By Etienne Pretorius Tuesday, 11 December 2018

As an employer, reviewing your template for employment contracts on a regular basis is a good idea. In fact, a review of all policies and procedures should be done regularly. But that’s for another article. Let me provide an example of why contracts should be regularly reviewed.

Recently I have noticed a trend where employment contracts do not include the retirement age clause. The clause should make provision that the employee exits the business at an agreed retirement age. The Basic Conditions of Employment Act 75 of 1997 (hereon BCEA) is silent on this, and if retirement is not covered as a clause in terms of termination of contract, section 6 of the Employment Equity Act might apply. In terms of this Act the dismissal of an employee based on their age may be seen as discrimination if the employer cannot prove that there was an inherent requirement in terms of age for that particular function that the employee fulfilled. This will normally be extremely difficult to prove by the employer. In terms of section 187(1)(f) of the Labour Relations Act 66 of 1995 (hereon LRA) the dismissal of an employee based on their age will be automatically unfair. Such a dispute would be dealt with by the Labour Court and up to 24 months of the employee’s remuneration may be awarded as compensation.

Subsequently, there are then only three ways an employer can terminate (dismiss) and employee. A dismissal is unfair if it is not affected for a fair reason and in accordance with a fair procedure. The LRA has rendered dismissals for certain reasons impermissible in any circumstance, and confined permissible reasons being misconduct, incapacity or those related to the employer’s operational requirements, provided those reasons are fair, and provided that before dismissing for these reasons the employer follows a fair procedure.

Some employers heed these sorts of cautions, but those that don’t normally find themselves in hot water. If the employee decides to pursue the matter it could cost the employer a bunch of money. Often employers don’t consider the collateral damage. Morale and a culture of transparency often erode if methods which could be construed as unfair labour practice are used. Admittedly employees often raise application for CCMA (or bargaining council) arbitration for frivolous reasons. That is the pleasure of our progressive labour legislation and requirements. But should there be an instance where the employer is seen to be unfair, the costs are severe, far reaching and more than merely financial.

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