If the proposed amendments to the LRA are implemented wealthy employees will forfeit any statutory protection against unfair dismissal, but it may be unconstitutional.
Employers will be able to terminate the employment of employees earning above a certain threshold, still be determined by the Minister of Labour, on notice of three months, or pay them instead of notice. In other words the common law notion of ‘just because’ will be revived in place of ‘just cause’ or fair reason. This follows from the proposed s 188B(2) which deems such dismissals ‘to be for a fair reason and to have been effected in accordance with a fair procedure as contemplated in section 188’ unless the employee can prove that the dismissal was ‘automatically unfair’ as provided in s 187 of the LRA.
Prior to 1979 our common law applied a ‘just because’ notion relating to termination of employment. Provided ‘reasonable notice’ was given, the other party had no ‘cause of action’ (legal claim) based on the dismissal. Payment instead of notice was also acceptable.
The common law also provided that when a party terminated the contract summarily (without proper notice) the other party had a legal claim based on breach of contract. But then the party who terminated the contract could prove that the other party had breached the contract in a material respect entitling the innocent part to end the relationship without notice. See also an earlier post (Labour law amendments: BCEA and LRA – suggestions for a proper approach to ‘dismissals’).
As pointed out in a recent post (SCA: Onus of proof in application proceedings – need for ‘clear and compelling’ evidence) the applicable test may require clear and compelling (convincing) evidence of such material breach and not just proof on a balance of probabilities.
As we know in 1979 parliament changed the common law and introduced a new legal claim based solely on fairness. That allowed employees to institute legal action for ‘unfair dismissals’. In 1982 the ILO adopted a Convention that approached the problem holistically. Employers had to have ‘just cause’ to dismiss but were not required to prove any breach of contract or fault on the employee’s part.
In other words the ILO protected the business interests of employers if they followed a fair procedure but did not require any proof of employee fault. Dismissal would be fair if the reason related to the employee’s conduct or capability. But the ILO also protected employees. Employees only forfeited rights to notice and severance benefits if the employer proved ‘gross misconduct’.
As has already been pointed out (Severance pay & operational requirements – amend the BCEA ) fault in the form of breach of contract was only really relevant to the forfeiture of notice and severance benefits and not a requirement for the dismissal.
Although South Africa has not formally ratified that ILO Convention, strange as it may seem, the LRA of 1995 does comply with some of the provisions in the Convention. Apart from fair procedures employers must prove ‘just cause’, or a fair and valid reason, related to the conduct or capability of the employee or base the reason on the operational requirements of the business.
Our statutory law deviates from the ILO Convention in that the right to severance pay only arises when the employer states that the reason for dismissal is based on operational requirements. The ILO Convention protects the rights of employees and they only forfeit the rights to notice and severance benefits when their conduct can be regarded as serious or gross.
The proposed insertion of s 188B will revive the common law principles and only require employers of such wealthy employees to provide notice of three months, or pay them instead. There will not be any need to follow any procedures nor to provide any reason, let alone a valid and fair reason. If that is what the Cabinet has already agreed to, and it is likely to become part of the statutory law, then why should those employees not have a right to severance benefits ?
It seems that employers will still be allowed to dismissal summarily (without three months notice) but then the wealthy employees will be protected and employers will be required to prove both lawfulness and fairness. If a wealthy employee is dismissed on three months notice it could be assumed that there was no gross misconduct. In all probability the reason is really part of risk management or operational requirements, in the broad sense, and there is no good reason why such employees should not also have a legal claim for severance pay in terms of section 41 of the BCEA.
Severance pay must be paid after expiry of fixed term contracts longer than 24 months.
It will be seen from the proposed section 198B(10) that an obligation to pay severance pay will be imposed on employers who engage employees on a fixed-term of longer that 24 months if an employee “is engaged on account of a temporary increase in the volume of work which is not expected to endure beyond 12 months” [ss 4(b)]
“An employer who engages an employee on a fixed term contract for a reason contemplated in subsection (4)(d) for a period exceeding 24 months must, subject to the terms of any applicable collective agreement, pay the employee on expiry of the contract one week’s remuneration for each completed year of the contract calculated in accordance with section 35 of the Basic Conditions of Employment Act.” [bold type added].