfair dismissal as contained in section 187:

3 1 Dismissal in contravention of section 5

Employees may not be dismissed when they exercise their freedom of association or any related
rights in terms of the LRA.

3 2 Dismissal in respect of a strike

Dismissal of an employee for taking part in a protected strike (see the discussion in Chapter 4) will
be automatically unfair. Employees taking part in a protected strike may however be dismissed for
misconduct such as assault and malicious damage to property during the strike. An employee taking
part in a strike may also be dismissed if the dismissal is based on the employer’s operational
requirements (Section 67(5)). In such a case the employee will not be dismissed for taking part in
the strike, but because retrenchments are necessitated as a result of financial loss due to the strike.
The employer will have to adhere to the requirements of the LRA for a dismissal based on
operational requirements. These requirements will be discussed below.

It is sometimes problematic to establish the real reason for the dismissal, whether the reason was
the fact that employees went on a strike (and thus automatically unfair) or whether the dismissal
was really based on the employer’s operational requirements. In SA Chemical Workers Union v
Afrox16 the court held that in cases of uncertainty about the real reason, the true or proximate cause
must be identified.

Taking part in an unprotected strike may amount to misconduct (Section 65(5)), which could be
regarded as a fair reason for dismissal. The Code of Good Practice: Dismissal enjoins an employer
to follow certain procedures before a person taking part in an unprotected strike may be dismissed.

The LRA allows employers to use replacement labour during a strike, but employees may not be
compelled to do the work of co-employees who are on strike. Employees may work voluntarily in the
place of striking colleagues.

3 3 Dismissal to compel an employee to accept the employer’s demand

An employer may not dismiss employees to compel them to accept a demand by the employer
(Section 187(1)(c) LRA). This prohibition is meant to prevent employers from dismissing employees
during for example wage negotiations to compel them to accept the employer’s offer. However,
insubordination may pose a problem in this respect. In A Mauchle (Ply) Ltd t/a Precision Tools v

16
(1999) 20 ILJ 1718 (LAC)

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Numsa17 employees were dismissed because they refused to operate two machines for a certain
period instead of only one. The court found that the employees were contractually bound to do the
work, as the instruction of the employer was reasonable. Their refusal amounted to insubordination.
From the above it is clear that the dismissal of employees who refuse to do the work that they are
bound to do in terms of their contract, will not be automatically unfair.

In Fry’s Metal v National Union of Metal Workers of SA18 the employees refused to work according
to a new shift system. The employer notified the employees that they would be dismissed if they do
not accept the new system. The trade union alleged that this was an automatically unfair dismissal
as the employer had threatened to dismiss the employees to compel them to accept the employer’s
demands. The court held that the employer did not use dismissal as a bargaining mechanism as the
dismissals were meant to be final. The court found that the employees were dismissed for
operational requirements, which was a fair ground for dismissal, and not to compel them to accept
the demands of the employer. It is clear from this decision that employers may not dismiss
employees and still keep the door open by offering to re-employ them once they accept the
employer’s demands. Such a provisional dismissal would be regarded as automatically unfair. 19

3 4 Victimisation

The employer may not dismiss the employee for taking action against the employer by exercising
any right conferred by the LRA. An example would be if the employee refers a dispute about an
alleged unfair labour practice to the CCMA and the employer dismisses the employee for that
reason.

3 5 Pregnancy

Any dismissal of a woman related to her pregnancy will be regarded as automatically unfair. In Botha
v A Import Export International CC20 the employer offered Mrs. Botha, who worked as a receptionist,
a job as sales representative when she became pregnant. The reason advanced by the employer
was that he did not approve of pregnant women in the office. When Mrs. Botha declined the offer,
he dismissed her. The court found that the dismissal was automatically unfair and awarded Mrs.
Botha an amount equivalent to two year’s salary.

In De Beer v SA Export Connection CC t/a Global Paws21 the pregnant employee agreed to return
to work only one month after the birth of her baby. She gave birth to twins who suffered from colic,
and she requested her employer to extend her leave to two months to care for the sick babies. Her
employer offered only another two weeks which the employee declined. The employer dismissed

17
(1995) 16 lLJ 349 (AAH)
18
(2003) 24 ILJ 133 (LAC)
19
Chemical Workers Industrial Union & Others v Algorax (2003) 24 ILJ 1917 (LAC)
20
(1999) 20 lLJ 2580 (AH)
21
[2008] 1 BLLR 36 (LC)

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her on the ground of misconduct for not returning to work in terms of their agreement. The employee
claimed compensation for automatically unfair dismissal for reasons related to her pregnancy. The
court held that the agreement was firstly contrary to the provisions of the BCEA (see Chapter 3) in
that the employee was entitled to four months maternity leave and therefore the agreement was
unenforceable. Secondly, the court regarded the illness of the babies as a reason related to her
pregnancy. (The employer contended that only the mother’s health should be regarded as a reason
related to pregnancy.) The dismissal was thus automatically unfair.

3 6 Dismissal based on discrimination

The Constitution, the Employment Equity Act and section 187(1)(f) of the LRA protect employees
against discrimination on any arbitrary ground. It should be noted that these provisions do not
prohibit differentiation per se. An employer may dismiss some employees and retain the services of
others by applying the LIFO (last in first out) criteria. It amounts to differentiation against employees
who have been employed for a short period, but this is allowed by the LRA. However, any arbitrary
reason that bears no relation to the needs of the workplace such as race or gender, will amount to
arbitrary discrimination.

Discrimination may be direct or indirect. Criteria that are prima facie not discriminatory may
discriminate indirectly against certain categories of people. A minimum height requirement for pilots
may operate in an indirectly discriminatory way against women, because women are on average
shorter than men.

In Food and Allied Workers Union v Others v Rainbow Chicken Farms22 butchers who worked at
Rainbow, all of them of the Muslim faith, did not come to work on one of their religious holidays. The
employer had arranged previously with them to not all attend religious meetings simultaneously, as
the work of the other 1 400 employees could not continue in the absence of all the butchers. The
employer gave them a choice of being dismissed or being issued with a final warning. They preferred
to be dismissed. The Labour Court found that that there was no unfair discrimination against the
employees on the ground of their religion as the decision to dismiss the butchers was based on
economic considerations.

The constitutional court found in Hoffman v South African Airways23 that there is no justification for
refusing to appoint a person who is HIV-positive and who is still able to do the work. Hoffman applied
for the position of cabin attendant. He had to undergo medical tests before being appointed. The
tests indicated that he was HI V- positive and he was not appointed for this reason. Based on the
decision in Hoffman a dismissal based on a person’s HIV status will be automatically unfair, even
though it is not one of the grounds that would constitute automatically unfair dismissal enumerated

22
(2000) 21 lU 615 (LC)
23
(200) 21 ILJ 2357 (CC)

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in the LRA. However, if someone has ‘full-blown’ AIDS it may be possible that he/she may be
dismissed on the ground of operational requirements. The Employment Equity Act also prohibits
discrimination on the ground of someone’s HIV status (in contrast to the LRA, the EEA does include
HIV/AIDS status as an enumerated ground in its prohibition of unfair discrimination).

361 Justification grounds for unfair discrimination dismissals

Employees who are dismissed for a reason based on the inherent requirements of a job will not
be deemed to have been unfairly dismissed. Such dismissal is based on the operational
requirements of the employer or incapacity and will be justified if the employer has adhered to the
requirements for such dismissals. Disability is one of the prohibited grounds of unfair discrimination.
But the dismissal of an airline pilot who lost their sight in a motor vehicle accident, for example, could
be justified on the basis of the inherent requirements of the job of being an airline pilot.

Dismissal based on age is also not unfair if the employee has reached the agreed or normal
retirement age for persons employed in that capacity. If the normal retirement age is 60 and the
contract specifies that 70 will be the retirement age, the employer may not dismiss the employee at
the age of 60.

3 7 Transfer of a business

If the dismissal of the employee is related to a transfer of a business in terms of section 197 or 197A,
the dismissal will be regarded as automatically unfair. The old employer is prevented from dismissing
employees in order to transfer the business as a more attractive proposition. The new employer is
also prohibited from ‘getting rid of old wood’ after the transfer. However, it may be possible for both
the old and new employer to dismiss employees on the grounds of operational requirements. It will
sometimes be difficult to establish the true reason for dismissals in this context.

3 8 Protected disclosures

Dismissal of an employee on account of having made a protected disclosure in terms of the

Protected Disclosures Act 28 of 2000 is also automatically unfair. “Whistleblowers’, or persons who
report acts of their employers that contravene the law, are protected by the Act. In Grieve v Denel24
the court held that if the disclosure was done in good faith, the employee will be protected against
an occupational detriment. To be subjected to a disciplinary hearing could also be classified as an
occupational detriment.

24
(2003) 24 ILJ 551 (LC)

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In CWU v MTN25 the court held that a disclosure based on rumours will not be protected. It is therefore
important that the situation should comply with the requirements of the Protected Disclosures Act,
before an employee would be entitled to succeed with a claim for unfair dismissal under section
187(1)(h) of the LRA.

As soon as it is clear that the dismissal was not automatically unfair, the employer must prove that
there was a fair reason for the dismissal (substantive fairness) and that the dismissal was done in
accordance with a fair procedure (procedural fairness). If the employer fails to prove this, the
dismissal will be unfair.

4 MISCONDUCT, INCAPACITY AND OPERATIONAL REQUIREMENTS

Section 188 of the LRA provides that

(1) A dismissal that is not automatically unfair, is unfair if the employer fails to prove—

(a) that the reason for dismissal is a fair reason—

(i) related to the employee’s conduct or capacity; or

(ii) based on the employer’s operational requirements; and

(b) that the dismissal was effected in accordance with a fair procedure.

(2) Any person considering whether or not the reason for dismissal is a fair reason or whether
or not the dismissal was effected in accordance with a fair procedure must take into account
any relevant code of good practice issued in terms of this Act.

4 1 Dismissal for misconduct

Misconduct constitutes one of the three grounds on which an employer may base a fair dismissal.
The onus is on the employer to prove that the dismissal was fair. In terms of the Code of Good
Practice, dismissal must only be seen as a measure of last resort. The employer must endeavour
to correct the employee’s behaviour by less drastic measures. The Code is based on principles
developed by the labour courts in terms of the 1956 LRA. These principles entail that there must be
a valid reason for dismissal (substantive fairness) and a fair procedure. As indicated above,
automatically unfair dismissal can never be fair.

411 Substantive fairness

For a dismissal to be substantively fair an employer must prove that the employee contravened a
relevant rule and that the contravention justifies the sanction of dismissal. The employer only needs

25
(2003) 24 ILJ 1670 (LC)

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to prove that the employee is guilty of misconduct on a balance of probabilities and not beyond
reasonable doubt as in a criminal case.

The Code of Good Practice: Dismissal enjoins any person determining whether a dismissal for
misconduct is unfair to consider–

 Whether there was a rule or standard regulating conduct in or of relevance to the workplace and
 whether the employee contravened such rule;
 whether the rule was a valid or reasonable rule or standard;
 whether the employee was aware or could reasonably be expected to have been aware of the
rule or standard;
 whether the rule or standard has been consistently applied by the employer; and
 whether dismissal was an appropriate sanction for the contravention of the rule or standard.

The requirement that the rule must regulate conduct in or of relevance to the workplace means that
conduct which bears no relation to the workplace cannot constitute misconduct for which the
employee can be fairly dismissed. Conduct outside the workplace could be regarded as misconduct
if there is some kind of link with the workplace. The conduct outside the workplace or working hours
must therefore have some impact on the workplace.

In respect of the second requirement the employer must prove on a balance of probabilities that the
employee contravened a rule. The stricter standard of proof beyond a reasonable doubt required in
criminal cases is not applicable here

The validity or reasonableness of the rule depends on the nature of the workplace. The disciplinary
code at a platinum mine might for instance prohibit the possession of a catapult or other device that
can be used by employees to shoot pieces of platinum over the fence. At any other workplace the
rule would be regarded as unreasonable, but in the specific circumstances at the mine the rule is
necessitated by the operational requirements of the employer.

In respect of the employee’s knowledge of the rule, the Code of Good Practice requires employers
to adopt disciplinary rules that clearly establish the standard of conduct required of their employees
and to make such disciplinary code available to employees. The disciplinary code will often be drawn
up in co-operation with a trade union and a collective agreement may be concluded in this regard.
Some rules are so well known that it would not be necessary to include them in the disciplinary code.

The rule that the employee may not steal from the employer is so self-evident that it need not be
included. Some common law rules are included in the contract by operation of law and parties need
not be aware of such a rule in order to be bound by it. The rule that the employee must not act in an
insolent manner towards the employer will automatically be deemed to be included in the contract.

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Item 3(6) of the Code of Good Practice provides as follows:

The employer should apply the penalty of dismissal consistently with the way in which it has been
applied to the same and other employees in the past (historical consistency) and consistently as
between two or more employees who participate in the misconduct under consideration
(contemporaneous consistency).

An employer may however differentiate if the disciplinary records of the employees differ, or when
one employee is more at fault than another employee, or if the one transgression differs considerably
from the other.

The sanction of dismissal must be the appropriate penalty. The Code of Good Practice provides
guidance by stipulating that if the employer must decide whether the employee should be dismissed,
the employer must, in addition to the gravity of the misconduct, consider factors such as the
employee’s circumstances (including length of service, previous disciplinary record and personal
circumstances), the nature of the job and the circumstances of the infringement itself.

A clean record and long service will not necessarily protect the employee against dismissal. Even
where progressive dismissal is required but the employee’s misconduct is of a serious nature,
dismissal may be justified.

Dismissal for a first offence is generally not appropriate, except in cases of serious misconduct which
makes a continued employment relationship intolerable. The Code of Good Practice supplies a list
of serious misconduct which could justify dismissal even in the case of a first offence. These and
other forms of misconduct will be discussed below.

4111 Gross dishonesty

There are different forms of dishonesty of which theft is the most common. The courts regard theft
as a very serious form of misconduct as the relationship of trust between the employer and employee
will in most cases be broken by theft, and dismissal of a first offender will therefore often be regarded
as fair. In Anglo American Farms Boschendal Restaurant v Komjwayo26 the court held that the theft
of one tin of cool drink by a waiter at a restaurant had breached the relationship of trust to such an
extent that a continued employment relationship would have been intolerable and therefore the
dismissal was regarded as being fair.

The extent of the breach of trust will depend on the circumstances of any given case.

Dishonesty need not always be related to theft. A false statement by an employee in respect of
his/her qualifications has been regarded as a fair reason for dismissal.

26
(1992) 13 ILJ 573 (LAC)

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Most disciplinary codes provide that the employee will be dismissed the first time that he/she is
found guilty of theft or in unauthorized possession of the employer’s property.

There is one exception to the rule that the onus is on the employer to prove that the employee did
in fact commit the alleged transgression. In the case of constant loss of stock in circumstances that
point towards collaboration by the staff, or protection of the guilty person by other staff members,
the whole workforce may be dismissed, even though the employer does not have specific proof of
the person/persons responsible for the loss of stock.27

4112 Wilful damage to property

The damage to the property must be intentional, or there must have been gross negligence on the
part of the employee. If gross negligence occurs regularly, the employee may possibly be dismissed
on account of incapacity.

4113 Wilful endangering of the safety of others

Disregarding the safety rules of the workplace or any other intentional act that endangers the safety
of other persons (not only co-employees) in circumstances where the employee should have known
better may be sufficient reason for a fair dismissal.

4114 Assault and fighting

A threat can also be regarded as assault on someone, there need not be a physical assault. Assault
outside the workplace may be regarded as a reason for dismissal, provided that the assault will
impact on the workplace. The employer must always take the circumstances of the assault into
account. It may be that the employee was provoked or that he/she acted in self-defence. Two
employees who were involved in the same fight must be treated similarly, unless the one provoked
the other, etc. Their disciplinary records must also be considered.

4115 Gross insubordination

The labour courts have distinguished insolence (a breach of the employee’s duty to show respect
towards the employer) from insubordination (a breach of the employee’s duty to obey instructions).
A refusal to obey instructions is regarded as more serious than rudeness or disrespect. A written
warning at the first instance of insolence will be regarded as proper.

27
SACCAWU v Cashbuild [1996] 4 BLLR 457 (IC)

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There are limits to the employee’s right to refuse to comply with altered working conditions. In A
Mauchle (Pty) Ltd t/a Precision Tools v NUMSA & Others28 machine operators refused to operate
two machines instead of one for a certain period, and were subsequently dismissed as a result of
such refusal. The court held that employees do not have a right to unchanged duties for the duration
of their employment. However, there are limits. The extra work or other job may not differ
dramatically from the original. In this case the instruction was reasonable and dismissal was
therefore justified.

It has, however, also been held that a clerk who refused to undertake a journey of 500km to a
neighbouring country (where such a task was not included in the employment contract) had the right
to refuse. Employees may also refuse to do illegal acts or acts that will endanger their safety. 29

It could amount to an automatically unfair dismissal should the employer dismiss the employee to
compel such employee to accept a demand of the employer. See the discussion under automatically
unfair dismissals (Chapter 5) above.

