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Why automatic termination clauses are unenforceable

Why automatic termination clauses are unenforceable

Many employers include clauses in their contracts of employment that would justify the termination of the agreement if the clause were met. The rationale behind this is that the termination itself does not emanate in or entail the principles and requirements of our labour law, but that it takes place entirely in the sphere of contract law. This is a very clever idea to attempt to circumvent the requirements of substantive- and procedural fairness in dismissing an employee. Unfortunately, it is also utterly wrong in the context of labour law.

The main problem with the enforcement of such clauses arise in the constitutional right to fair labour practices, which right is entrenched in the Labour Relations Act (LRA) itself. Given how often rules and standards are bypassed, our courts have had ample opportunity to decide on dismissals based on automatic termination clauses.

In Mwelase and Others v Enforce Security Group and Others (2015) the court dealt with whether it is permissible to contract out of the right not to be unfairly dismissed. This is a very pertinent question to ask because if this is permissible, an employment contract could bypass any labour-related right on agreement between the parties. In this case, the employer was a private security service provider that entered into contracts with different clients and employed security officers on a temporary basis. A clause in the contracts of employment required each employee to agree that the termination of a contract between the employer and the client would automatically terminate the employee’s employment contract and most importantly, such termination would not be construed as a retrenchment but as a completion of contract.

This seems reasonable enough in theory, but when the client terminated the contract with the employer, the employer enforced the above clause. The employer was challenged by the employee’s trade union that relied on Section 189 of the LRA. It was the trade union’s view that the employer was under an obligation to retrench the employees and the employees were entitled to severance pay, both of which principles place certain procedural and substantive burdens on the employer in terms of the LRA.

The court found that the above clause has the effect of denying employees the right to challenge the fairness of the employer’s conduct and enforce their rights in terms of Section 189, which, among other things, includes consultation and severance pay. It simply did not matter that the employees assented to the terms and conditions of the employment contract, fully aware of what the consequences might entail, as the consenting adults that they were.

The court proceeded to discuss the case of Mahlamu v CCMA & Others (2011) 4 BLLR 381, where the court had to decide a similar question. The court held that the true test is whether the subject of the right was intended to be the sole beneficiary. The focus should therefore be placed on who is the beneficiary of any right and whether the decision to waive such a right contractually have any negative consequences for the beneficiary. It was found in the aforementioned case that the public interest rests with preventing exploitation and the waiver of their rights, as the ideological founders of labour rights had rightfully fought for. Accordingly, individuals cannot waive the right not to be unfairly dismissed. Allowing such waivers would not only be against public policy and the greater good, but would also fall directly in the hand of cunning employers who know that the unemployed would pretty much sign away their birth rights if it would help them to land a job.

ABOUT THE AUTHOR

Marius Victor obtained his BA and LLB degrees from the North-West University in 2009 and 2013 respectively. He completed his articles at Jansens Attorneys in Potchefstroom and was admitted as an Attorney of the High Court of South Africa in September 2014. Marius is currently practicing as a SEESA Labour Legal Advisor at the Pretoria office.

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