Essentialia The contract of employment is an agreement between two parties in terms of which one party (Mr. Phage) places his labour potential at the disposal and under the control of the other party (Lifeline services), in exchange for some form of remuneration. From this definition, it is clear that the essentialia of a contract of employment are 1. Work and 2. Remuneration. This contract does not meet the requirement for work because even though an ambiguous job title of ‘General Worker’ has been given, no type of work or job description has been specified.
The contract states that the employee will perform ‘any and all duties’ required by the employer without specifying a particular field or area of expertise with which that relates to. As a result that no specified tasks have been assigned: a)It is impossible for the employee to agree to an appropriate remuneration. b)It is impossible to identify under what circumstances disciplinary action may be taken in areas such as under / non-performance. The contract does however meet the requirements for remuneration. The amount is certain and fixed at the sum of R3000 which is paid monthly in Cash. Control Test
An employment contract states that an employee is subject to the authority and supervision (control) of the employer. However, the amount of control an employer can exercise over an employee is questionable. However, the degree of control they have which allows them to decide how an employee’s labour is to be utilized is referred to as the control test. The control test requires one to consider all the facts as they appear from the agreement between the parties, their practices and customs in order to decide whether or not the relationship has the appearance of an ordinary contract of employment.
The Employee, Mr. Phage: I. Is obliged to render his services personally and may not delegate this obligation – From the contract, it can be ascertained that he is indeed obliged to personally render the services as his hours of work, days of work, lunch breaks and details of his leave have been set out in the contract. II. Keep fixed hours and is paid a regular wage or salary –Mr. Phage has fixed hours from 7 a. m. to 10 p. m. Though the legality of these hours is in question, the fact remains that they are clearly stated in the contract.
With regards to a regular wage, Mr. Phage receives a monthly salary of R3000 per month. III. Is subject to the alleged employer’s disciplinary code – Though this has not been specifically stated, it can be assumed that Mr. Phage is under the company’s disciplinary code as the Employer has left the conditions under which employment can be terminated as being very broad to possibly include the disciplinary code if one exists. IV. Is entitled to benefits, such as membership of a pension fund or medical aid scheme – From the details of the contract, Mr.
Phage is not entitled to any pension fund or medical scheme. V. Is subject to a degree of control by the employer – Mr. Phage is under a great deal of control by the employer. Under job description, the employer can ask Mr. Phage to undertake any task. Though the legality of this statement is in question, Mr. Phage is definitely under the control of the employer. From this control test, it can be concluded that Mr. Phage is indeed an employee of Lifeline Services, however the legality of certain aspects of his contract needs to be investigated. This is covered in the next section.
Contract compliancy with Legislation It is to be noted that even though a contract may comply with the essentialia of an employment contract and the control test, it may not be compliant with the relevant legislation which governs a valid employment agreement. We will now test the detail of the contract to check if it complies with The Basic Conditions of Employment Act 75 of 1997 (hereinafter referred to as BCEA), the Labour Relations Act 66 of 1995 (hereinafter referred to as LRA) and the Employment Equity Act 55 of 1998 (hereinafter referred to as EEA).
A copy of the contract has been added as an Annexure at the end of this assignment. In perusing the contract, one will note that in certain sections it does comply with elements of the labour legislation and in other instances it does not. We will highlight in which area’s/sections the contract does not meet with the legislation and why (i. e. point out what the relevant legislation requires in order for certain sections to be deemed as lawful), then suggest ways in which the contract can be amended in order to make it lawful. Extent to which the contract does not meet legislation:
For ease of reference we have highlighted the areas in which the contract has not abided by the proper legislation in red (see annexure 1-contract of employment) and we will be discussing which legislation governs it and provide remedies as to how to address these areas to ensure that they comply with the law. The Termination of Employment – the current contract states that upon agreeing to the contract, the employer will have the right to terminate the contract at any point without notice, and for any reason it deems suitable.
This is however not legally correct as the BCEA state that any employer may only terminate employment with a valid reason recognised by law such as incapacity or misconduct. Even in these cases, an employer needs to supply the employee with notice periods as follows: •Where the employee has been employed for less than 6 months – 1 week’s notice •Where the employee has been employed for more than 6 months, but less than a year – 2 weeks’ notice •Where an employee has been employed for more than 12 months – 1 months notice is required.