4116 Sexual harassment

Sexual harassment has been described by the courts as persistent, unsolicited and unwanted
sexual advances or suggestions by one person to another. Employers have the duty to protect
employees against sexual harassment. In the event of an allegation of such conduct, the employer
must hold an enquiry to determine whether sexual harassment did take place. Harassment is a
prohibited form of discrimination in terms of the Employment Equity Act. The 2005 Code of Good
Practice on the Handling of Sexual Harassment Cases issued by the Department of Labour provides
the following test for sexual harassment:

Sexual harassment is unwelcome conduct of a sexual nature that violates the rights of an employee
and constitutes a barrier to equity in the workplace, taking into account all the following factors:

 Whether the harassment is on prohibited grounds of sex and /or gender and /or sexual
orientation;
 Whether the sexual conduct was unwelcome;
 The nature and extent of the sexual conduct; and
 The impact of the sexual conduct on the employee

28
(1995) 1.6 ILJ 349 (LAC
29
Ntsibande v Union Carriage & wagon Co (1993) 14ILJ 1566 (IC)

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Sexual conduct not only includes physical contact, but also verbal forms such as jokes, reference
to body parts, the display of suggestive pictures and photographs.

The Code of Good Practice requires employers to adopt policies for handling cases of sexual
harassment. The employer must appoint a person to investigate such complaints in a confidential
manner. The complainant must be allowed to choose between an informal attempt to alter the
perpetrator’s conduct, or a disciplinary enquiry. If the informal attempt is not successful, a
disciplinary hearing and possibly dismissal will follow. The procedure should differ from other kinds
of disciplinary hearings in that confidentiality should be maintained and only appropriate
representatives from management should be allowed to be present.

4117 Intoxication

Intoxication at the workplace may lead to dismissal in the case of a first offence. The fairness of
such a dismissal will depend on the employee’s responsibilities. Someone who serves the public or
(for example) the driver of a 32-ton truck could possibly be dismissed for a first offence. The
dismissal of a farm worker or a cleaner will probably not be regarded as a fair response to a first
offence. In the latter case a warning would be more appropriate. It is sometimes difficult to
distinguish between intoxication and incapacity due to alcoholism and drug abuse. According to the
Code of Good Practice: Dismissal there would in circumstances of addiction be a duty on the
employer to ensure that the employee receives appropriate counselling and rehabilitation.
Employers should therefore be careful to consider the circumstances of the particular employee in
such cases, in order to determine what a fair response would be.

4118 Absence

Absence from work is not mentioned in the Code of Good Practice, but labour courts acknowledge
the duty of an employee to render service and that the refusal to do so will amount to a disciplinary
offence. If the disciplinary code at the workplace provides for progressive disciplinary steps, the
employee should normally not be dismissed for a first offence. However, this will depend on the type
of job that the person does. The court will take the reason for the employee’s absence into account.

The abuse of sick leave is a disciplinary offence. Frequent absence may however point to incapacity,
and employers must be careful in such cases, as a dismissal based on the employee’s incapacity
(for example, as a result of ill health) requires specific procedures to be followed by the employer in
order to ensure the procedural fairness of the dismissal. Treating such a case as a misconduct
dismissal is virtually guaranteed to make the dismissal unfair.

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4119 The onus in dismissal cases

Section 192(2) requires that as soon as dismissal has been proved, the employer must prove that
such dismissal was fair. There will only be proof of fairness if there is has been a proper investigation
and if evidence at a hearing links the employee with the offence (in the case of dismissal for
misconduct). The employer only needs to show on a balance of probabilities that the employee
committed the offence.

412 Procedural fairness

The Code of Good Practice: Dismissal requires that a fair procedure must be followed before an
employee may be dismissed. Item 4 of the Code provides that the procedure need not be formal.
The employer must notify the employee timeously of the allegations against him/her in a language
and form that the employee will understand. The employee must be given an opportunity to respond
to the allegations. The employee should be entitled to a reasonable time to prepare the response
and to the assistance of a trade union representative or fellow employee. After the enquiry, the
employer should communicate the decision taken, and preferably furnish the employee with written
notification of that decision.

In addition to the aforementioned requirements, the employer must allow the employee to call
witnesses and to cross examine the employer’s witnesses. The presiding officer must keep minutes
of the hearing and may not be biased. The Code of Good Practice: Dismissal does not make
provision for an internal appeal to a higher authority. If such a right is included in the disciplinary
code, the employee should have the right to appeal to a higher authority within the workplace.

Employers must keep a disciplinary record of disciplinary transgressions, the steps taken by the
employer and the reasons for such steps.

Among the rules of natural justice, the most important is the duty to hear the other side of any issue
in dispute (audi alteram partem). In the context of the workplace this means that the employee must
be given a fair hearing, with an opportunity to present his or her case.

The employer cannot be expected to conduct a disciplinary hearing in certain circumstances.

Sometimes the employer will be justified in dismissing the employee to prevent loss of life or
injuries.30

The results of a polygraph test may not be used on its own as sufficient proof of misconduct, but
may be used if corroborated by other evidence.31

30
Lefu v Western Areas Gold Mining Co (1985) 6 ILJ 307 (IC)
31
Sosibo & Others v Ceramic Tile Market (2001) 22 ILJ 811 (CCMA).

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Amendments to the LRA (Act 12 of 2002) allow the employer to request the CCMA, a council or
accredited body to investigate allegations about the conduct or capacity of an employee. The
decision of the presiding officer will be final, although it may be reviewed by the Labour Court. This
process is expected to eliminate internal appeals, conciliation procedures and arbitration.

413 Dismissals and industrial action

The Code of Good Conduct: Dismissal provides that participation in a strike that does not comply
with the requirements for a protected strike constitutes misconduct.
However, like other acts of misconduct, this would not always deserve dismissal. The substantive
fairness of dismissal in these circumstances must be determined in the light of the facts of the case,
including—

(a) the seriousness of the contravention of the LRA;

(b) attempts made to comply with the LRA;
(c) whether or not the strike was in response to unjustified conduct by the employer.

Prior to dismissal the employer should, at the earliest opportunity, contact a trade union official to
discuss the course of the action it intends to adopt. The employer should issue an ultimatum in clear
and unambiguous terms that should state what is required of the employees and what sanction will
be imposed if they do not comply with the ultimatum. The employees should be allowed sufficient
time to reflect on the ultimatum and respond to it, either by complying with it or rejecting it. If the
employer cannot reasonably be expected to extend these steps to the employees in question, the
employer may dispense with them.

The courts have found that the audi-rule is also applicable in respect of the dismissal of workers
who participate in an unprotected strike.32 The employer may comply with this duty by consulting the
union and the strike leaders and need not provide every striker an opportunity to state his/her case
individually.33

4 2 Dismissal based on incapacity

Incapacity of the employee constitutes one of the three grounds on which the employee may be
fairly dismissed. The Code of Good Practice differentiates between incapacity due to poor work
performance and incapacity due to illness or injury.

32
Karras t/a Floraline v SASTAWU & others (2000) 21 ILJ 2612 (LAC)
33
Xinwa & others v Volkswagen of SA (Pty) Ltd (2003) 24 ILJ 1077 (CC)

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421 Poor work performance

4211 Employees on probation

Item 8(1) of the Code of Good Practice provides that—

(1)(a) An employer may require a newly appointed employee to serve a period of probation before
the appointment of the employee is confirmed.
(b) The purpose of probation is to give the employer an opportunity to evaluate the employee’s
performance before confirming the appointment.
(c) Probation should not be used for purposes not contemplated by this Code to deprive employees
of the status of permanent employment. For example, a practice of dismissing employees who
complete their probation periods and replacing them with newly appointed employees is not
consistent with the purpose of probation and constitutes an unfair labour practice.
(d) The period of probation should be determined in advance and be of reasonable duration.
(e) During probation the employee’s performance should be assessed. An employer should give
the employee reasonable evaluation, instruction, training, guidance or counseling in order
to allow the employee to render satisfactory service.
(f) If the employer determines that the employee’s performance is below standard, the employer
should advise the employee of the respects in which the employee does not meet the required
standard.
(g) The probationary period may be extended to allow the employee to meet the required standard.
(h) The employer may only dismiss an employee on probation or extend the probationary period
after the employer has invited the employee to make representations and has considered such
representations. A trade union representative or fellow employee may make representations
on behalf of the employee.
(i) If the employer decides to dismiss the employee or to extend the probationary period, the
employer should advise the employee of his/her rights to refer the matter to a council or the
Commission.
(j) Any person evaluating the fairness of a dismissal of an employee for poor work performance
during or on expiry of the probationary period should accept reasons for dismissal that may be
less compelling than would be the case in dismissals effected after the completion of the
probationary period.

From the above it is clear that a less strict standard than in the case of a permanent employee will
be applied to establish whether the dismissal of a person on probation was fair. However, the
employer will still have to adhere to the requirements of the Code of Good Practice: Dismissal.

4212 Guidelines in respect of dismissal for incapacity after probation

After the probation period the employee should not be dismissed for unsatisfactory performance

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unless the employer has ─

(a) given the employee appropriate evaluation, instruction, training, guidance, or counseling;
and
(b) after a reasonable period of time for improvement, the employee continues to perform
unsatisfactorily.
The procedure leading to dismissal should include an investigation to establish the reasons for the
unsatisfactory performance and the employer should consider other ways, short of dismissal, to
remedy the matter. In the process the employee should have the right to be heard and to be assisted
by a trade union representative or a fellow employee.

Any person determining whether a dismissal for poor work performance is unfair should consider─

(a) whether the employee failed to meet a performance standard; and

(b) if the employee did not meet a required standard, whether or not the employee was aware
or could reasonably be expected to have been aware of the required performance standard;
and
(c) whether the employee was given a fair opportunity to meet the required performance
standard; and
(d) whether dismissal was an appropriate sanction for not meeting the required performance
standard.

Before dismissal there must be an inquiry to determine whether the failure to meet the required
standard was the employee’s fault.

A higher standard of competence may be expected of a senior manager and thus the courts will be
less strict in judging the fairness of the procedure that the employer followed before the dismissal.

Incompatibility of employees is not dealt with in the Code of Good Conduct: Dismissal, but could be
classified under poor work performance since the incompatibility of an employee (inability to work in
harmony with other employees) will impact on the work performance of an employee. Employers
have in the past been obliged to dismiss employees due to the demands of co-employees.34

422 Incapacity: Ill health or injury

Item 10 of the Code of Good Practice: Dismissal provides as follows:

Incapacity on the grounds of ill-health or injury may be temporary or permanent. If an employee is

temporarily unable to work in these circumstances, the employer should investigate the extent of
the incapacity or injury. If the employee is likely to be absent for a time that is unreasonably long in
the circumstances, the employer should investigate all the possible alternatives short of dismissal.

34
Amalgamated Industries (Pty Ltd) v Jonker (1993) 14 ILJ 1232 (LAC)

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When alternatives are considered, relevant factors may include

 the nature of the job,
 the period of absence,
 the seriousness of the illness or injury and
 the possibility of securing a temporary replacement for the ill or injured employee.

In cases of permanent incapacity, the employer should ascertain

 the possibility of securing alternative employment, or
 adapting the duties or work circumstances of the employee to accommodate the
employee’s disability.

In the process of the above investigation the employee should be allowed to state a case in response
and to be assisted by a trade union representative or a fellow employee.

The degree of incapacity is relevant to the fairness of the dismissal. The cause of the incapacity
may also be relevant. In the case of certain kinds of incapacity, for instance alcoholism or drug
abuse, counselling and rehabilitation may be appropriate steps for the employer to consider.

Particular consideration should be given to employees who are injured at work or who are
incapacitated by work-related illness. The courts have indicated that the duty on the employer to
accommodate the incapacity of the employee is more onerous in these circumstances.

Item 11 of the Code provides as follows:

Any person determining whether a dismissal arising from ill health or injury is unfair should
consider–
(a) whether or not the employee is capable of doing the work and
(b) if the employee is not capable─
(i) the extent to which the employee is able to perform the work;
(ii) the extent to which the employee’s work circumstances might be adapted to accommodate
disability, or where this is not possible, the extent to which the employee’s duties might be
adapted and
(iii) the availability of any suitable alternative work.

From the above it is clear that it would be not be unfair to dismiss the employee for a period of
absence that is unreasonably long. The Code does not require that the period of absence should be
continuous. The employer is often confronted with an employee who is absent on a regular basis.
The courts have indicated that it would not be unfair for an employer to dismiss employees in these
circumstances, even if the person is absent as a result of medical reasons.

The question on what an unreasonable period would be may be answered by taking into

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consideration the duties of the employee, the circumstances, the length of employment and the
financial ability of the employer to appoint someone else.

Employees should not be dismissed before their sick leave is exhausted, unless the employee
abused his/her entitlement to sick leave.

If the employer demotes the employee, it would probably not be unfair to pay the employee a lower
wage. The fact that the employee is given an opportunity to state his/her case does not mean that
a disciplinary hearing will be held, because the employee cannot be blamed for his/her situation.

It is clear that the employee may only be dismissed if there is no possibility that he/ she will
recuperate within a period during which it will be financially possible for the employer to pay his/her
wage. In these circumstances dismissal would be tantamount to dismissal for operational
requirements.

In the case of permanent disability the employer must endeavour to adapt the work circumstances
of the employee, or to adapt the duties of the employee or to find suitable alternative work for the
employee. If the circumstances and duties cannot be adapted and there is no suitable alternative
work, a dismissal would be fair.

4 3 Dismissal based on the employer’s operational requirements (‘retrenchment’)

Operational requirements are defined by the LRA as requirements based on the economic,
technological, structural or similar needs of an employer.

In the case of dismissal on the ground of operational requirements (or ‘retrenchment’), the employee
is not at fault, similar to dismissal on the ground of incapacity. The employee may have rendered
good service for many years and may still be capable of being economically active for many years.
The results of retrenchments may be more far-reaching than dismissal based on other grounds as
hundreds or even thousands of employees may be dismissed simultaneously. For this reason,
disputes in respect of dismissal on the ground of operational requirements are referred to the Labour
Court for adjudication if conciliation has failed (and not to the CCMA for arbitration).

The courts are not eager to second-guess the decision of the employer to dismiss employees on
the ground of operational requirements. It will be difficult for someone else than the entrepreneur to
decide on the substantive fairness of a dismissal. However, the Labour Court will be in a position to
decide whether the operational reason was bona fide or whether it was only an excuse for dismissing
employees for other reasons. The decision of the employer must make business sense.

Since the courts do not interfere with the reasons for the decision of the employer, the LRA requires
extensive negotiation procedures to establish a consensus seeking process.

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The Labour Court has ruled that the employer may even dismiss employees to increase profit. The
court will not force the employer to retain an employee whom he/she does not need anymore, even
though the employer is financially able to continue remunerating the employee.

Section 189 of the LRA provides the following in regard to dismissal based on operational
requirements:

(1) When an employer contemplates dismissing one or more employees for reasons based on
the employer’s operational requirements, the employer must consult any person whom the
employer is required to consult in terms of a collective agreement;

(2) If there is no agreement, a workplace forum and any registered trade union whose members
will be affected must be consulted, and if there is no workplace forum, a registered trade union;

(3) If there is no registered trade union the employees themselves or their representatives must be
consulted.

(4) The employer and the consulting parties must engage in a meaningful joint consensus-
seeking process of consultation and attempt to reach consensus on

(a) appropriate measures─

(i) to avoid dismissals;
(ii) to minimise the numbers of dismissals;
(iii) to change the timing of dismissals; and
(iv) to mitigate the adverse effects of dismissals.
(b) the method for selecting the employees to be dismissed;
(c) the severance pay for dismissed employees.

(5) The employer must issue a written notice inviting the other consulting party to consult with it
and must disclose in writing all relevant information including, but not limited to─

(a) the reason for the proposed dismissals;

(b) the alternatives that the employer considered before proposing the dismissals and
the reasons for rejecting each of these alternatives;
(c) the number of employees likely to be affected;
(d) the proposed method of selecting employees to be dismissed;
(e) the time when or period during which the dismissals are likely to take effect;
(f) the severance pay proposed;
(g) any assistance that the employer proposes to offer to the employees who are likely

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to be dismissed;
(h) the possibility of future re-employment of employees who are dismissed;
(i) the number of employees employed by the employer; and
(j) the number of employees dismissed for operational requirements in the preceding
12 months.

(6) The provisions of section 16 (that requires the employer to disclose relevant information to trade
unions) apply to the disclosure of information. The onus is on the employer to prove that
information that he has refused to disclose is not relevant.

(7) The employer must allow the other consulting party an opportunity to make representations.

(8)(a) The employer must consider and respond to such representations and if the employer
does not agree with them, the employer must state the reasons for disagreeing
(b) if any representation is made in writing the employer must respond in writing.

(9) The employer must select employees to be dismissed according to

(i) selection criteria that have been agreed upon by consulting parties; or
(ii) if no criteria have been agreed, criteria that are fair and objective.

