Common Law Contract of Employment

Question 1

What is the nature of the employment contract in Labour Law?

Answer 1

It discusses the essentials of the employment contract, obligations of the employee and the employer, and termination of the contract.

Question 2

What are the common law principles in contracts of employment?

Answer 2

Common law principles in contracts of employment involve negotiation of terms between the employer and employee providing labour and services for remuneration and subjecting themselves to the employer’s supervision.

Question 3

What are the key aspects of the Control Test in the Ordinary Contract of Employment?

Answer 3

Key aspects include the degree of control by the employer, the ability to the issue instructions and prescriptions, and the importance of the level of control in determining the employee’s status.

Question 4

What is the difference between an employee and an independent contractor based on control?

Answer 4

An employee has significant control by the employer over their labour, while an independent contractor operates with less control from the employer.

Only an employee enjoys legislative protection and has access to the dispute resolution mechanisms created under the LRA, such as the CCMA (Commission for Conciliation, Mediation and Arbitration) and the Labour Court. Only employees enjoy the freedom of association to join trade unions and the protection afforded by the Basic Conditions of Employment Act (BCEA). Furthermore, only employees are entitled to social security benefits in terms of the Unemployment Insurance Act (UIA) and the Compensation for Occupational Injuries and Diseases Act (COIDA).

Question 5

How can the control test help distinguish between an employment relationship and other contractual arrangements?

Answer 5

Understanding the control test aids in classifying the legal relationship correctly, ensuring workers receive appropriate rights and legal classification.

Question 6

What are the factors that indicate a employment relationship (dominant test)?

Answer 6

The dominant impression test requires a consideration of all the facts as they appear from the agreement between the parties, their practices and customs and the evidence led in court.

Personal service obligation, fixed working hours, regular compensation, adherence to employer policies, benefits provision, and employer control over work

Question 7

What are the presumption criteria for determining an employee status (dominant test)?

Answer 7

Criteria include control or direction by another person, controlled work hours, being part of an organization, consistent work for an employer, economic dependence, provision of work tools, exclusive work for one person, a person who earns less than the BCEA threshold

Question 8

What considerations are important in determining employment status?

Answer 8

Considerations include legislative protections (CCMA), the validity of the employment contract, lawfulness of services, and constitutional and fairness aspects in Labour Law.

Question 9

What are the general principles regarding the conclusion of an employment?

Answer 9

No formalities are required, but having a written agreement is advisable.

Question 10

What are the types of conclusions for an employment contract?

Answer 10

An employment contract can be expressly concluded through verbal or written agreement, or tacitly inferred from parties’ conduct.

Question 11

What categories of employees are excluded from the BCEA?

Answer 11

Members of the State Security Agency and unpaid volunteers working for charitable organisations.

Question 12

What are the three types of lease agreements?

Answer 12

The rental of a thing (locatio conductio rei), hiring of services (locatio conductio operarum), and hiring of a piece of work (locatio conductio operis).

Question 13

What is meant by locatio conductio operarum?

Answer 13

Locatio conductio operarum, or the ordinary contract of employment, is a reciprocal contract where an employee offers services to an employer for remuneration, under the employer’s authority and supervision.

Question 14

What is meant by location conductio operis?

Answer 14

Locatio conductio operis involves an independent contractor hired to complete a specific task for payment, without being under the employer’s control.

Question 15

What is a contract of mandate?

Answer 15

Can be defined as a contract in terms of which the mandatory undertakes to perform a mandate for the mandator

Question 16

What are the essential elements of an employment contract?

Answer 16

Specified Work: The contract must specify the work the employee will perform. The employee must do this agreed work and any related, lawful tasks within their expertise. If an employee’s duties change significantly, particularly if it reduces their status, they can withdraw from the contract and claim damages.

Remuneration: The contract must state the remuneration, which can be in cash or in kind. It doesn’t have to be a fixed amount but must be reasonably ascertainable. Can include profit shares or commissions. When paid in kind, its value must be determined.

