Labour clause not en­force­able

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW -

ror in law. The Labour Court up­held the re­view on the ba­sis that the “au­to­matic ter­mi­na­tion” clause pre­cluded Mahlamu from ex­er­cis­ing his right not to be un­fairly dis­missed in terms of the Labour Re­la­tions Act. The court went fur­ther to say that the “au­to­matic ter­mi­na­tion” clause would be in­valid un­less the Labour Re­la­tions Act per­mit­ted such con­trac­tual pro­vi­sion. In find­ing that this was not per­mis­si­ble, the court held that “par­ties to an em­ploy­ment con­tract can­not con­tract out of the pro­tec­tion against un­fair dis­missal af­forded to the em­ployee whether through the de­vice of ‘au­to­matic ter­mi­na­tion’ pro­vi­sions or other­wise”.

As a re­sult, the court held that the au­to­matic ter­mi­na­tion of Mahlamu’s con­tract of em­ploy­ment con­sti­tuted a dis­missal for the pur­poses of the Labour Re­la­tions Act and Mahlamu was granted leave to re­fer the mat­ter to the Labour Court or CCMA.

This find­ing has pro­found and far­reach­ing con­se­quences as re­gards the en­force­abil­ity of an “au­to­matic ter­mi­na­tion” clause in­cluded in an em­ploy­ment con­tract which pro­vides for the au­to­matic ter­mi­na­tion of the em­ploy­ment con­tract, should the labour bro­ker no longer re­quire the ser­vices of the em­ployee. In terms of this case, this will now con­sti­tute a dis­missal for the pur­poses of the Labour Re­la­tions Act and the ag­grieved party will be en­ti­tled to re­fer the mat­ter to the CCMA or bar­gain­ing coun­cil on the ba­sis of an un­fair dis­missal claim.

The ef­fect of this is that labour bro­kers are now pre­cluded from in­clud­ing, or rather en­forc­ing, these “au­to­matic ter­mi­na­tion” clauses in em­ploy­ment con­tracts as this will be con­sid­ered a dis­missal un­der the Labour Re­la­tions Act.

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