The employer must begin to consult at the stage when he/she contemplates dismissal and not when
the decision has already been taken. The employer may still take the final decision to dismiss when
the consultation process is exhausted. The LRA requires a meaningful joint consensus-seeking
process, which means that the employer cannot mechanically adhere to the requirements for
procedural fairness without considering the other party’s proposals.

431 Selection criteria

The most commonly used selection criterion for dismissal on the ground of operational requirements
is LIFO (‘last in, first out’). Employees with the shortest period of service will be the first to be
retrenched. This selection criterion may work unfairly towards persons who have been employed in
accordance with an affirmative action plan, as such persons would usually have been appointed
more recently.

In CWIU v Johnson35 the Labour Court ruled that it was unfair that women were selected for
dismissal on the ground that the remaining work could only be done by men. The courts have
accepted criteria such as attendance records, efficiency, performance and experience. When
employees are selected on the ground of performance, they must be given an opportunity to make
representations. Criteria that are prima facie objective may have a disproportionate effect on a
certain group of employees. If the employer should for example use part-time work as a criterion, it

35
9 BLLR 1886 (AH)

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may have the effect that mostly women will be dismissed. It is possible that such a dismissal could
be automatically unfair in that the employer indirectly discriminated on the ground of sex.

432 Severance pay

Section 41 of the BCEA provides that the employer has to pay the employee who is dismissed for
operational requirements at least one week’s wage for each year that the employee has worked.
Parties may agree on a higher amount.

An employee who unreasonably refuses an employer’s offer of alternative employment with that
employer or with another employer will not be entitled to severance pay. If the offer comes from
another employer, the employee will still be entitled to severance pay.

433 Large scale dismissals by big employers

Section 189A of the LRA provides that employees of an employer who employs more than 50
employees have a choice to either refer the dispute in respect of a dismissal based on operational
requirements to the Labour Court, or to strike to persuade the employer not to dismiss. Employees
may only strike in regard to the substantive fairness of the dismissal. The dismissal will be regarded
as substantively fair if

 the dismissal was to give effect to a requirement based on the employer’s economic,
technological, structural or similar needs;
 it was operationally justifiable on rational grounds;
 there was proper consideration of alternatives to dismissal and
 selection criteria were fair and objective

If an employer who employs up to 200 employees contemplates the dismissal of 10 employees, or

an employer who employs more than 200 employees contemplates the dismissal of at least 10 %
of the workforce, the employees may strike and the employer may lock out. This is also possible if
the employees who have been dismissed during the preceding 12 months before the contemplated
dismissal represent at least 10% of the workforce. If the strike is unsuccessful, employees may not
refer the dispute to the Labour Court for a period of one year. This is one of the exceptions where a
party may strike or lock out in the case of a rights dispute.

5 REMEDIES FOR UNFAIR DISMISSALS

Section 191 of the LRA provides that a dispute in respect of an unfair dismissal may be referred to
the CCMA or a council with jurisdiction within 30 days of the dismissal. If conciliation is unsuccessful,

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an arbitrator appointed in terms of the Act may determine the unfair dismissal if the dismissal is
based on misconduct or incapacity. Dismissals based on the operational requirements of the
employer must be referred to the Labour Court after conciliation proved to be unsuccessful. If a
single employee is dismissed for operational requirements, the employee has the choice to either
refer the dispute to the Labour Court or to arbitration (the CCMA or a bargaining council). In the
case of a large-scale dismissal by a big employer, the employees may strike on the substantive
fairness of a dismissal or refer the dispute to the Labour Court.

If the Labour Court or an arbitrator finds that a dismissal is unfair, the Court or arbitrator may order
the employer to reinstate or re-employ the employee, or to pay compensation (sec 193).
Reinstatement means that the employee will be in exactly the same position as before the dismissal.
Re-employment means that the employee will be newly employed by the employer and it may be
possible that the conditions of employment will not be similar to those applicable before the
dismissal.

The Labour Court or the arbitrator must require the employer to reinstate or re-employ the employee,
unless—

(a) the employee does not wish to be reinstated or re-employed,

(b) the circumstances surrounding the dismissal are such that that a continued employment
relationship would be intolerable;
(c) it is not reasonably practicable;
(d) the dismissal is unfair only because the employer did not follow a fair procedure.

Section 194 places limits on compensation. The compensation awarded to an employee who is
unfairly dismissed because the employer did not prove that the reason for the dismissal relating to
the employee’s conduct or incapacity was fair or related to the employer’s operational requirements,
or if the employer did not follow a fair procedure, must not be more than 12 months’ remuneration.
Compensation awarded to an employee whose dismissal is automatically unfair must be just and
equitable in all the circumstances, but not more than the equivalent of 24 months’ remuneration.

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CHAPTER 5

UNFAIR LABOUR PRACTICES

After having studied this chapter, you should be able to enumerate the different types
of unfair labour practices and be able to briefly discuss each of these.

1 INTRODUCTION

In addition to unfair dismissal, the LRA provides a closed list of acts by an employer that would
constitute an unfair labour practice (acts short of dismissal). Section 23 of the Constitution also
provides that everyone has the right to fair labour practices. The question is whether an employee
may approach the Constitutional Court directly, if the employer acts unfairly and this act constitutes
neither an unfair dismissal nor an unfair labour practice listed in the LRA. A further question is
whether an employer has a right to fair labour practices. It would seem to be the case in terms of
the Constitution, but not in terms of the LRA, since the LRA states that every employee has the
right to fair labour practices (and not everyone as provided by the Constitution).

2 THE DEFINITION OF “UNFAIR LABOUR PRACTICE”

Section 186(2) of the LRA provides as follows:

Unfair labour practice means any unfair act or omission that arises between an employer and
employee involving —

(a) unfair conduct by the employer relating to the promotion, demotion, probation (excluding
disputes about dismissals for a reason relating to probation) or training of an employee or
relating to the provision of benefits to an employee;
(b) the unfair suspension of an employee or any other unfair disciplinary action short of dismissal
in respect of an employee;
(c) a failure or refusal by an employer to reinstate or re-employ a former employee in terms of
any agreement; and
(d) an occupational detriment, other than dismissal, in contravention of the Protected Disclosures
Act (Act 26 of 2000) on account of an employee having made a protected disclosure as defined
in that Act.

Section 186(2) creates a closed list of potential unfair labour practices, and any employee who
wishes to bring a claim against their employer for an unfair labour practice, must be able to show
that the circumstances surrounding their claim fits into one of the options in section 186(2). If the
employee is unable to show that the employer’s conduct falls within the scope of section 186(2), the

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CCMA or relevant bargaining council will not have jurisdiction to hear the dispute.

2 1 Unfair conduct by the employer

The act complained of must be between the employer and its employee and not between an
employee and a third person such as an independent pension fund which is not controlled by the
employer. This also means that applicants for employment will not be able to base a claim on the
provisions of section 186(2) of the LRA. In addition, an employee who have left their employment
with a particular employer will likewise not be able to make use of the protection in section 186(2)
to institute a claim against their employer for conduct after the end of the employment relationship,
subject to the exception in section 186(2)(c), which will be discussed below.

211 Promotion

Before an employee will be able to bring a claim based on the employer’s failure to promote them,
the employee will firstly need to prove that there had been an existing employment relationship
between the employer and the employee. Secondly, the employee will also need to prove that it
would have been a promotion for them if they had been appointed to the new position under
consideration. This second element requires a comparison to be made between the employee’s
current position and the position to which the employee wanted to be appointed. The position to
which the employee aspires will normally be regarded as a promotional position if the employee will
enjoy an increase in remuneration, benefits, status, levels of responsibility, authority or power if they
are appointed to the new position.

Substantive fairness of the decision not to promote the employee will relate to the merits of the
employer’s decision. The employee may be successful in proving that the employer’s failure to
promote her amounted to substantive unfairness if the decision not to promote was based on an
arbitrary reason which has no relevance to skills required for the job.

In most disputes about a failure to promote, the focus will be on the procedural fairness of the
employer’s actions. If the employer did not adhere to minimum requirements in an advertisement or
its own internal rules for promotion, this would likely amount to procedural unfairness and would also
constitute an unfair labour practice. This can include failing to advertise a position externally or
internally if required by the employer’s own internal rules; promoting an individual who do not meet
the advertised requirements instead of an employee who does meet the minimum requirements;
basing the promotion decision on criteria not communicated to the applicants and not giving the
applicants an opportunity to address those issues; bias; and nepotism/cronyism.

Generally, the courts have emphasized that courts should not act like employment recruitment

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agencies, and it is not the court’s role to tell the employer who the best person is for a job. The
courts allow employers to exercise their managerial prerogative, but in cases where the employer
has acted unfairly by not applying their mind properly to the decision, by acting in bad faith, or by
acting with an ulterior motive, the failure to promote an employee may be held to be an unfair labour
practice. Note that employers are entitled to take into account aspects related to affirmative action
and their duty to implement affirmative action measures in making promotional decisions. 36

212 Demotion

A demotion will normally be regarded as the opposite of a promotion, in that a demotion will in
essence result in a reduction of remuneration, benefits, status, responsibility levels, authority, or
power in the workplace.

An important difference between promotions and demotions is that employees will normally not have
a right to be promoted, whereas demotions often coincide with the employer taking away some of
the employee’s existing substantive rights. Previously it has been discussed that a variation of terms
and conditions of employment may be regarded as a breach of contract. The discussion in Chapter
2 of this aspect emphasised that the employer has the right to alter conditions as long as it does not
amount to totally new terms and conditions of employment. If there is a unilateral variation of terms
and conditions which amount to a significant reduction in wages, seniority, etc, it may constitute an
unfair labour practice in the form of a demotion. However, it could be fair if the demotion had the
purpose of avoiding the dismissal of the employee for reasons related to conduct, capacity, or
operational requirements. The requirements in relation to the substantive and procedural fairness
of the potential dismissal will need to be met in order to ensure that the demotion as alternative to
dismissal would be fair..

213 Training

In some instances, an employee’s contract of employment or an applicable collective agreement

may create a right for an employee to receive training of some kind. The importance of upskilling
employees through training and development initiatives is however emphasised by the EEA and the
Skills Development Act.

No court cases have been decided on this aspect of unfair labour practices. It may be regarded as
an unfair labour practice if the employee can only progress in his or her job if he/she is trained and
the employer does not train the employee. Alternatively, where the employee is able to show that
the employer’s decision not to provide training to the employee is because the employer acted

36
The affirmative action duties of employers will be discussed in Chapter 6.

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inconsistently, arbitrarily, or irrationally, it may be possible to establish that an unfair labour practice
relating to training has taken place.

214 Benefits

There is no clear guidance from the courts on the meaning of “benefit”. What is clear is that
remuneration of the employee will not be regarded as a benefit. Moreover, the dispute must be a
dispute of right, i.e. there must be a pre-existing entitlement. If the dispute is about some advantage
to which the employee aspires (no entitlement as yet), it will be regarded as a dispute of interest
and will not qualify as a dispute about a benefit.

Disputes about travel allowances and medical aid schemes have been regarded as disputes about
benefits, but disputes about overtime pay and performance bonuses were not regarded as disputes
about benefits. Generally, the courts have held that a ‘benefit’ for purposes of an unfair labour
practice in respect of a benefit includes something to which the employee is entitled in terms of law
or in terms of a contract (including a collective agreement), and also where the entitlement arises
from a policy or practice in terms of which the employer exercises a discretion (in which case the
employer must exercise such discretion fairly).

2 2 Suspension and disciplinary action short of dismissal

Employers may suspend employees for two reasons, firstly to discipline an employee after a
disciplinary hearing (punitive suspensions) and secondly to make sure that the employee is not at
the workplace where there is a pending disciplinary enquiry against the employee (precautionary
suspensions). This latter kind of suspension must be with pay. Usually a precautionary suspension
will not be regarded as an unfair labour practice, except if the time of the suspension is unreasonably
long, or the employer did not adhere to its own disciplinary code in regard to suspensions.

Substantive fairness of a decision to place an employee on precautionary suspension pending the

disciplinary enquiry relate to the reason why the employer believes that it is necessary to suspend
the employee. The employer must therefore be able to justify their decision to suspend. Justifiable
reasons for a precautionary suspension include where the employee’s alleged misconduct is very
serious in nature and where the employee’s continued presence in the workplace pending the
disciplinary enquiry will result in a disruption of the workplace; or if the employer reasonably believes
that the employee may interfere with the investigation or witnesses.

Procedural fairness of a precautionary suspension is determined with reference to the process

followed by the employer prior to taking their decision. This does not necessarily require the
employer to give the employee an opportunity to make representations, as a precautionary

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suspension is not punitive in nature. Fairness of a precautionary suspension is therefore determined

with reference to the substantive reason for the suspension and if the employee is prejudiced by the
precautionary suspension. If the employer’s own disciplinary code, employment contracts,
applicable regulations, or collective agreements require a pre-suspension hearing, the employer will
however be required to adhere to these requirements to ensure procedural fairness of the decision.

Punitive suspensions without pay will normally only be possible where the employment contract, the
employer’s disciplinary code, or applicable legislation allows for suspension without pay as a form
of disciplinary action short of dismissal. The employee may also agree to a period of suspension
without pay as an alternative to being dismissed.

Disciplinary action short of dismissal includes warnings, transfers and (punitive) suspensions, once
an employee has been found guilty through a disciplinary process. This form of unfair labour
practice may also include any decision by an employer to institute disciplinary proceedings against
an employee. The employer will have to show that these actions were fair. Fairness will also be
determined with reference to the reason for the employer’s decision and if the employee was given
an opportunity to make representations. The less serious the disciplinary action is, the less formal
the process will need to be. Final written warnings are normally regarded as a serious form of
disciplinary sanction.

2 3 Failure to reinstate or re-employ

This provision is very similar to sec 186 (1)(d) of the LRA which deals with selective non-re-
employment (see chapter 4). However, there are important differences as an employee will have to
prove that he/she was treated differently to other employees in terms of sec 186(1)(d) while the
employee only has to prove breach of an agreement to re-employ in terms of sec 186(2)(c). Often
this type of dispute will arise in the context of a group of employees who were dismissed for
operational requirements. As part of the process leading up to the dismissal for operational
requirements it is often agreed that the employer will re-employee individuals from the group of
employees who were dismissed for operational reasons when vacancies arise within an agreed
period of time after the initial dismissal. This section accordingly creates an exception to the
requirement that the person claiming an unfair labour practice, must be an existing employee and
that the conduct of the employer giving rise to the alleged unfair labour practice should take place
during the course of their employment.

2 4 Protected disclosures (whistle blowing)

It may be an unfair labour practice if an employee makes a protected disclosure and that disclosure
has the effect that he/she is subjected to an occupational detriment. According to the Protected

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Disclosures Act (PDA), an occupational detriment includes the following; disciplinary action,
suspension, demotion, being denied promotion, harassment, etc. If the employee is dismissed on
the ground of a protected disclosure, this will amount to an automatically unfair dismissal (see
chapter 4).

A disclosure will only be protected if it is made in good faith and if it is made to certain persons
specified in the PDA, such as the employer, a legal adviser, etc. The employee must have reason
to believe that the disclosure is true. Although the employee does not necessarily have to provide
proof of their allegations, the disclosure made by the employee must at least be based in facts and
not just on the employee’s unsubstantiated opinion, fabricated information, or information that the
employee knows is false.

3 REMEDIES

Section 191 of the LRA provides that a dispute in respect of an unfair labour practice may be referred
to the CCMA or a council with jurisdiction within 90 days of the occurrence of the alleged action or
omission. If conciliation is unsuccessful, an arbitrator appointed in terms of the Act may determine
any unfair labour practice dispute on terms that the arbitrator deems reasonable. The arbitrator may
order reinstatement, re-employment or compensation. Compensation is limited to wages for twelve
months. However, the director of the Commission must refer the dispute to the Labour Court if the
director decides, upon application by any of the parties, that it would be appropriate because of the
complexity of the dispute, if questions of law are raised by the dispute, etc. An employee may refer
a dispute concerning an unfair labour practice to the Labour Court if the dispute is in respect of the
contravention by the employer of the Protected Disclosures Act.

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CHAPTER 6

EMPLOYMENT EQUITY

After having studied chapter six, you should understand the following
concepts and provisions:
 The purpose of the Employment Equity Act
 The prohibition on unfair discrimination in section 6(1) of the EEA
 The justification grounds for discrimination in section 6(2) of the EEA
 The meaning of “inherent requirements” of the job
 The different stages to establish whether unfair discrimination took place
 The difference between direct and indirect discrimination
 Designated employers and employees
 The definition of “suitably qualified” employees
 The main duties of designated employers
 Whether an employee has a right to affirmative action

1 INTRODUCTION

The Constitution provides in section 9 that everyone is equal before the law and that no person may
unfairly discriminate directly or indirectly against anyone on the ground of race, gender, etc. The
Labour Relations Act prohibits an employer from dismissing an employee on basically the same
grounds mentioned in the Constitution. (See the discussion of automatically unfair dismissal in
Chapter 5).

