Spies v Mi-C3 Holdings SA (Pty) Ltd [2010] 11 BLLR 1208; (2011) 32 ILJ 149  (LC) decided on 28 July 2010 per Molahlehi J.

When is an employee allowed to cancel an employment contract as a result of the employer’s conduct   When is an employee obliged to accept a change of employment conditions?  What is the true cause of action – breach of contract or a claim based on statute?  What is the test for a repudiation of contract?

The labour court upheld a claim [section 77(3) of the Basic Conditions of Employment Act 75 of 1997] and awarded damages for the balance of a fixed-term employment contract after holding that the employer had in fact repudiated the contract thus entitling the employee to cancel the contract and claim damages.

The applicant was employed as an IT engineering/implementation specialist on a one year fixed-term contract.   There was a ‘rotational provision’ in the contract requiring the applicant to work outside the country.   The applicant was informed that he would not be returning to Nigeria and needed to undergo further training in Midrand.   But the employer insisted that the applicant would have to accept a substantial reduction in salary.

The applicant rejected the offer which he regarded as a material change to his conditions of employment.  The applicant was given an ultimatum which he turned down and refused to report for duty.

For some strange reason the applicant referred a dispute to the CCMA alleging demotion in terms of section 186(2)(a) of the LRA.  It seems that proceedings were then instituted in the labour court with a cause of action based on repudiation of contract.  This required the labour court to decide whether the employer had repudiated the contract.  Molahlehi J correctly held that the applicant had to prove that the employer breached the contract.

In deciding that the employer had repudiated the contract Molahlehi J referred to the following passage in paragraph [16] of Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd [2001] JOL 7804 (SCA):

“…; repudiation is accordingly not a matter of intention, it is a matter of perception.  The perception is that of a reasonable person placed in the position of the aggrieved party.  The test is whether such notional reasonable person would conclude that proper performance (in accordance with the true interpretation of the agreement) will not be forthcoming”.

Quoting from paragraph [18]:

“The conduct from which the inference of impending non- or mal-performance is to be drawn must be clear-cut and unequivocal, i.e. not equally consistent with any other feasible hypothesis.  Repudiation, it has often been stated, is ‘a serious matter’ .   .   .   requiring anxious consideration and – because parties must be assumed to be predisposed to respect rather that to disregard their contractual commitments – not lightly to be presumed.”

Concerning the claim for damages and mitigation the labour court was not persuaded by arguments of the employer and awarded the full amount the applicant would have earned during the balance of his fixed-term contract.