Furthermore, the employer must submit this notice in writing to the employee and only in cases where the employee is illiterate is a verbal notice acceptable. It is not reasonable for Lifeline services to request 4 months notice period from Mr. Phage unless the same 4 month notice period applies to both parties. Summarily dismissal (where an employer has legal grounds to dismiss an employee without notice) takes place in cases of gross misconduct or when a valid and fair reason exists.
Schedule 8 of the LRA contains a “Code of Good Practice: Dismissal” where guidelines are set out by the LRA as to what constitutes good practice in a lawful dismissal. If these guidelines are not adhered to, the employee is able to take legal action against the employer – one such avenue provided by the LRA is the Commission for Conciliation, Mediation and Arbitration (CCMA). Our recommendation is that the contract should state the guidelines for notification of termination of employment as set out by the BCEA and have the employers disciplinary codes, policies and procedures attached.
Remuneration – Although under the BCEA there are no clear guidelines on salary increase, there is allowances made under the EEA which makes reference to fairness and equal treatment of staff. Therefore if there are other employee’s within the company who perform a similar function who are getting an annual increase (and Mr. Phage is performing to a similar standard of work), then he would have the legal right to contest the increase dilemma.
Also if the employee is part of the a Trade Union (such as COSATU as an example), then the LRA does make allowance for certain actions to be taken by the employees which form part the relevant Trade Unions constituency so as to negotiate a higher salary within a legally permissible framework. One such example would be mass strike action to force the employer to agree to salary increases when warranted (usually on an annual basis). Hours of work – the hours of work required by the employer in the current contract totals 15 hours per day, 7 days per week with no overtime pay.
This is unlawful. According to the BCEA an employee may work a maximum of 45 hours per week and not more than 9 hours per day. Also, that by agreement, a person is allowed up to 10 hours of overtime per week at a rate of 1. 5 times the normal salary rate, and on a Sunday at a rate of 2 x the normal salary rate. In the case of the current contract, the employer has stated that no overtime pay will be paid whatsoever and that the excess hours and Sunday work will be taken as normal working hours and remunerated accordingly.
From a social perspective, if the above treatment – prolonged working hours – is the case for a group of employee’s, collective bargaining can again be a consideration as the employer may be faced with mass action to rectify the unfavourable working conditions, as one of the aims of the LRA (and the collective bargaining process) is to ensure social justice for employees and prevent unfair treatment of its members (i. e. employees).
In order to address the above to make sure it complies with law, the employer would need to ensure that the shifts are reduced to a maximum of 9 hours per day (with a break of 1 hour after 5 consecutive hours of work), as well as to ensure that the employee has at least 1 day (or 12 hours) between the ending of one shift and the beginning of the other, and that the employee must be granted at least 36 hours of rest in any given week. Overtime must be paid to the employee after the 45 hours per week have been exceeded, as well as on Sunday’s (if no off-time is given in lieu of Sunday work) and public holidays.
Leave Entitlements – no paid sick leave has been granted to the employee in this contract, and the annual leave accrual rate is set out at 10 days for every 12 months worked. Legally, this contravenes the BCEA which stipulates that an employee should accrue annual leave at a rate of 15 working days for every leave cycle (normally a 12 month period). Mr. Phage is also entitled to paid sick leave which is the total number of days a staff member would have worked in a six-week period, and this is granted over a 3 year period. However, during the first 6 months, the employee is only entitled to 1 day’s paid sick leave for every 26 days worked.
Emphasis is made on paid sick-leave, as the employer is required to make payment for all sick leave taken, provided that requirements laid out by the BCEA are met by the employee (e. g. to provide a certificate as proof of illness when required). In order for the contract to be deemed lawful in respect of leave entitlements, this area needs to be rectified to cater for the allowances listed above. Remuneration and amendments to the contract – again the issue of remuneration is revisited at the end of the contract where it states that any deductions can be taken from the employee’s salary advice and that at the discretion of the employer.
Legally, any deductions made must first be made known and consented to by the employee before the deduction can be made. And therefore this needs to be stated in the contract and adhered to in order to be lawful. Employment Equity Act – the contract itself does not directly contravene the Act, however it is important to mention the Act in terms of any employment contract entered into, as it governs the manner in which the employer manages Equity in the workplace.
To ensure that the employer is meeting with its legal responsibility to adhere to the act, it needs to meet with its responsibility to eradicate unfair discrimination in the workplace and redress the effects of discrimination in terms of its recruitment & selection process for new employees, as well as the management of existing talent in terms of training and equipping the current staff; it needs to promote equality and exercise true democracy and have a workforce representative of diverse people.