The Employment Equity Act (EEA) 55 of 1998, endeavours to remedy the imbalances in the
representation of different groups in South African workplaces that arose as a result of unfair
discrimination in the past. The EEA applies two methods to achieve this aim. In the first place
(chapter II of the Act) the EEA prohibits discrimination against employees on arbitrary grounds (race,
sex, etc.-grounds which correspond with the prohibited grounds in the Constitution and the LRA)
and secondly (chapter III) it enjoins certain employers to promote the interests of groups against
whom discrimination took place, namely women, black people (which includes Africans, Coloureds
and Indians) and people with disabilities, by means of ‘affirmative action’.

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2 UNFAIR DISCRIMINATION

The purpose of the Employment Equity Act is to achieve equity in the workplace by─
(a) promoting equal opportunity and fair treatment in employment through the elimination of unfair
discrimination; and
(b) implementing affirmative action measures to redress the disadvantages in employment
experienced by designated groups, in order to ensure their equitable representation in all
occupational categories and levels in the workforce.

Section 6 prohibits unfair discrimination by providing the following:

(1) No person may unfairly discriminate, directly or indirectly against an employee (or applicant
for employment) in any employment policy or practice on one or more grounds including
race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin,
colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political
opinion, culture, language and birth, or on any other arbitrary ground.
(2) It is not unfair discrimination to ─
(a) take affirmative action measures consistent with the purposes of this Act;
(b) distinguish, exclude or prefer any person on the grounds of an inherent requirement
of a job.

HIV-status, which is not included in the list of prohibited grounds in the Constitution (Section 9) or
the LRA (the provisions dealing with automatically unfair dismissals) is included in the list of grounds
for unfair discrimination in the EEA.

Family responsibility is defined as the responsibility of employees in relation to their spouse or

partner, their dependent children, or other members of their immediate family who need their care
or support.

Section 6(2) provides that it is not unfair discrimination to take affirmative action measures consistent
with the purposes of the Act (see above). This provision is in accordance with section 9 of the
Constitution that provides that, in order to promote the achievement of equality, legislative and other
measures may be taken to protect and advance persons or categories of persons who were
disadvantaged by unfair discrimination (section 9(3) of the Constitution).

Section 6(2) of the EEA provides further that it is not unfair discrimination to distinguish, exclude or
prefer any person on the basis of the inherent requirement of a job.

Section 11 of the EEA contains the onus (or burden of proof) provisions, and distinguishes between
cases where the claimed unfair discrimination is alleged to be on a listed ground, and cases where
it is alleged to be on an unlisted or ‘arbitrary ground’. In the case of a listed ground there is a

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presumption of unfairness and the employer may prove that the discrimination did not take place, or
if it did take place that it was rational and not unfair, or otherwise justifiable. In the case of an unlisted
or arbitrary ground, the claimant employee must prove that the discrimination took place and that it
was unfair.

Certain concepts from section 6 will be discussed below.

2 1 ‘Employee’

The definition of employee is similar to the definition in the LRA and the BCEA. Independent
contractors are excluded from this definition. Employees employed by the National Defence Force,
the National Intelligence Agency and the South African Secret Service are also excluded. Section 9
of the Act provides that ‘employee’ also includes an applicant for employment in respect of the
prohibition of unfair discrimination and the prohibition of medical and psychological testing. This
provision is important in order to protect applicants for employment (who have not yet been
appointed and accordingly would otherwise not qualify as ‘employees’ under the Act) from unfair
discrimination in selection and appointment.

2 2 ‘No person’ may discriminate

It appears that the prohibition on discrimination does not only apply to employers, but also prohibits
employees from discriminating unfairly against each other. Support for this interpretation is to be
found in section 60 of the Act, which regulates the responsibility of an employer to take certain steps
in the case of sexual harassment as soon as a discriminatory practice of one employee against
another has been reported to the employer.

2 3 Unfair discrimination

Both section 9 of the Constitution and section 6 of the Employment Equity Act prohibit ‘unfair
discrimination’ on certain grounds. Although the EEA prohibits unfair discrimination, it does not tell
us what it is.

The stages to establish whether there was unfair discrimination was set out in Harksen v Lane as
follows:
 It must be established whether there was differentiation (differential treatment),
 If there was differentiation, it must be established whether the differentiation was based on
a prohibited (listed) ground. If so, discrimination is established and unfairness is presumed
 When differentiation is not based on one of the prohibited grounds, the differentiation may
still amount to unfair discrimination if the complainant can prove that the differentiation is
based on characteristics that have the potential to infringe the inherent dignity of a person.

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As soon as the employee proves that there was discrimination on one of the listed grounds, the
employer must prove that the discrimination was fair. While the fairness of discrimination may
therefore be established, the EEA places the burden of proof on the employer to do so. Here one
must also note the provisions of section 6(2) – conduct that might otherwise be viewed as unfair
discrimination may be justified on the basis of the inherent requirements of a job.

There can also be unfair grounds for discrimination that are not listed. In Harksen v Lane37 the court
held that discrimination is unfair if the differentiation between persons is based on characteristics
that have the potential to infringe the inherent dignity of a person. If the employee relies on a ground
for discrimination that is not listed (i.e. an arbitrary ground), the employee must however prove that
the discrimination was unfair.

2 4 Direct and indirect discrimination

The EEA prohibits both direct and indirect discrimination. Direct discrimination takes place when the
differentiating standard is based on (for example) the sex of a person. In Association of Professional
Teachers v Minister of Education38 the department of education differentiated against women in
education on the ground of sex since they could not qualify for a subsidy on a house if their husbands
were not declared permanently medically unfit.

In Swart v Mr Video39 the video shop advertised for an assistant of not older than 25 years. Mrs
Swart, who was 28 years, applied and was not employed as she was considered too old. The CCMA
held that the employer directly discriminated against Mrs Swart on the basis of her age.

Indirect discrimination takes place when the ground on which the discrimination is based is neutral,
on the face of it, but in practice has a disproportionate impact on certain categories of persons.

This is illustrated by two cases which were decided in the United States. In Griggs v Duke Power
Co40 the employer required employees to have a high school diploma and to obtain satisfactory
results in aptitude tests in order to be appointed and to be promoted. The court held that these
requirements were a form of indirect discrimination against black Americans, as in the past black
people did not have the same educational opportunities as white people. The seemingly neutral
educational requirements had a disparate impact on a protected group (black people) and therefore
the requirements amounted to indirect discrimination.

37
1998 (1) SA 300 (CC)
38
(1995) 16 ILJ 1048 (IC)
39
(1998) 19 ILJ 1315 (CCMA)
40
401 US 424 (1971)

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In Dothard v Rawlinson41 certain height and weight requirements were set for prison guards. The
court found that these seemingly neutral requirements had a disparate impact on women, as women
are on average shorter and weigh less than men.

These requirements thus constituted indirect discrimination against women.

While it was possibly never the intention of the employers in the above cases to discriminate, such
intention is not important, since an objective standard will be applied in determining whether unfair
discrimination exists or not.

2 5 Justification for discrimination

251 Affirmative action

The EEA provides in section 6 (2) that it is not unfair discrimination if the employer takes affirmative
action measures consistent with the purpose of the EEA. The reason for such a justification for
employers is that when affirmative action measures (consistent with the requirements of the EEA)
are implemented, this will by implication mean that an employer will distinguish between employees
on the basis of their race, gender, or the presence of a disability. Without this justification, any
decisions by an employer to implement affirmative action measures could strictly speaking be
regarded as unfair discrimination in terms of section 6(1) of the EEA. The justification in section
6(2) accordingly allows employers to implement these necessary measures without being subjected
to unfair discrimination claims as a result of those decisions. Affirmative action will be discussed
below.

252 Inherent requirements of the job

The second ground on which the employer may justify discrimination is if the employer distinguishes,
excludes or prefers any person on the basis of an inherent requirement of a job

In Hoffman v South African Airways42 Hoffman applied for the job of flight assistant with the South
African Airways. Even though he was suitable for the job in all other respects (he had passed all
pre-employment tests except the medical test), SAA refused to appoint him on the ground that he
was HIV-positive. The High Court held that SAA was justified in not appointing him on the ground of
the inherent requirements of the job. Hoffman appealed to the Constitutional Court and the court
found that in this case Hoffman could do the work that was expected of him. The court examined
each of the reasons for non-appointment alleged by SAA and found them all to lack substance in

41
433 US 321 (1977)
42
(2000) 21 ILJ 2357 (CC)

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the specific circumstances of this appointment. However, the court did not say that it would always
be unfair to refuse to appoint an HIV-positive person. It would depend on the person’s condition and
the type of work to be performed.

It must be emphasized that “…what ultimately determines the successful use of the defence is not
so much the context itself, but rather the essence of the business and the essence of the job.” 43 In
the 2019 judgment in TFD Network Africa (Pty) Ltd v Faris the Labour Appeal Court held that an
inherent requirement of a job is ‘a permanent attribute or quality forming an ... essential element ...
and an indispensable attribute which must relate in an inescapable way to the performing of a job’.

It is in essence a proportionality test that must be applied to determine if the employer should be
allowed to defend a claim of unfair discrimination on the basis of a defence that their actions are
justified due to the inherent requirements of the job. Normally a mere commercial reason for the
employer’s actions will not be regarded as sufficient, and the inclusion of the specific requirement
for the job being considered should fulfil a genuine and legitimate work-related purpose.
Consideration may also have to be given to the reasonable accommodation of the employee’s
inability to meet the requirement that the employer believes to be inherent, as part of the
proportionality enquiry into the fairness of the employer’s conduct.

In the US and the UK the following reasons were inter alia regarded as sufficient to constitute a bona
fide occupational requirement and a genuine occupational qualification respectively (the equivalent
of the South African inherent requirement defence):

2521 Authenticity

The owner of a restaurant with a Japanese theme could argue that it is an inherent requirement of
his business that the waiters must be Japanese in order to create an authentic atmosphere.

2522 Privacy and decency

It could be an inherent requirement that a nurse in a maternity hospital must be a woman.

2523 Safety

An employer will almost certainly be successful in requiring that an airline pilot does not suffer from
a disability that affects his eyesight.

43
Dupper et al Essential Discrimination law 85

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2 6 Harassment

Section 6(3) of the EEA provides that harassment is also a form of unfair discrimination and thus
prohibited. Even though section 6(3) includes this general prohibition against harassment, the act
does not define what harassment means. However, given its inclusion in section 6 of the EEA, it
will by implication mean that harassment may occur on any of the grounds provided for in section
6(1) of the EEA.

Sexual harassment, which is the most common form of harassment in the workplace, is to be
regarded as discrimination on the ground of sex. In the 2016 judgment in Campbell Scientific Africa
(Pt) Ltd v Simmers the Labour Appeal Court emphasised that sexual harassment is a great scourge
in our workplaces and a significant barrier to the achievement of substantive equality, and the courts
are apparently moving towards a zero-tolerance approach to sexual harassment.

A Code of Good Practice on the Prevention and Elimination of Harassment in the Workplace was
published in 2022. This Code of Good Practice replaced the previous code that dealt exclusively
with the managing of sexual harassment.

In terms of the 2022 Code of Good Practice further guidance is provided for various different forms
of harassment that may occur in the workplace, including sexual harassment and other forms of
conduct that may constitute unwanted conduct that impairs the dignity of the employee. As was
discussed in chapter 4, sexual harassment by an employee may also be regarded as a type of
misconduct.

The 2022 Code of Good Practice defines harassment as:

“4.1.1unwanted conduct, which impairs dignity;
4.1.2 which creates a hostile or intimidating work environment for one or more employees or is
calculated to, or has the effect of, inducing submission by actual or threatened adverse
consequences; and
4.1.3 is related to one or more grounds in respect of which discrimination is prohibited in terms
of section 6(1) of the EEA.

The types of conduct that may be regarded as harassment is wide-ranging, and include: violent
behaviour or abusive behaviour (including physical, psychological, emotional, sexual, gender-
based, or racial abuse). In addition, if the conduct of the employer or other employees create a
hostile working environment for an employee that has a negative effect on the employee’s ability to
perform their work, or on their well-being, this may also constitute harassment for purposes of the
EEA. Bullying and intimidation are also expressly included as forms of harassment. The Code of
Good Practice also include a wide-ranging non-exhaustive list of examples of conduct that may be

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regarded as harassment.44

In terms of section 60 of the EEA an employer who receives a complaint of sexual harassment must
deal with the complaint. If the employer fails to take the necessary steps, and it is proved that the
employee has contravened the relevant provision, the employer will be deemed also to have
contravened that provision. This liability of the employer is a type of vicarious liability, but less strict
than the common law doctrine of vicarious liability (see the discussion of vicarious liability in chapter
2) since the employer will not be liable if it is able to prove that it did all that was reasonably
practicable to ensure that the employee would not act in contravention of the EEA.

The resignation of a person who was sexually harassed might be seen by the courts as constructive
dismissal, should the employee resign on the ground that the employer rendered continued
employment intolerable (i.e. if the employer did not act in the case of a complaint of sexual
harassment).45 If it is established that the employee was dismissed, it is possible that the dismissal
could constitute automatically unfair dismissal on the ground of sex.

2 7 Equal pay

Amendments to the EEA in 2014 included a new section 6(4) which deals with ‘equal pay’, which is
a contentious issue in employment discrimination law worldwide. Section 6(4) now provides as
follows:

‘A difference in terms and conditions of employment between employees of the same

employer performing the same or substantially the same work or work of equal value that is
directly or indirectly based on any one or more of the grounds listed in subsection (1), is
unfair discrimination.’

There is, therefore, no right to equal pay for employees, but unequal pay resulting from or based on
unfair discrimination is outlawed.

Employers may justify differential pay for employees on a number of grounds (which are also set
out in Regulations that have been published to give effect to the equal pay provisions), which include
seniority, length of service, skills, academic and other qualifications, etc.

44
Includes: malicious slandering, malingering, or spreading of rumours; humiliating, demeaning, or insulting conduct;
sabotage of the employee’s work performance; ostracising, boycotting or excluding an employee; failure by an employer
or other employees to tolerate psychological, medical, or disability related needs of an employee or their personal
circumstances; pressurising an employee to resign. Covert, or passive-aggressive conduct will also be regarded as
harassment.
45
Ntsabo v Real Security CC (2003) 24 ILJ 2341 (LC)

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2 8 Medical tests

Section 7 of the EEA prohibits medical tests of employees, unless legislation permits or requires the
testing, or if it is justifiable in the light of medical facts, employment conditions, social policy, the fair
distribution of employee benefits or inherent requirements of a job. Testing of an employee to
determine the employee’s HIV status is prohibited unless the employee consents, or such testing is
determined to be justifiable by the Labour Court, in which event the Labour Court may impose certain
conditions in respect of the form that such testing should take (section 50(4) of the EEA, e.g. in
respect of confidentiality, the provision of counselling, etc).

Psychological testing of an employee is prohibited unless the test has scientifically been shown to
be valid and reliable, can be applied fairly to all employees and is not biased against any employee
or group. Applicants for jobs are also included in the protection offered by the prohibition of unfair
discrimination, medical and psychological testing.

2 9 Dispute resolution

Disputes in terms of the EEA, excluding unfair dismissals that must be referred to the appropriate
body for conciliation, arbitration or adjudication under the LRA, may be referred to the CCMA for
conciliation. If conciliation fails, the dispute may be referred to the Labour Court for adjudication, or
parties may consent that the dispute be arbitrated by the CCMA. The Labour Court may grant
compensation or order the employer to pay damages to the employee or order the employer to take
steps to prevent the same unfair discrimination occurring in future in respect of other employees.
When unfair discrimination (on a listed ground) is alleged by the employee, the employer against
whom the allegation was made must prove that his/her conduct was fair.

3 AFFIRMATIVE ACTION

In addition to the prohibition on discrimination that is applicable to all employers, the EEA enjoins
certain employers, namely ‘designated’ employers, to implement affirmative action in order to
achieve employment equity. The prohibition on discrimination may be seen as a duty to implement
formal equality, while affirmative action may be seen as a duty to implement substantive equality
(‘equal outcomes’).

The purpose of affirmative action is to ensure that suitably qualified people from designated groups
have equal employment opportunities and are equitably represented in all occupational categories
and levels in the workforce of a designated employer.

Is affirmative action a form of reverse discrimination? The Constitutional Court held in Minister of

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Finance and another v Van Heerden46 that affirmative action does not create a presumption of unfair
discrimination. In this case a member of parliament who was elected before 1994, claimed that the
Minister of Finance discriminated against him in that only certain persons who were elected as
members of the post- apartheid parliament received enhanced pension fund contributions from the
state. The court held that in the light of South Africa’s history the measure does not amount to
discrimination as its purpose is to promote substantive equality. The employer only has to show that
the affirmative action measures falls within the ambit of section 9(2) of the constitution.

The employer must thus demonstrate that the affirmative measures are designed to protect persons
or categories of persons previously disadvantaged by unfair discrimination in order to promote the
achievement of equality.

3 1 Equitable representation

Equitable representation is not defined, but section 42 provides that, in determining whether the
employer is implementing equity in accordance with the EEA, the Director-General must take certain
factors into account, The primary factor is the extent to which suitably qualified people from and
amongst the different designated groups are equitably represented within each occupational
category and level in that employer’s workforce in relation to the demographic profile of the national
and regional economically active population.

