On 15 February 2010 Wallis AJA delivered a landmark judgment in SA Maritime Safety Authority (SAMSA) v McKenzie; [2010] 5 BLLR 488 ; (2010) ILJ 529 (SCA) (17/09) [2010] ZASCA 2.

Multiple causes of action based on the termination of employment have long given rise to controversy in South Africa.   Are employees confined to a statutory cause of action in terms of the LRA (the right not to be unfairly dismissed) or is there an additional cause of action based on breach of contract and an implied term of “fairness”, whatever that may mean?

Reliance has been placed in the past on decisions of the House of Lords in the United Kingdom, more particularly with regard to the reciprocal duties of trust and confidence in the employment relationship.   However, until now it seems to have escaped the notice of practitioners that in 2001 in Johnson v Unisys Ltd the House of Lords conclusively ruled on the issue of multiple causes of action.

The House of Lords decided that

“a common law right embracing the manner in which an employee is dismissed cannot satisfactorily co-exist with the statutory right not to be unfairly dismissed”.

The Supreme Court of Appeal has now unanimously agreed with that reasoning and added

“there is the further bar in South Africa that the legislation in question has been enacted in order to give effect to a constitutionally protected right and therefore the courts must be astute not to allow the legislative expression of the constitutional right to be circumvented by way of the side-wind of an implied term in contracts of employment”.

The facts are provided in para [1] of the judgment:

“Mr McKenzie was formerly employed by the South African Maritime Safety Association (SAMSA) as its chief internal auditor, but was dismissed on 1 March 2005 in a manner that he alleges was both procedurally and substantively unfair.   After pursuing his remedies under the Labour Relations Act 66 of 1995 (‘the LRA’) and reaching a settlement with SAMSA in terms of which he was paid an amount equivalent to one year’s salary, he instituted the present action claiming that his contract of employment was subject to ‘an explicit, alternatively implied, further alternatively tacit term … that the employment contract would not be terminated by the Defendant or the Plaintiff without just cause’.   He then alleged that this term had been breached in consequence of his having been dismissed ‘in a procedural and substantive unfair manner’.   This he contended entitled him to claim damages calculated on the basis that he would otherwise have continued working for SAMSA until his retirement.   The amount he claims is R5.2 million”.

The SCA allowed the appeal and altered the order of the High Court, which had the effect of dismissing Mr McKenzie’s claim.

Wallis AJA made some important points in the course of an erudite judgment.

In para [14] Wallis AJA writes:

“The fundamental difference between rights arising from a contract and rights arising from statute is that the former depend upon the actual or imputed consent of the parties whilst the latter are imposed by the legislature in order to give effect to social policies underpinning the legislation”.

In para [22] Wallis AJA goes on to explain:

“The arrangements in these sections constitute a legislative scheme for giving effect to the right not to be unfairly dismissed.   The scheme is enacted as a package embodying the right itself together with sections that

  • explain what is a dismissal (s186);
  • identify automatically unfair dismissals (s187) and
  • state the test for determining when other dismissals are unfair (s188); and
  • prescribe the procedures to be followed in relation to dismissals for operational reasons (ss189 and 189A).

It then stipulates

  • the mechanism for dealing with disputes over unfair dismissals (s191);
  • deals with the onus of proof in proceedings concerning such disputes (s192) and
  • prescribes the remedies that flow from an unfair dismissal (ss193 and 194)”.

In para [35] it is stated that :

“Where the common law, as supplemented by legislation, accords to employees the constitutional right to fair labour practices there is no constitutional imperative that calls for the common law to be developed.   Indeed, to duplicate rights that exist by statute does no more than to create the ‘jurisdictional quagmire’ that is referred to by Tamara Cohen”.

Wallis AJA concludes that para by writing:

“Professor Darcy du Toit sums it up as follows: ‘To infer the existence of a common law right duplicating the statutory right is to call into question the purpose of enacting the statutory right’.”

Confronted by various recent decisions of the SCA that on the face of it appear to have created such a common law right Wallis AJA was forced to discuss them in some detail.

Wallis AJA concludes in para [56] that:

“In my view the interpretation given to the cases mentioned goes further than the judgments warrant and they provide no obstacle to the correctness of the analysis set out above.   That analysis concludes that, insofar as employees who are subject to and protected by the LRA are concerned, their contracts are not subject to an implied term that they will not be unfairly dismissed or subjected to unfair labour practices.   Those are statutory rights for which statutory remedies have been provided together with statutory mechanisms for resolving disputes in regard to those rights”.

Wallis AJA also points out that it is necessary to recognise that the concern is not with jurisdiction issues but with the substantive rights of the parties (see para [57]).