Question 17

What are the conditions of employment?

Answer 17

Negotiable Conditions: Parties can negotiate conditions like hours, wages, and leave. Common law allows flexibility, but labor laws impose limits to ensure fairness.

No Work, No Pay: Absence from work is generally unpaid unless otherwise agreed.

Annual Leave: BCEA provides a minimum of 21 consecutive days’ annual leave, which cannot coincide with termination notice. Paid holiday leave is a privilege, not a right, under common law but is mandated by the BCEA. This means that an employee is not as a matter of course entitled to any paid holiday leave.

Sick Leave: Originally unpaid under common law, sick leave is now paid under the BCEA, which allows 30-36 days of paid sick leave in a three-year cycle, contingent on providing medical certificates after two days of absence.

Remuneration Negotiation: Minimum wages are now regulated by the National Minimum Wage Act, ensuring no employee is paid below the national minimum.

Question 18

What are the requirements to hold a employer liable for wrong acts?

Answer 18

Must be an established employment relationship, ordinary contract of employment must be proved.

The delict must be committed while the employee is performing job duties. This is known as vicarious liability, which holds the employer accountable instead of the individual employee.

Question 19

When is a employer liable for delictual acts?

Answer 19

If the delict is committed while the employee is actually working – i.e. while he is occupied with the execution of his duties – he is obeying the orders of his employer and doing his work. Should the employee in the process of working commit a delict which causes damage to a third party, the employer is liable. (Hendrickz v Cutting, Minister of Justice v Khoza)

If a delict is committed while the employee is acting within the scope of his employment, whether during or after working hours, his employer is liable. (Sauer NO v Duursema, K v Minister of Safety and Security).

When an employee performs an illegal act while acting in the course of his duties, the employer is liable for the delict committed. Therefore, the employer is liable when the employee commits an illegal act, if compliance with the employer’s orders requires that act (Mkize v Martens).

If an employee performs an act which has been prohibited by the employer, but which nevertheless promotes the employer’s interests the employer is liable for the delict committed by the employee. (General Tyre & Rubber Co v Kleynhans).

When an employee commits a delict while partly promoting the interests of his employer and partly his own, the employer will be liable. (Feldman v Mall).

Question 20

When is a employer NOT liable for delictual acts?

Answer 20

The employee abandons their work for personal interests.

Acts fall outside the scope of employment

(Rossouw v Central News Agency, Carter & Co (Pty) Ltd v McDonald, Absa Bank Ltd v Bond Equipment (Pretoria) (Pty) Ltd’) .

Question 21

When is a employer liable for delictual acts of an independent contractor?

Answer 21

Giving incomplete instructions to the independent contractor.

Instructing the independent contractor to do something the employer is not authorized to do.

Issuing unlawful instructions to the independent contractor or ratifying the contractor’s unlawful act.

Failing to take precautionary steps when the instructed acts are potentially dangerous.

Question 22

What is a restraint of trade?

Answer 22

A restraint of trade clause in employment contracts prevents employees from starting their own competing businesses or working for competitors for a specific period and within a certain geographical area after leaving their employer. Although such clauses restrict the employee’s freedom to engage in commercial activities, they aim to protect the employer’s interests, particularly regarding confidential information and trade secrets.

Restraints of trade are seen as justifiable limitations on a person’s right to engage in any trade or profession, provided they are reasonable and in the public interest.

Question 23

What are the factors considered for reasonableness of a restraint of trade?

Answer 23

The area and period of the restraint.

Whether the agreement aims to prevent healthy competition or genuinely protect the employer’s interests.

The nature of the business.

Whether the restraint prevents the employee from using their own skills, expertise, and experience.

(Unreasonable restraints, such as overly broad geographic or time restrictions or preventing an employee from using their skills, are void. Each case is judged individually on its merits)