An employer may, in an assessment of its compliance with the Act or in court proceedings, raise
any reasonable grounds to justify its failure to comply. These grounds may include labour market-
related conditions, such as a shortage of skills as well as the operational requirements of the
employer. Affirmative action is apparently not intended to be a permanent measure. As soon as
equitable representation is attained, affirmative action will no longer be required since it was only
implemented to restore the imbalance in representation caused by past unfair discrimination.

Section 15 of the EEA provides that designated employers must apply affirmative action measures
to ensure equitable representation of designated employees who are suitably qualified. It is
important to note that such measures may not include quotas of persons from designated groups –
see section 15(3).

The Employment Equity Amendment Act 4 of 2002 creates a new section 15A which introduces
sectoral numerical targets that must be met by all designated employers. The purpose of this
addition is to ensure the equitable representation of people from designated groups (historically
disadvantaged groups of people based on race, gender, and disability) at all occupational levels in

46
2004 (11) BCLR 1125 (CC)

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the workforce. The amendment empowers the Minister of Employment and Labour (Minister) to
identify national economic sectors for purposes of the administration of the EEA and set numerical
targets for each such sector.47

3 2 Designated employees

Affirmative action measures are only applicable to designated employees, namely black people,
women and people with disabilities. ‘Black people’ is a generic term which means Africans,
Coloureds and Indians (and persons of Chinese descent have also been included in this list as a
result of case law).

3 3 Suitably qualified employees

In terms of the Employment Equity Act a person may be suitably qualified for a job as a result of any
one of the following factors (or any combination of them), namely that person’s─

(a) formal qualifications

(b) prior learning
(c) relevant experience; or
(d) capacity to acquire, within a reasonable time, the ability to do the job.

When determining whether a person is suitably qualified the employer must take all these factors
into account but may not unfairly discriminate against the employee solely on the basis of the
person’s lack of relevant experience. This provision seems to add a new ground for unfair
discrimination to the list (which includes race, sex, etc). The potential for conflict and litigation in
respect of the bases for selection for employment which is created by this provision is significant.

3 4 Designated employers

A ‘designated employer’ means an employer who employs 50 or more employees48. Employers

with less than 50 employees will not be required to comply with the duties of designated employers
discussed below, but they will nevertheless be entitled to obtain a certificate of compliance under
section 53 of the EEA where this is for example required for purposes of obtaining government

47
Draft Regulations have been published by the Minister, but the amendment and the proposed targets in the regulations
are currently subject to a court challenge, as the argument is made that the amendment and the targets in the draft
regulations are unconstitutional, as it amounts to the introduction of quotas and reinforces racial categorisation of
employees, which is prohibited. A settlement was reached in June 2023 between some of the parties involved and the
state in terms of which it was agreed that race may not be the exclusive criteria when employment decisions are made.
48
The definition of designated employer was amended in the Employment Equity Amendment Act 4 of 2022 to exclude
references to employers with less than 50 employees who could still be regarded as designated employers by virtue of
their annual turnover

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contracts.

Municipalities, organs of state, and an employer bound by a collective agreement to be considered

a designated employer, will be regarded as designated employers. An employer may also indicate
that he/she wishes to act as a designated employer on a voluntary basis.

3 5 Duties of designated employers

Designated employers must do the following:

(a) The employer must consult with a representative trade union and if there is no representative
trade union with the representatives of employees who must reflect the interests of employees
across all occupational categories and levels of the employer’s workplace, as well as the
interests of designated and non-designated groups.

Matters for consultation include the conduct of an analysis of the workforce, preparation and
implementation of an employment equity plan and reporting on the progress with the
employment equity plan to the Director-General.

(b) The employer must conduct an analysis of its employment policies, practices, procedures and
the working environment, in order to identify employment barriers which adversely affect people
form designated groups. The analysis must include a profile of the designated employer’s
workforce within each occupational category and level in order to determine the degree of
underrepresentation of people from designated groups in various occupational categories and
levels in that employer’s workforce.

(c) The employer must prepare and implement an employment equity plan that will achieve
reasonable progress towards employment equity in that employer’s workforce. The
employment equity plan must state─

1) the objectives to be achieved for each year of the plan;

2) the affirmative action measures to be implemented;

3) numerical goals to achieve equitable representation;

4) the timetable for each year of the plan;

5) the duration of the plan;

6) procedures that will be used to evaluate the implementation of the plan;

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7) internal procedures to resolve any dispute about the interpretation or implementation of the

plan; and

8) the persons in the workforce, including senior managers, responsible for monitoring and

implementing the plan.

(d) The employer must report annually to the Director General on the progress made with the
implementation of the employment equity plan.

4 AFFIRMATIVE ACTION MEASURES

Affirmative action measures are designed to ensure that suitably qualified people from designated
groups have equal employment opportunities and are equitably represented in all occupational
categories and levels in the workforce of a designated employer.

Affirmative action measures implemented by a designated employer must include─

(a) measures to identify and eliminate employment barriers, including unfair discrimination, which
adversely affect people from designated groups;

(b) measures to further diversify representation in the workplace, based on equal dignity and
respect for all people;

(c) measures to make reasonable accommodation for people from designated groups in order to
ensure that they enjoy equal opportunities and are equitably represented in the workforce of a
designated employer;

(d) ensuring equitable representation of suitably qualified persons from designated groups in all
occupational categories and levels in the workplace; and

(e) retaining and developing people from designated groups and implementing appropriate training
measures, including measures in terms of the Skills Development Act.

The measures referred to above include preferential treatment and numerical goals, but exclude
quotas. A designated employer is not required to take any decision concerning an employment
policy or practice that would establish an absolute barrier to the prospective or continued
employment or advancement of people who are not from the designated groups (i.e. white males
who are not people with disabilities).

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4 1 Monitoring

An employee or trade union representative may bring an alleged contravention of the EEA to the
attention of another employee, an employer, a trade union, labour inspector or the Director-General.

A labour inspector acting in terms of the EEA has authority to enter the workplace, question persons
and inspect as provided for in sections 65 and 66 of the BCEA. Labour inspectors may obtain a
written undertaking from a designated employer who has failed to comply with the duties of a
designated employer (consulting with employees, conducting an analysis, preparing an employment
equity plan, etc). A labour inspector may issue a compliance order to a designated employer if the
employer has refused, upon request, to give a written undertaking to comply. If the employer does
not comply with the compliance order, the Director General may apply to the Labour Court to make
the compliance order an order of the Labour Court. The minimum fine for a first contravention of the
Act is R500 000.

Every employer who makes an offer to conclude an agreement with any organ of state for the
furnishing of supplies or services to that organ of state or for the hiring or letting of anything, must,
if it is a designated employer, comply with the provisions of the EEA. A failure to comply is sufficient
ground for rejection of any offer to conclude an agreement with the state or for the cancellation of
an existing agreement.

4 2 Do employees have a right to affirmative action?

When the EEA was implemented, it was generally accepted that the provision in section 6(2) in
respect of affirmative action provided the employer with a ground of justification against someone
who alleges that the employer discriminated against him/her by applying affirmative action in respect
of another employee. This provision supplied employers with a justification ground for so-called
‘reverse discrimination’. The provision was seen as a ‘shield’ (defence mechanism) and not as a
‘sword’ (a weapon). This interpretation was rejected by the judgment in Harmse v City of Cape
Town.49 Harmse, a ‘black person’ in terms of the definition of designated employees, was not short-
listed for a position for which he applied. The court found that the employer did discriminate unfairly
against Harmse in not appointing him, i.e. not implementing affirmative action measures. Harmse,
who was a designated person thus had, according to the Labour Court, a right to affirmative action
and a claim against the employer for the failure to appoint him.

This judgement was not followed in Dudley v City of Cape Town.50 In this case the Labour Court
found that there was a clear difference between the enforcement of Chapter ll of the EEA, which
confers the authority on courts to enforce the prohibition on discrimination, and Chapter lll of the

49
(2003) 24 ILJ 1130 (LC)
50
(2004) 25 ILJ 305 (LC)

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EEA, which is based on consultation and in terms of which the employer must report to the Director-
General on progress with an employment equity plan. According to the court it is clear that it was
never the intention of the legislature that employees would have a right to affirmative action that is
enforceable in a court. A complaint against an employer in regard to affirmative action (or a failure
to implement affirmative action) should begin with a complaint lodged with a labour inspector who
will issue the employer with a compliance order, thus a totally different route than in the case of a
complaint of unfair discrimination under the Act.

The prevailing opinion is that the Dudley case was correctly decided as the reasoning in that case
was followed in Cupido v Glaxosmithkline51 In this case the Labour Court held that the failure of an
employer to prepare an employment equity plan does not provide a cause of action to an aggrieved
employee. Enforcement should in terms of chapter III of the EEA be at the instance of the Director-
General of Labour.

4 3 The ‘Barnard principle’

The Constitutional Court (in the 2016 Department of Correctional Services case) has affirmed what
it calls the ‘Barnard principle (which derives from a 2014 judgment of the same court in the Barnard
v SAPS case). According to this principle, under the EEA a designated employer may refuse to
appoint or promote an employee from a designated group at a certain occupational level in case
persons from that employee’s designated group are over-represented at that level.
Accordingly, an employer may, for example, refuse to appoint a coloured female to a position if
coloured females are already adequately represented or over-represented at that relevant level,
according to the regional or national demographics.

51
(2005) 26 ILJ 868 (LC)

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CHAPTER 7

COLLECTIVE BARGAINING

After having studied this chapter, you should be familiar with and be able to discuss
the following:
 The five organisational rights granted to trade unions
 The right to freedom of association
 The requirements for a binding collective agreement
 The resolution of disputes about collective agreements
 Closed shop and agency shop agreements and the constitutionality of these
agreements
 The definition of a strike and the requirements for a protected strike
 The protection afforded to employees taking part in a protected strike
 Limitations on strikes and lock-outs
 Essential services and maintenance services
 Picketing and protest action

1 INTRODUCTION

In the event of disputes of interest (e.g. a dispute over higher wages) and not rights disputes (e.g.
disputes over unfair dismissal), the parties may not refer the dispute to a court or other tribunal. The
resolution of a dispute of interest is settled by a power play between the parties and not by the
courts. The Labour Relations Act (LRA) does, however, make provision for rules in respect of
collective bargaining, in order to regulate this process.

2 PURPOSE OF THE LRA

The purpose of the Act is to advance economic development, social justice, labour peace and the
democratisation of the workplace by fulfilling the primary objectives of the Act, which are the
following:

(a) to give effect to and regulate the fundamental rights conferred by section 23 of the
Constitution;
(b) to give effect to obligations incurred by the Republic as a member state of the International

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Labour Organisation;
(c) to provide a framework within which employees and their trade unions, employers and
employers’ organisations can—
(i) collectively bargain to determine wages, terms and conditions of employment and
other matters of mutual interest; and
(ii) formulate industrial policy; and
(d) to promote—
(i) orderly collective bargaining
(ii) collective bargaining at sectoral level
(iii) employee participation in decision-making at the workplace; and
(iv) the effective resolution of labour disputes.

3 SCOPE OF THE LRA

The LRA regulates the organisational rights of trade unions, regulates collective bargaining at the
workplace, the right to strike and the recourse to lock-out.

Workplace forums were created to promote employee participation in decision-making. The LRA
provides procedures for the resolution of labour disputes through statutory conciliation, mediation
and arbitration for which purpose the Commission for Conciliation, Mediation and Arbitration
(CCMA) was established. The Act established the Labour Court and the Labour Appeal Court as
superior courts with exclusive jurisdiction to decide matters arising from the LRA. The Act provides
a procedure for the registration of trade unions and employers’ organisations and provides rules for
fair dismissal and fair labour practices.

4 APPLICATION OF THE LRA

The Act is not applicable to members of the National Defence Force, the National Intelligence
Agency and the South African Secret Service.

5 INTERPRETATION OF THE LRA

Anyone applying the Act must interpret its provisions

(a) to give effect to its primary objects;

(b) in compliance with the Constitution; and
(c) in compliance with the public international law obligations of the Republic.

The most important public international law obligations of the Republic in respect of labour law are
the conventions of the International Labour Organisation.

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6 FREEDOM OF ASSOCIATION AND GENERAL PROTECTION

The LRA provides that each employee has the right to participate in forming a trade union or
federation of trade unions and to join a trade union, subject to its constitution. Every member of a
trade union has the right to participate in the lawful activities of the trade union, such as the election
of office-bearers, to stand for election and be eligible for appointment as an office-bearer or official,
etc. The LRA’s freedom of association provisions give effect to the fundamental right to freedom of
association as contained in section 18 of the Constitution, as well as the right to fair labour practices
contained in section 23.

No person may discriminate against an employee for exercising any right conferred by the LRA. No
person may require an employee or a person seeking employment not to be a member of a trade
union or workplace forum, or to give up membership of a trade union or workplace forum. No person
may prevent an employee or a person seeking employment from exercising any right conferred in
the Act or prejudice an employee for failure or refusal to do something that employer may not lawfully
permit or require an employee to do, or for the disclosure of information that the employee is lawfully
entitled or required to make to another person.

No person may advantage or promise advantage to an employee or person seeking employment in

exchange for that person not exercising any right conferred by the Act or for not participating in any
proceedings in terms of the LRA. However, parties to a dispute are not precluded from concluding
an agreement to settle that dispute.

A provision in any contract, whether entered into before or after the commencement of the LRA that
contradicts or limits any provision in respect of employees’ right to freedom of association, is invalid,
unless the contractual provision is permitted by the LRA.

The rights of employers and trade unions to freedom of association are also protected by the LRA.

If there is a dispute about the interpretation of any of the rights discussed above, any party may refer
the dispute in writing to a bargaining or statutory council, if the parties to the dispute resort within
the registered scope of the council, or the CCMA if there is no council with jurisdiction. The party
who refers the dispute must satisfy the council or the Commission that a copy of the referral has
been served on all the other parties to the dispute.

The council or Commission must attempt to resolve the dispute through conciliation and if it remains
unresolved, any party to the dispute may refer it to the Labour Court for adjudication.

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7 ORGANISATIONAL RIGHTS

The LRA does not saddle the parties with a duty to bargain. It does, however, provide certain
organisational rights to ‘representative unions’. This can make it difficult for an employer not to
bargain with such union. A representative trade union is a registered trade union or two or more
registered trade unions acting jointly, that are sufficiently representative of the employees employed
by an employer in a workplace. The requirements for ‘sufficiently representative’ will depend on the
type of right being exercised.

7 1 Trade union access to the workplace

This right may only be exercised by one or more registered trade unions acting together. The trade
unions must be sufficiently representative. For purposes of access to the workplace, an employer
and a registered trade union whose members are a majority of the employees employed by that
employer in a workplace or the parties to a bargaining council may conclude a collective agreement
establishing a threshold of representativeness. This has the implication that if a threshold of 30% is
established, all trade unions that have at least 30% of employees as members may claim that they
are sufficiently representative and that they have the right to trade union access to the workplace.

Trade union access to the workplace includes the following:

(1) Any office-bearer or official of a representative trade union is entitled to enter the employer’s
premises in order to recruit members or communicate with members, or otherwise serve
members’ interests
(2) A representative trade union is entitled to hold meetings with employees outside their
working hours at the employer’s premises.
(3) The members of a representative trade union are entitled to vote at the employer’s premises
in any election or ballot contemplated in that trade union’s constitution.
(4) These rights conferred by the LRA are subject to any conditions as to time and place that
are reasonably necessary to safeguard life or property or to prevent undue disruption of
work.

7 2 Deduction of trade union subscriptions or levies

The same requirements for representativeness as above are applicable to this right. This right
includes the following:

(1) An employee who is a member of a representative trade union may authorise the employer
in writing to deduct subscriptions or levies payable to that trade union from the employee’s
wages.

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(2) An employer who receives such an authorisation must make the authorised deduction as
soon as possible and must remit the amount deducted to the representative trade union.

7 3 Election of trade union representatives

For the purposes of this right ‘representative trade union’ means a registered trade union, or two or
more trade unions acting jointly, that have as members the majority of the employees employed by
an employer in the workplace.

In any workplace in which at least 10 members of a representative trade union are employed, those
members are entitled to elect from among themselves— if there are 10 members of the trade union
employed in the workplace, one trade union representative. If there are more than 10 members, two
trade union representatives may be elected. If there are more than fifty members, two trade union
representatives for the first 50 and another representative for every additional 50 members.

A trade union representative has the right:

(i) to assist and represent the employee in grievance and disciplinary proceedings
(ii) to monitor the employer’s compliance with the workplace-related provisions of the LRA and
any other labour law as well as the terms of a collective agreement
(iii) to report a contravention of labour law to the employer, the trade union or a responsible
agency or body
(iv) to perform any other function agreed to between the representative trade union and the
employer
(v) to take reasonable time off work with pay to perform the functions of a trade union
representative
(vi) to be trained in any subject relevant to the performance of the functions of a trade union
representative
(vii) An employee who is an office-bearer of a representative trade union or of a federation of
trade unions is entitled to take reasonable leave during working hours for the purpose of
performing the functions of that office.

7 4 Leave for trade union activities

An employee who is an office-bearer of a representative trade union (not a shop steward, but
secretary etc) is entitled to reasonable leave during working hours for the purpose of performing the
functions of the office. A trade union exercising this right need not be a majority union.

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7 5 Disclosure of information

A registered trade union or two or more registered trade unions acting jointly that have as members
the majority of employees employed by employers in the workplace will be entitled to exercise this
right.

This right is of great importance to trade unions in the protection of the rights of their members.
During negotiations on wages and severance pay it is important that information on the financial
position of the employer should be available. Employers often argue that they are entitled to keep
certain private information secret. The LRA requires employers to disclose all relevant information
that will allow a trade union representative to perform their functions effectively. This will be important
in assisting an employee in a disciplinary hearing and during collective bargaining.

The employer must notify the trade union in writing if any information disclosed is confidential. If
there is a dispute about what information is required to be disclosed, any party to the dispute may
refer the dispute in writing to the CCMA. The commissioner who investigates such a dispute must
first decide whether such information is relevant. If the commissioner decides that the information is
relevant, the commissioner must balance the harm that the disclosure is likely to cause to an
employee or employer against the harm that the failure to disclose the information is likely to cause
to the ability of the trade union representative to perform effectively.

7 6 Restricted rights in domestic sector

Trade unions that represent domestic workers do not have the right to enter the employer’s house.
The right to disclosure of information is also not applicable to the domestic sector.

7 7 Exercise of trade union rights

A registered trade union may notify an employer in writing that it seeks to exercise one or more trade
union rights conferred by the LRA. The employer must meet the registered trade union within 30
days of receiving the notice and endeavour to conclude a collective agreement as to the manner in
which the trade union will exercise those rights.

If a collective agreement is not concluded, either the employer or the trade union may refer the
dispute in writing to the CCMA. If the dispute remains unresolved, either party may request that the
dispute be arbitrated. If the unresolved dispute is about whether or not the registered trade union is
a representative trade union, the commissioner must seek to minimise the proliferation of trade
union representation and where possible to encourage a system of only one representative trade
union in the workplace and to minimise the financial and administrative burden of requiring an
employer to grant organisational rights to more than one registered trade union.

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Factors that the commissioner must consider to reach this goal are inter alia, the nature of the
workplace, the nature of the organizational rights that the trade union seeks to exercise, the nature
of the sector in which the workplace is situated and the organisational history at the workplace.

8 COLLECTIVE AGREEMENTS

A collective agreement is a written agreement concerning terms and conditions of employment or

any other matter of mutual interest concluded by one or more registered trade union and one or
more employers or registered employers’ organisations.

A collective agreement binds the parties to such agreement and also the members of the respective
parties. The trade union and employer or employer’s organisation that concluded the collective
agreement as well as the members of the trade union and employers’ organisation will thus be
bound. However, they will only be bound if the collective agreement regulates terms and conditions
of employment, or the conduct of employers in relation to their employees or the conduct of
employees in relation to their employers.

Employees who are not members of the registered trade union party to the agreement will be bound
when the employees are identified in the agreement, the agreement expressly binds these
employees and the trade union has as members the majority of employees employed by the
employer in the workplace. A collective agreement can therefore be a powerful instrument, which
binds persons (employees) who are strictly speaking not parties to the agreement. The terms of
such a collective agreement will automatically be deemed to form part of the employment contracts
of such individual employees. These agreements can therefore significantly limit the freedom of
contract of employees and employers

Employees who become members after the collective agreement came into force will be bound.
Employees who resign as members of the trade union but remain in the service of the employer
after such date will remain bound.

Where applicable, a collective agreement varies any contract of employment between an employee
and employer who are both bound by the collective agreement. Unless the collective agreement
provides otherwise, any party to a collective agreement that is concluded for an indefinite period
may terminate the agreement by giving reasonable notice to the other parties.

8 1 Disputes about collective agreements

Any collective agreement, excluding an agency shop agreement or closed shop agreement, (which
will be discussed below) must provide for a procedure to resolve any dispute about the interpretation
or application of the collective agreement. The procedure must first require the parties to attempt to

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resolve the dispute through conciliation and, if the dispute remains unresolved, to resolve it through
arbitration.

If there is a dispute about the interpretation or application of a collective agreement, any party to the
dispute may refer the dispute in writing to the CCMA (if the collective agreement does not provide
for a procedure to resolve the dispute, if the procedure provided for is not operative, or any party to
the collective agreement has frustrated the resolution of the dispute in terms of the collective
agreement).

A dispute about the interpretation or application of an agency shop or closed shop agreement may
be referred to the Commission.

8 2 Agency shop agreements

A representative trade union and an employer or employer’s organisation may conclude a collective
agreement known as an agency shop agreement, requiring the employer to deduct an agreed
agency fee from the wages of its employees who are identified in the agreement and who are not
members of the trade union. Only a trade union whose members are the majority of employees at a
workplace may conclude such an agreement.

The agency shop agreement is only binding if it provides that employees who are not members of
a representative trade union are not compelled to become members of that trade union. In
Solidariteit v Minister of Public Service & Administration52 the court held that an agency shop
agreement concluded between the State and trade union parties at a bargaining council, which does
not contain a clause to this effect, is invalid and thus unenforceable.

This type of agreement is aimed at the prevention of so-called ‘free riders’ from not paying trade
union membership while they are enjoying the benefits of collective bargaining. The amount
deducted may not be more than the trade union subscription and must be paid into a separate
account and used to advance and protect the socio- economic interests of employees. The money
may not be paid over to a political party.

The employer may deduct the agreed agency fee from the wages of the employee without the
employee’s authorisation. A conscientious objector may request the employer to pay the amount
deducted for his/her wages into a fund administered by the Department of Labour.

8 3 Closed shop agreements

A closed shop agreement is a collective agreement requiring all employees at the workplace to be

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[2004] 6 BLLR 593 (LC)

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members of the trade union that concluded the agreement. This only applies to a registered trade
union that has as members the majority of employees at a workplace, or the majority of employees
employed by members of an employers’ organisation in a sector or area in respect of which the
closed shop agreement applies.

A closed shop agreement is only binding if a ballot has been held of the employees to be covered
by the agreement, if two thirds of the employees who voted have voted in favour of the agreement
and there is no provision in the agreement requiring membership of the trade union before
employment commences. It is also only binding if it provides that no part of the amount deducted
may be paid to a political party as an affiliation fee and that such amount will only be used to advance
or protect the socio-economic interests of the employees.

A trade union that is party to a closed shop agreement may not refuse an employee membership or
expel an employee from the trade union, unless such refusal or expulsion is in accordance with the
trade union’s constitution and for a fair reason.

It is not unfair to dismiss an employee for refusing to join a trade union party to a closed shop
agreement or who is refused membership of the trade union on fair grounds.

Persons employed at the time when the closed shop agreement takes effect, may not be dismissed
for refusing to join a trade union party to the agreement. The requirement to become a member of
the trade union is only applicable to new employees. Conscientious objectors may not be dismissed
for refusing to join a trade union. Becoming a member of a trade union may be against a person’s
religious beliefs and if such an employee is dismissed, it could be against the right to freedom of
religion conferred by the Constitution. These employees may be required to pay an agency fee.

If the Labour Court decides that a dismissal is unfair because the refusal of membership of or the
expulsion from a trade union party to a closed shop agreement was unfair, the provisions in respect
of unfair dismissal will be applicable. The trade union may be liable to compensate the employee,
and the Labour Court can make an order in this regard.

At first glance a closed shop agreement would appear to be unconstitutional, as it appears to infringe
the right to freedom of association (which includes the right not to associate). The Constitution,
however, makes explicit provision for this type of agreement, as section 23(6) provides that national
legislation may recognize union security arrangements contained in collective agreements. It must
be noted, however, that any limitation of a right contained in the Bill of Rights must comply with the
provisions of the limitation clause (section 36) that provide under which circumstances it would be
justifiable to limit a constitutional right (in this case freedom of association)

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9 BARGAINING COUNCILS

One or more registered trade unions and one or more registered employers’ organisations may
establish a bargaining council for a sector and area by adopting a constitution as required by the
LRA. The constitution must provide that half of the representatives to the bargaining council must
be appointed by the trade unions and the other half by the employer organisations that are party to
the bargaining council.

Bargaining councils may conclude and enforce collective agreements, prevent and resolve labour
disputes, perform dispute resolution functions, promote and establish training and education
schemes, pension-, provident- and medical aid schemes, sick pay, holiday, unemployment and
training schemes. The bargaining council may determine by collective agreement the matters which
may not be an issue in dispute for the purposes of a strike or lockout at the workplace.

A collective agreement concluded in a bargaining council binds only the parties to the bargaining
council who are parties to the collective agreement. However, a bargaining council may ask the
Minister in writing to extend a collective agreement to non-parties who are in the registered scope
of the bargaining council if one or more of the registered trade unions whose members constitute
the majority of the members of the trade unions that are party to the bargaining council vote in favour
of the extension, and one or more registered employers organisations whose members employ the
majority of employees employed by the members of the employers’ organisations that are party to
the bargaining council, vote in favour of the extension.

10 STATUTORY COUNCILS

Where it is not possible for trade unions and employers’ organisations to conclude an agreement to
create a bargaining council, a trade union or an employers’ organisation that represents 30% of the
employees or employers respectively in a sector, may apply to the registrar for the establishment of
a statutory council. This way to central bargaining is a compromise, which was embodied in the LRA
to enable parties who are not sufficiently representative to take part in central bargaining. Statutory
councils may also regulate dispute resolution, training, pension-, provident — and similar schemes
and the conclusion of collective agreements, but have more limited functions than bargaining
councils.

The most important difference is that union or employer parties can be forced to become parties to
a statutory council, if central bargaining cannot take place by agreement.

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11 STRIKES AND LOCK-OUTS

11 1 The right to strike and recourse to lock-out

The common law regarded a strike as breach of contract and the employer could terminate the
contract summarily. A strike was also regarded as a delict and the employer could claim damages
caused by the strike from the striking party. The right to strike is now conferred by the Constitution
because this right is seen as an essential instrument in the hands of employees to counter the
imbalance of power between employer and employee. The right to strike may be limited in the same
manner as any other right conferred by the Constitution.

The LRA protects the right to strike, but also limits the exercise of the right. Section 64 provides that
every employee has the right to strike, and every employer has recourse to lockout.
It should be noted that the labour law amendments in 2018 introduced provisions to regulate
industrial action. This has largely been as a result of the perception that the South Africa labour
market has in recent years been blighted by violent strike action (a prime example being the tragic
events of the 2012 Marikana platinum miners’ strike). For example, the amendments brought the
introduction of a system whereby an advisory arbitration panel may be established by the Minister
of Labour or by the Labour Court. The purpose of such panel is to resolve strikes (or lockouts) that
may turn violent, or if there is potential for the strike (or lockout) to cause a local or national crisis.
The panel investigate the cause and circumstances of the strike (or lockout) and may release an
advisory arbitration award to assist the parties to resolve the dispute.

This and other amendments (e.g. in respect of picketing rules) will not be discussed in this chapter,
but students should take note of their existence.

A strike is defined in section 213 as the partial or complete concerted refusal to work, or the
retardation or obstruction of work, by persons who are or who have been employed by the same
employer or by different employers, for the purpose of remedying a grievance or resolving a dispute
in respect of any matter of mutual interest between employer and employee, and every reference to
‘work’ in this definition includes overtime work, whether it is voluntary or compulsory.

The comprehensive definition of a strike is to the benefit of employees, because any deliberate
refusal to work which is not included in the definition could be regarded as a disciplinary offence.

The elements of a strike are the following:

11 1 1 A refusal to work

The work stoppage must entail a refusal to do the work that the employees are contractually bound
to do, except in the case of voluntary overtime work. A work-to rule during which employees will only

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do the minimum, a go-slow during which employees will delay work or grasshopper (intermittent)
stoppages, will all be regarded as strikes.

11 1 2 Concerted (joint) refusal to work

One employee who stops work to remedy a grievance will not be on strike. There must be a joint
refusal to work, as well as a common purpose. Employees who stop working at the same time, but
each for a different reason, will not be on strike. Even persons who are no longer employed by the
employer may take part in a strike, as well as employees employed by another employer or persons
no longer in the employment of that other employer.

11 1 3 Against an employer

The action must be directed at an employer, although not necessarily against the employer of the
strikers. In the case of a secondary strike, the action will be directed against the employer of other
strikers. A strike that begins at one branch of an employer’s business and spreads to other branches
will still be a primary strike.

11 1 4 Remedying a grievance or resolving a dispute

The work stoppage will only be a strike if the purpose is the remedying of a grievance or resolution
of a dispute. Employees who want to take revenge but who have no intention of remedying a
grievance will not be on strike. The employees must demand something from the employer. In Food
& Allied Workers Union & Others v Rainbow Chicken Farms (2002) 21 lLJ 621 (LC) the Labour Court
decided that the refusal of Muslim employees to work on one of their religious holidays is no strike,
because no demand was made and there was no intention to remedy a grievance. If the employer
complies with a demand, the strike will come to an end.

11 2 Requirements for a protected strike or lock-out

Before a trade union strikes or an employer locks his/her employees out, certain requirements must
be met:

(1) the issue in dispute must have been referred to a council or to the Commission as required
by the LRA
(2) a period of 30 days must have elapsed since the referral was received by the council or
commission, or
(3) the council or Commission must have issued a certificate stating that the dispute remains
unresolved

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(4) At least 48 hours notice of the commencement of a strike must have been given to the other
party in writing. If the State is the employer, notice in writing must be given at least seven
days before the commencement of the strike or the lock-out.

If the issue in dispute is a refusal to bargain, the dispute must first be referred to the Commission
for an advisory award before recourse may be had to a strike. A refusal to bargain includes the
refusal to recognise the trade union as collective bargaining agent, or a refusal to agree to establish
a bargaining council. In NUMSA v Baderbop53 the Constitutional Court held that a minority trade
union may strike if the trade union and employer cannot agree on the exercising of organizational
rights at the workplace which the LRA reserves only for majority unions.

The above requirements for a protected strike are not applicable to parties who are members of a
council and if the dispute has been dealt with by that council in accordance with its constitution, or
to strikes or lockouts that conform with procedures in a collective agreement. Employees may, in
the case of a lockout that does not adhere to the requirements in the LRA, legitimately engage in a
strike that does not adhere to the requirements for a protected strike. Similarly, an employer who
reacts to an unprotected strike is not required to adhere to the requirements for a protected lockout.

An employee or trade union that refers a dispute about a unilateral change to terms and conditions
of employment to a council or the Commission, may require the employer to not unilaterally
implement the change to terms and conditions of employment that applied before the change or, if
the employer has already implemented the change unilaterally, may require the employer to restore
the terms and conditions of employment that applied before the change. The employer must restore
the terms and conditions within 48 hours of service of the referral on the employer. This section
(section 64(4) of the LRA) does not provide specifically that employees may strike if the employer
does not comply, but the fact that this matter is discussed under the requirements for a valid strike
indicates that a strike for this reason may be protected.

11 3 Limitations on strikes and lock-outs

No person may take part in a strike or lock-out or in any conduct in contemplation or furtherance of
a strike or lock-out if –

(1) that person is bound by a collective agreement that prohibits a strike or lock- out in respect
of the issue in dispute;
(2) that person is bound by an agreement that requires the issue in dispute to be referred to
arbitration;

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(3) the issue in dispute is one that a party has the right to refer to arbitration or to the Labour
Court in terms of the LRA;
(4) that person is engaged in an essential service or a maintenance service;
(5) A person may take part in a strike or a lock-out if the issue in dispute is about organisational
rights as provided for in sections 12-15 of the LRA, despite the fact that such disputes may
be referred to arbitration (sec 22(4)). However, if the registered trade union has given notice
of the proposed strike, it may not exercise the right to refer the dispute to arbitration for a
period of 12 months from the date of the notice.
(6) No person may take part in a strike or a lock-out if that person is bound by an arbitration
award or collective agreement that regulates the issue in dispute or a Ministerial
determination.

11 4 Secondary strikes

Secondary strike means a strike, or conduct in contemplation or furtherance of a strike, that is in

support of a strike by other employees against their (another) employer.

No person may take part in a secondary strike unless the primary (supported) strike complies with
the LRA’s requirements for a protected strike. The (secondary) employer must have received written
notice at least seven days prior to the commencement of the secondary strike. The nature and extent
of the secondary strike must be reasonable in relation to the possible effect that the secondary strike
may have on the business of the primary employer.

The requirement of reasonableness embodies the principle that there must be some link between
the conduct of the secondary strikers and the primary employer. There must be a possibility that the
conduct of the secondary strikers may influence the conduct of the primary employer to the benefit
of the primary strikers.

If employees or the trade union concerned do not adhere to these requirements, the secondary
employer may apply to the Labour Court for an interdict.

11 5 Protected strikes and lock-outs

A person does not commit a delict or a breach of contract by taking part in a protected strike or lock-
out or any conduct in contemplation or in furtherance of a protected strike or a protected lock-out.
An employer may not dismiss an employee for participating in a protected strike. However, an
employer is not obliged to remunerate an employee for services that the employee does not render
during a protected strike or a protected lock-out.

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An employee who is guilty of misconduct during the strike may be dismissed provided that the
employer adheres to the requirements of the LRA in respect of misconduct. The employer may also
dismiss striking employees on account of operational requirements. The employer will have to
adhere to the requirements for a fair dismissal.

Civil legal proceedings (claims for damages on account of breach of contract or a delict) may not be
instituted against any person for participating in a protected strike or lock-out.

11 6 Unprotected strikes and lock-outs

In the case of a strike or lock-out that does not comply with the requirements for a protected strike
or lock-out, the Labour Court has exclusive jurisdiction—

 To grant an interdict or order to restrain any person from participating in a strike or lock-out
or any conduct in contemplation or in furtherance of a strike or lock-out (48 hours notice
must be given to the party who intends to strike or lock-out);
 To order the payment of just and equitable compensation for any loss attributable to the
strike or lock-out.
The court must take the following into account when ordering such payment:

Whether attempts were made to comply with the provisions for a protected strike or lockout, whether
the strike or lock-out was premeditated, whether the strike or lock-out was in response to unjustified
conduct by another party to the dispute and whether the party has complied with an interdict or order
discussed above. The Labour Court must have regard to the interests of orderly collective
bargaining, the duration of the strike or lock-out and the financial position of the employer, trade
union or employees.

11 7 Picketing

Picketing is a demonstration by means of which the employees hope to draw the attention of the
public to their grievances and to gather support for their protected strike. Employees often gather
near their workplace and they use banners, slogans and songs to convey their message. The LRA
provides that the process must take place in a peaceful manner.

A registered trade union may authorise a picket by its members and supporters for the purposes of
peacefully demonstrating in support of any protected strike, or in opposition to any lock-out. An
authorised picket may take place in any place to which the public has access but outside the
premises of the employer, or with the permission of the employer, inside the employer’s premises.
The employer may not withhold his/her permission unreasonably.

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If requested to do so by the registered trade union or employer, the CCMA must attempt to secure
an agreement between the parties to the dispute on rules that should apply to a picket in relation to
the specific strike or lock-out. If there is no agreement, the Commission must establish picketing
rules and, in doing so, must take account of the particular circumstances of the workplace and any
relevant code of good practice (such a Code has already been issued by NEDLAC).

11 8 Essential services committee

The Minister may establish an essential services committee under the auspices of the Commission.
The functions of the essential service committee are to conduct investigations as to whether or not
the whole or a part of any service is an essential service, to determine disputes as to whether or not
the whole or part of any service is an essential service and to determine whether or not any service
is a maintenance service.

An essential service is defined in section 213 of the LRA as follows:

(a) a service the interruption of which endangers the life, personal safety or health of the
whole or any part of the population;
(b) the Parliamentary service;
(c) the South African Police Services.

An employer may request the Commission to conduct an investigation to determine whether his/her
business is an essential service when employees plan to strike. If the business is designated as
such, the strike may not take place.

In Canada, employees who remove snow on the roads are during wintertime involved in essential
services, but not during summer when snow on the roads poses no hazard to motorists.

When employees in New York involved in refuse removal went on strike, the authorities applied for
these services to be designated as essential services. At first this application did not succeed, as
there was no immediate health risk. When rodents multiplied as a result of the refuse, the authorities
succeeded as the rodents posed a threat to the health of the inhabitants.

In South Africa, the following have been designated as essential services:

 The regulation and control of air traffic;

 Municipal traffic services;
 Policing;
 Health and security;
 The provision of water;
 Fire fighting;

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 Services for the functioning of courts;

 Correctional services; and
 Blood transfusion services.

11 9 Disputes in essential services

Disputes in essential services may be referred in writing to a council or the CCMA. If conciliation is
not successful, any party may request that the dispute be resolved through arbitration by the council
or the Commission.

11 10 Minimum services

The LRA creates mechanisms for employers and employees to conclude collective agreements
whereby part of an essential service may be regarded as a minimum service. The implication is that
the undertaking as a whole will not be regarded as an essential service, but that employees will still
be allowed to strike over matters that do not concern the minimum services.

11 11 Maintenance services

A service is a maintenance service if the interruption of that service has the effect of material physical
destruction to any working area, plant or machinery. Even though the employer will suffer losses, or
even though part of the stock will be lost, the business will not be designated as a maintenance
service on this account. The test is whether the strike will destroy the ‘wealth generating capacity’
of the business. If there is no collective agreement relating to the provision of a maintenance service,
an employer may apply to the essential services committee for a determination that the whole or a
part of the employer’s business is a maintenance service.

11 12 Replacement labour

An employer may take into employment persons to continue or maintain production during a strike
(scab labour). In negotiations during drafting of the LRA this was an important concession to
employers. The employer may not appoint such replacement employees permanently, as the
employees on strike are entitled to return to their jobs when the strike ends.

An employer may not take into employment any person to continue or maintain production during a
protected strike or lock-out, if the whole or a part of the employer’s service has been designated a
maintenance service, except if the lock- out is in response to a strike. To take into employment
includes the contracting the services of a labour broker or an independent contractor.

The employer may use his/her own employees who are not on strike to do the work of those who
are on strike. However, the employer may not dismiss employees who refuse to do the work of those

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on strike, except if the work is necessary to avoid risk to life, personal safety or health. Such a
dismissal would be deemed to be automatically unfair.

11 13 Protest action to promote or defend socio-economic interests of workers

Any employee who is not engaged in an essential service or a maintenance service has the right to
take part in protest action if—

(a) the protest action was called by a registered trade union or federation of trade unions
(b) the registered trade union or federation of trade unions has served a notice on NEDLAC
stating—
(i) reasons for the protest action and
(ii) the nature of the protest action;
(c) the matter giving rise to the intended protest action has been considered by NEDLAC or
any other appropriate forum in which parties concerned are able to participate in order to
resolve the matter (a bargaining council will probably be regarded as an appropriate forum)
and at least 14 days before the commencement of the protest action, the registered trade
union or federation of trade unions has served a notice on NEDLAC of its intention to
proceed with the protest action.

Protest action is defined as the partial or complete concerted refusal to work, or the retardation or
obstruction of work, for the purpose of promoting or defending the socio-economic rights of workers,
but not for a purpose referred to in the definition of a strike.

Employees may not take part in such a work stoppage for political reasons, the action must aim to
improve the socio-economic interests of the workers.

An employee taking part in protest action that complies with the LRA enjoys the protection conferred
by the LRA on strikers. The Labour Court has exclusive jurisdiction to grant an order to restrain any
person from taking part in protest action.

11 14 Lock-outs

A lock-out is defined as the exclusion by an employer of employees from the employer’s workplace,
for the purpose of compelling the employees to accept a demand in respect of any matter of mutual
interest between employer and employee, whether or not the employer breaches those employees’
contracts of employment in the course or for the purpose of that exclusion.

The employer may take recourse to lock-out, but does not enjoy the right to lock-out, in contrast with
employees who do enjoy the right to strike. The implication is that employers who lock out do not
have the right to apply for an interdict prohibiting trade union actions such as the boycotting of

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products, picketing and secondary strikes that aim to force the employer to end the lock-out.
Application for an interdict would amount to discrimination on the ground of exercising a right
conferred by the LRA. The employer does not have to pay employees during a protected lock-out.

12 WORKPLACE FORUMS

A workplace forum may be established in any workplace at which an employer employs more than
100 employees. Any representative trade union may apply to the Commission for the establishment
of a workplace forum. The establishment of a workplace forum is aimed at democratising the
workplace and to steer away from confrontation to a model of consultation and joint decision-making
about issues that do not impact on the remuneration of employees. The latter will still have to be
determined by negotiations between the employer and trade unions.

Examples of matters for consultation in a workplace forum:

 Restructuring the workplace, changes in the organisation of work

 Partial or total plant closures
 Mergers and transfers of ownership in so far as they have an impact on employees
 The dismissal of employees for reasons based on operational requirements, etc.

Although workplace forums have been successfully established in sophisticated labour law systems
such as Germany, trade unions in South Africa did not ‘buy in’ to the system and workplace forums
do not feature prominently in the South African labour law. The reason is probably that the LRA
provides that workplace forums have to be initiated by a trade union. Trade unions may be wary that
workplace forums may take over their leading role in employer-employee relationships.

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CHAPTER 8

DISPUTE RESOLUTION AND REMEDIES

After having studied this chapter you should be able to

 Distinguish between disputes that have to be referred to a bargaining council
or the CCMA and those disputes that have to be referred to the Labour Court
 The stages of dispute resolution
 The remedies that may be ordered by the CCMA and the Labour Court
 The difference between appeal and review
 The circumstances in which proceedings in a case heard at the CCMA could
be reviewed
 The circumstances in which the CCMA or Labour Court will not order
reinstatement or re-employment

1 INTRODUCTION

The LRA establishes mechanisms for peaceful collective bargaining to encourage labour peace.
However, disputes will never be ruled out completely. The LRA provides for different ways to resolve
disputes to ensure that parties do not strike or lock-out for every unresolved dispute. When the 1956
LRA was still in force, parties had the option to strike over every matter that was not the subject of
an agreement, or part of essential services. The present LRA confers certain rights over which
parties may not strike, with the exception of organisational rights. Parties may only strike or lock-out
when there is a conflict of interest, in other words when the aggrieved party does not have a right to
what he or she wants (a higher wage, more annual leave than provided for in the BCEA, etc.)
Employees who strike over disputes of rights, will not enjoy protection against dismissal.

The LRA provides for three ways in which disputes of right may be resolved. The dispute may be
referred for conciliation to a bargaining or a statutory council (if such a body has been established
for the relevant sector) or to the Commission for Conciliation, Mediation and Arbitration. Parties may
also use the services of private dispute resolution bodies. If attempts to reconcile the parties are
unsuccessful, the dispute may, in certain instances, be referred for arbitration and in other instances
the dispute will be adjudicated by the Labour Court. If parties agree, these disputes may also be
arbitrated. Arbitration differs from a court case in that the arbitration procedures are final.

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There is no appeal to a higher body. In the case of irregularities, it is possible that the case may be
reviewed. If the case is adjudicated by a court, a party may appeal from the Labour Court to the
Labour Appeal Court.

2 ARBITRATION

If a dispute remains unresolved after conciliation, the Commission must arbitrate the dispute if the
Act requires the dispute to be arbitrated and any party to the dispute has requested that the dispute
be resolved through arbitration. If a party to the dispute would otherwise be entitled to refer the
dispute to the Labour Court for adjudication and, instead, all parties agree in writing to arbitration
under the auspices of the Commission, the Commission must arbitrate the matter (Section 133).

Section 138 obliges the Commissioner to conduct the arbitration in a manner that they consider
appropriate in order to determine the dispute fairly and quickly, but the substantial merits of the
dispute must be dealt with the minimum of legal formalities.

In arbitration proceedings the dispute will be heard anew. The disciplinary record will not be taken
into account, unless parties agree to it.

In disputes about dismissal based on misconduct and incapacity the parties may only be
represented by a legal practitioner if both parties and the Commissioner agree thereto.

Parties may give evidence, call witnesses, question the witnesses of any other party, and address
concluding arguments to the Commissioner. If all the parties consent, the Commissioner may
suspend the arbitration proceedings and attempt to resolve the dispute through conciliation.

The Commissioner must assist parties who have a lack of knowledge or experience to ensure that
the other party does not benefit unfairly from this.

Section 5A of the LRA provides that the council or Commission must commence the arbitration
immediately after certifying that the dispute remains unresolved if the dispute concerns a dismissal
or unfair labour practice relating to probation. Any other matter in which the employee has alleged
that the reason for dismissal is related to the employee’s conduct or capacity, or in the case of
constructive dismissal, or if the employer provided the employee with substantially less favourable
conditions after a transfer, or the employee alleges an unfair labour practice, may be arbitrated
immediately after unsuccessful conciliation, provided that the parties do not object.

At the request of the employer, the Commission or a council may with the consent of the employee
conduct an arbitration into allegations regarding the conduct or capacity of that employee (section
188A). If this procedure is followed, the duplication of procedures (i.e. a disciplinary hearing followed
by arbitration) will be avoided.

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2 1 Awards

Within 14 days of the conclusion of the arbitration proceedings the commissioner must issue an
arbitration award with brief reasons for such award. An arbitration award is final and binding and
may be enforced as if it were an order of the Labour Court, provided the award has been certified
by the Director of the CCMA. There is no appeal to the Labour Court but the award may be reviewed
by the Labour Court in case of a defect in the proceedings. The award may be enforced by way of
contempt proceedings in the Labour Court and a warrant of execution may be levied against the
property of a person who has been ordered to pay a sum of money.

2 2 Review

The proceedings may be reviewed by the Labour Court if any party to a dispute alleges a defect in
the arbitration proceedings. A defect means that the Commissioner committed misconduct in
relation to their duties as an arbitrator, or committed a gross irregularity in the conduct of the
arbitration proceedings, or exceeded the Commissioner’s powers, or that an award has been
improperly obtained. In Mutual & Federal Insurance Co Ltd v Commission for Conciliation, Mediation
& Arbitration & others54 the Labour Court found that the commissioner was prejudiced because he
did not allow the employer the opportunity to question the witnesses of the employee. Moreover, the
commissioner had declared that the employer’s manager was incompetent. The dispute was
referred back to the Commission for arbitration by another Commissioner.

3 THE LABOUR COURT

3 1 Representation

In proceedings before the Labour Court, a party to the proceedings may appear in person or be
represented only by a legal practitioner, any member, office bearer or official of that party’s
registered trade union or employers’ organisation, or a designated agent or official of a council or
an official of the Department of Labour.

3 2 Jurisdiction

The Labour Court has exclusive jurisdiction in respect of all matters reserved for it by the LRA or
any other Act. Parties may appeal against a judgment of the Labour Court to the Labour Appeal
Court.

54
12 BLLR 1610 (LC)

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The Labour Court has concurrent jurisdiction with the High Court in respect of any alleged violation
or threatened violation by the State in its capacity as employer and in respect of any dispute over
the constitutionality of any executive or administrative act or conduct by the State in its capacity as
employer. The Labour Court also has jurisdiction over disputes in respect of the Employment Equity
Act. The High Court has concurrent jurisdiction with the Labour Court over disputes in respect of the
Basic Conditions of Employment Act.

The High Court retains common law jurisdiction over labour law matters, especially in respect of
strictly contractual matters. The High Court recently ruled that it had jurisdiction in respect of a
dispute about a fixed-term contract that had been terminated before the agreed time55. The court in
this case ruled that it was not bound by the maximum compensation provided for in the LRA, but
that the employee could be compensated for the total of the remaining period of the contract.

The Labour Court may refuse to entertain a dispute if it is not satisfied that a prior attempt has been
made to resolve the dispute by conciliation.

The jurisdiction of the Labour Court may be classified as follows:

321 Freedom of Association

• Disputes in respect of the right to freedom of association (sec 7)

• Disputes in respect of freedom of association and victimisation (sec 9 (4))

322 Bargaining Councils

• Interpretation or execution of the awards of bargaining councils

• Admission of parties to bargaining councils
• Winding up of Councils and cancellation of the registration of a council

323 Strikes and lock-outs

• A dispute in respect of picketing rules

• A dispute in respect of the reasonableness of a secondary strike
• Application by the employer to recover the monetary value of the payment in kind made at the
request of the employee during a strike or lock-out (sec 67(3))
• Interdicts and declaratory orders in respect of socio-economic protest actions (sec 77(2) read
with sec 77(4))

55
Fedlife Assurance v Wolfaardt (2001) 22ILJ 2407 (SCA)

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324 Trade unions and employers’ organisations

• A dispute about the alleged non-compliance with its constitution

• Winding up of trade unions and employers’ organisations for non-compliance with the
provisions of the LRA, or insolvency, or cancellation of registration (sec 103, 104 and 105)

325 Dismissal

• Automatically unfair dismissals (Section 187)

• Dismissal in respect of operational requirements (Section 189)
• Unprotected strikes and lock-outs and closed shop agreements
• Referrals from the CCMA in respect of dismissal on account of misconduct and incapacity in
cases where questions of law are raised by the dispute
• Referrals from the CCMA on account of the complexity of the dispute (Section 191(6))
• Disputes in respect of discrimination against employees in terms of the Employment Equity Act

3 3 Powers of the Labour Court

The Labour Court may make any appropriate order, including

• the granting of urgent interim relief (for example the temporary reinstatement of an employee)
• an interdict,
• •an order directing the performance of any particular act, which order, when implemented, will
remedy a wrong and give effect to the primary objects of this Act,
• a declaratory order,
• an award of compensation or damages, and
• an order for costs.

The Labour Court has powers of review in respect of a defect in arbitration proceedings before the
Commission (sections 145 and 158).

Proceedings in the Labour Court must be carried out in open court.

4 THE LABOUR APPEAL COURT

The Labour Appeal Court is the court of appeal in respect of all judgments and orders made by the
Labour Court in respect of matters within its exclusive jurisdiction. The Labour Appeal Court is a
superior court that has authority, inherent powers and standing, in relation to matters under its
jurisdiction, equal to that which the Supreme Court of Appeal has in relation to matters under its
jurisdiction.

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The Labour Appeal Court has jurisdiction in all the provinces of the Republic. The seat of the Labour
Court is also the seat of the Labour Appeal Court.

The Labour Appeal Court has exclusive jurisdiction to hear and determine all appeals against the
final judgments and the final orders of the Labour Court and to decide questions of law. Judgments
of the Labour Appeal Court are binding on the Labour Court and the CCMA. The Labour Appeal
Court is the highest court in respect of labour matters. Where a decision has to be made in respect
of constitutional rights, or a matter that in the view of the Constitutional Court is a matter or general
public interest, a party may in appropriate cases appeal from the Labour Appeal Court to the
constitutional court. In NUMSA v Fry’s Metals56 the Supreme Court of Appeal held that in exceptional
cases (when it is in the public interest) an appeal from the Labour Appeal Court to the Supreme
Court of Appeal will be allowed.

5 SUMMARY OF THE JURISDICTION OF THE CCMA AND THE LABOUR COURT

Disputes in respect of rights are divided into two broad categories by the LRA. The CCMA and
bargaining councils have the jurisdiction to arbitrate the following issues:

Organisational rights, the interpretation and application of collective agreements, disputes in respect
of interests in essential services, matters that have to be determined by joint decision-making and
the disclosure of information to workplace forums, dismissal on the grounds of misconduct and
incapacity, constructive dismissal, where the employer provided the employee with substantially
less favourable conditions after the transfer of a business, severance pay and unfair labour
practices.

The Labour Court has jurisdiction over the application and exercise of rights in respect of freedom
of association, the refusal of a party as member of a bargaining council, strikes and lock-outs, the
breaking of rules in respect of pickets and protest actions, dismissal in respect of strikes,
automatically unfair dismissals, dismissal in terms of operational requirements and discrimination
against workers in terms of the Employment Equity Act. (Section 191(5)(b)).

If the employee classifies the dispute incorrectly, the CCMA or Labour Court will not be bound
thereby, but the procedures may be stayed and referred to the appropriate body, or the Labour Court
may with the permission of the parties (and if it is expedient to do so) continue with the proceedings
with the court sitting as an arbitrator.

6 REMEDIES FOR UNFAIR DISMISSAL AND UNFAIR LABOUR PRACTICES

If the Labour Court or an arbitrator finds that a dismissal is unfair or that a certain labour practice is

56
(2002) 26 ILJ 689 (SCA)

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unfair, the Court or arbitrator may order the employer to reinstate or re-employ the employee, or to
pay compensation (Section 193). Reinstatement means that the employee will be in exactly the
same position as before the dismissal. Re- employment means that the employee will be newly
employed by the employer and it may be possible that the conditions of employment will not be
similar to those applicable before the dismissal.

The Labour Court or the arbitrator must require the employer to reinstate or re- employ the
employee, unless—

(a) the employee does not wish to be reinstated or re-employed,

(b) the circumstances surrounding the dismissal are such that that a continued
employment relationship would be intolerable;
(c) it is not reasonably practicable;
(d) the dismissal is unfair only because the employer did not follow a fair procedure.

Section 194 places limits on compensation. The compensation awarded to an employee who is
unfairly dismissed because the employer did not prove that the reason for the dismissal relating to
the employee’s conduct or incapacity was fair or related to the employer’s operational requirements,
or if the employer did not follow a fair procedure, or if the employee was subjected to an unfair labour
practice, must not be more than 12 months’ remuneration. Compensation awarded to an employee
whose dismissal is automatically unfair must be just and equitable in all the circumstances, but not
more than the equivalent of 24 months’ remuneration.

Where breach of contract is alleged and a party does not rely on the fairness of an act, the party to
the employment contract may still make use of the civil courts and parties are not bound to the
Commission or the Labour Court to enforce their rights.

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DISPUTE RESOLUTION FLOWCHARTS:

INTEREST DISPUTES:

Collective action
Conciliation (CCMA) (Employees strike or
Employer locks out)

RIGHTS DISPUTES:
High Court/
Contract Labour Court

BCEA Labour Court

High Court/
Constitution Labour Court

Rights Conciliation Arbitration

dispute Misconduct; (CCMA/ (CCMA/
Capacity; ULP Bargaining Bargaining
Council) Council

Operational
Conciliation
requirements;
(CCMA/ Adjudication
Strike
Bargaining (Labour Court)
dismissals;
Council)
AUD

Conciliation Arbitration
LRA (CCMA/ (CCMA/
S21; S16; S24
Bargaining Bargaining
Council) Council)

Arbitration
(CCMA/
Bargaining
Conciliation Council)
Discrimination (CCMA/
Bargaining Adjudication
Council) (Labour Court)

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CHAPTER 9

ECONOMIC EMPOWERMENT

After having studied this chapter you should be able to

 have a basic understanding of economic empowerment as provided for in
the Broad Based Black Economic Empowerment Act.
 understand the meaning of broad based black economic empowerment.
 know what the aims and objects of broad-based Black economic
empowerment are.
 identify the sources of the regulation of broad-based Black economic
empowerment.
 know what the relationship is between BBBEE ratings, scores, and levels.

1 INTRODUCTION

The premise for broad-based black economic empowerment (BBBEE) is to improve the participation
of Black people (defined as African, Coloured, and Indian people who are also South African
citizens) in the South African economy through economic transformation. The principles of BBBEE
recognise that even though the South African Constitution entrenches the right to equality for
everyone in South Africa, historical inequality persists which prevents previously disadvantaged
individuals from taking up the same opportunities as individuals who were advantaged by past
economic and societal policies. BBBEE is therefore also a way in which the South African
government aims to achieve the constitutional goal of substantive equality and equality of
opportunity.

Whilst BBBEE is not part of labour law there is a close relationship between the principles of BBBEE
and especially the EEA and the Skills Development Act, as all this legislation directly and indirectly
relate to economic empowerment. In addition, the affirmative action measures implemented by
employers (as discussed in Chapter 6) may, in certain instances, assist businesses in meeting the
requirements of BBBEE legislation. Note that affirmative action measures are aimed at ensuring that
an employer’s workforce is diverse and representative of all designated groups. The focus of
BBBEE is however more on diversity and representation in respect of the ownership and
management of businesses.

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2 OBJECTIVES OF BBBEE

The main objective of the BBBEE Act is to enable participation in the economy by Black57 South
Africans.

The stated objectives of the government’s BBBEE policy include to:

- empower more Black people to own and manage businesses. A business will be regarded
as Black-owned if at least 51% of the business is owned by Black people, and Black people
substantially manage and control the business;
- achieve change in the racial composition of business ownership and management;
- promote access to financing for black economic empowerment;
- promote human resource development and skills development of Black people;
- ensure that Black-owned businesses benefit from preferential procurement policies; and
- increase the extent to which Black women own and manage business and to improve their
access to economic activities, infrastructure, and skills development.

3 SOURCES OF RULES GOVERNING BBBEE

The rules regulating BEE in practice can be found in the:

- Broad-Based Black Economic Empowerment Act, 2003 (“BBBEE Act”);
- The general Codes of Good Practice on Broad-Based Black Economic Empowerment
(“General BBBEE Codes”); and
- Sector-specific Codes of Good Practice (“BBBEE Sector Codes”) which apply to entities
falling within the scope of that sector. If a specific BBBEE Sector Code applies to an entity,
the General BEE Codes will not apply to that entity.

The BBBEE Act should be read together with the different Codes as the BBBEE Act only provides
a framework to the regulation of black economic empowerment with the detail set out in the Codes.
There is a positive obligation on State institutions to apply the BBBEE Codes58 when making
decisions unless it is unreasonable to do so.

4 MEANING OF BROAD-BASED

The premise behind broad-based Black economic empowerment (as opposed to a narrower
understanding of the concept) is that Black economic empowerment goes further than ownership.
Black economic empowerment accordingly also encompass the need to ensure increased

57
All references to Black South Africans should be read to refer to Black South Africans as defined by the
BBBEE Act, which is inclusive of African Black, Coloured, and Indian individuals.
58
The General BBBEE Codes and the BBBEE Sector Codes are collectively referred to as the BBBEE Codes.

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participation of Black individuals in the management and control of businesses. The purpose of the
BBBEE Act’s references to broad-based Black economic empowerment is to highlight that the aim
of the legislation is to benefit all Black people and not only a wealthy elite.

Broad-based black economic empowerment is defined as:

- “the economic empowerment of all black people including women, workers, youth, people
with disabilities and people living in rural areas through diverse but integrated socio-
economic strategies that include, but are not limited to –
o Increasing the number of black people that manage, own and control enterprises and
productive assets;
o Facilitating ownership and management of enterprises and productive assets by
communities, workers, cooperatives and other collective enterprises;
o Human resource and skills development;
o Achieving equitable representation in all occupational categories and levels in the
workforce;
o Preferential procurement; and
o Investment in enterprises that are owned or managed by black people.”

5 BBBEE RATINGS, SCORES AND LEVELS

The BBBEE Act makes use of a scorecard method. The first aim of the scorecard method is ensuring
consistency in measuring empowerment, and aligning the way in which different governmental
departments and agencies apply empowerment policies. The second aim of the scorecard method
is measuring progress made in achieving empowerment.

There is no general requirement that all businesses in South Africa must comply with BBBEE
legislation. There are also no sanctions in the legislation for businesses who fail to implement
BBBEE. The advantages for businesses in complying with these BBBEE requirements however
relate to better business opportunities, access to state contracts, and to benefit the South African
economy as a whole.

The BBBEE Codes refer to three types of companies:

- Exempt Micro Enterprises: businesses with an annual turnover of less than R10 million.
Depending on the level of Black shareholding, these businesses will receive an automatic
BBBEE level and rating.
- Qualifying Small Enterprises: businesses with an annual turnover of between R10 million
and R50 million. Depending on the level of Black shareholding, these businesses may
receive an automatic BBBEE level and rating. If the business has less than 50% black

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shareholding they must undergo a scorecard audit to determine the appropriate BBBEE level
and rating.
- Generic / large enterprises: businesses with an annual turnover of more than R50 million.
These businesses must undergo a scorecard audit to determine the appropriate BBBEE
level and rating.

In terms of the relevant rules governing BBBEE, companies will be given a BBBEE score which will
be used to determine the company’s BBBEE level, which in turn informs the company’s BBBEE
rating (e.g. the business may have a Level 2 BBBEE rating based on the scores awarded using the
BBBEE scorecard). The BBBEE level and rating may then affect the company’s ability to perform
certain economic activities:
- In certain industries (such as mining) companies require licenses to operate their business.
Relevant legislation in these industries may prescribe certain minimum percentages of Black
ownership that must be met before the company may be granted the necessary licence,
consent of concession to operate within that industry.
- The BBBEE rating of a business may also be taken into account in respect of transactions
with state entities and organs of state, where business with higher BBBEE ratings may have
an advantage in the selection process over those businesses with lower BBBEE ratings. 59
- Private entities contracting with suppliers for their own business may also require suppliers
to have a prescribed minimum BBBEE rating or level of Black ownership, as the use of
suppliers with high BBBEE ratings and high Black ownership will improve the BBBEE rating
of client-entities.

BBBEE ratings are determined with reference to five elements which are measured in different
weights in the determination of the BBBEE score. The BBBEE score is determined with reference
to historic information and the business circumstances in the business’ previous financial year.
Elements that are taken into account are ownership, management control, skills development,
enterprise and supplier development, and socio-economic development.

Once the company’s BBBEE score is determined, the score will be used to identify the company’s
BBBEE level and a certificate will be issued. The higher that the company’s BBBEE score is, the
higher the BBBEE level will be. A Level 1 BBBEE status is the highest status that may be achieved
based on the BBBEE score. Level 8 is the lowest level that is still regarded as compliant with BBBEE
legislation. Different thresholds also apply in respect of the size of the business. BBBEE certificates
are valid for one year from the date on which is it issued. BBBEE certificates are normally issued

59
Previously certain requirements existed in respect of preferential procurement and compulsory minimum BBBEE
ratings and levels for all businesses contracting with state-owned entities. The preferential procurement regulations
containing these rules have however been set aside and it is no longer compulsory for state entities to take BBBEE into
account when concluding procurement contracts.

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by accredited BBBEE verification agencies. Although the BBBEE Codes make provision for certain
targets in respect of each of the elements and for each type of company, points may still be awarded
on a pro rata basis if the target in the BBBEE Codes were not met. In certain instances, a failure to
comply with some of the sub-minimum requirements could result in the entity’s BBBEE status being
downgraded by one level.60

6 BBBEE OFFENCES AND FRONTING

The BBBEE Act provides that it is a criminal offence if a person knowingly:

- Misrepresents or attempts to misrepresent an entity’s BBBEE status.
- Provides false information or misrepresents information to a BBBEE verification professional
to secure a particular BBBEE status or benefit;
- Provides false information or misrepresents information relevant to assessing BBBEE status
to an organ of state or public entity
- Engages in a fronting practice.

Fronting is an intentional circumvention or attempted circumvention of the BBBEE Act and Codes.
Fronting is a transaction, arrangement or other act of conduct that directly or indirectly undermines
or frustrates the achievement of the objectives of the BBBEE Act, or the implementing of any
provisions of the BBBEE Act. Fronting does not require a misrepresentation by the guilty party in
relation to the true nature of the arrangement between the fronting parties. There is also no
requirement that the Black person involved in the fronting practice should have been exploited, and
financial benefit to the Black person will not be a defence for the business who is involved in fronting.
Fronting is regarded as fraud and is therefore a serious criminal offence. Any person who is actively
involved in the fronting exercise, or anyone who reasonably could have been expected to know
about a fronting scheme may be found guilty. Ignorance will therefore not be a defence if it can be
shown that the person ought to have known about the fronting scheme and should have investigated
the matter or should have exposed the fronting scheme.

The types of arrangements that may amount to fronting include:

- When a Black person is appointed to a business, but is discouraged or prevented from
substantially participating in the primary activities of that business.
- When the economic benefits that flow from the implementation of BBBEE policies, and the
BBBEE status of a business does not reach the Black people in the ratio specified in the
legal documentation.

60
For example, a large enterprise that fails to comply with all three sub-minimum requirements in the relevant
Code will be downgraded by one level, or a qualifying small enterprise that does not comply with the sub-minimum
requirements in respect of ownership will also be downgraded.

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- When a legal relationship is concluded with a Black person so that the business may obtain
a certain BBBEE compliance level, but the Black person does not receive the economic
benefits that would reasonably have been expected to be associated with the position held
by the Black person.
- The conclusion of agreements with other businesses to achieve a certain BBBEE status by
leveraging an intermediary’s favourable BBBEE status, where the agreement either
expressly or impliedly places limits on the identity of suppliers, service providers, clients or
customers; it is improbable that the business operations could be maintained taking into
account available resources; and the terms and conditions of the agreement were not
negotiated at arm’s length.

Examples of BBBEE fronting include:

- A company that claims low salaried Black employees (such as gardeners or drivers) are
directors or hold a senior position to enable the company to secure business contracts.
- A company listing Black employees as executives or shareholders without the employee’s
knowledge or agreement, when they are not.
- Paying Black executive employees significantly lower salaries compared to the salaries paid
to other executives.
- Black managers being excluded or prevented from active participation in high-level decision
making processes.

A party that is found guilty of fronting may be held criminally liable. Sanctions include a fine and/or
imprisonment for a period of not more than 10 years. Business can also be fined up to 10% of their
annual turnover. If a BBBEE verification professional becomes aware of or attempts to commit
fronting, the verification professional may also be liable for a fine and/or imprisonment of a period
not more than 12 months. If a business has been found guilty of fronting, the business will be
prohibited from doing business with state entities for a period of up to 10 years, but the court has a
discretion to apply this limitation to only those individuals who were involved in the fronting practice.

7 THE BBBEE COMMISSION

The BBBEE Commission was established in 2016. The Commission oversees the implementation
and application of the BBBEE Act. The Commission also maintains a registry of major BBBEE
ownership transactions (i.e. where the transaction value equals or exceeds R25 million). The
Commission does not have to authorise these major BBBEE ownership transactions, but may
assess the transaction to determine if there are any BBBEE related concerns with the transaction.
Any concerns identified should then be addressed by the parties, as the Commission may
investigate if the concerns are not appropriately addressed.

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The Commission may also receive and investigate any complaints relating to the implementation of
BBBEE or they may launch an investigation on their own initiative. Employees of a business or
members of the general public may lodge complaints with the BBBEE Commission in relation to
potential fronting practices. The Commission should then investigate the complaint. If the
investigation confirms that fronting may have occurred the Commission may refer the matter to the
SAPS and the National Prosecuting Authority for criminal investigation and prosecution. If relevant,
the Commission may also refer matters to SARS or another regulatory authority. The Commission
does not have authority to impose penalties or criminal sanctions and any activities that contravene
the BBBEE Act must be dealt with through the courts. The Commission may however make findings
on whether a practice by a business in respect of BBBEE amounts to fronting, and accordingly have
wide investigative powers.

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