The Labour Court has confirmed the principle that clauses in a
contract of employment that provide for the automatic termination
of an employee's employment if the labour broker's client
no longer requires the services of the employee, are invalid.
In the past businesses have avoided having to comply with the
dismissal provisions in the Labour Relations Act by using labour
brokers to provide employees. The labour brokers have in turn built
in automatic termination provisions in their contracts of
employment to avoid unfair dismissal claims by their employees.
In Mahlamu v CCMA and others (unreported) the respondent labour
broker employed the applicant as a security officer with a
provision in his contract that the employment contract would
on expiry of the contract between the labour broker and the
in the event that the client no longer required the services of
the employee "for whatever reason".
The client sent notice of the immediate termination of the
labour broking contract and the labour broker in turn notified the
employee in a letter that his services were no longer required and
that he was "automatically terminated" because it had no
alternative position for him.
Pursuant to an unfair dismissal claim the arbitrator found that
since the client no longer required the applicant's services,
the employment contract had terminated automatically and there had
therefore been no dismissal.
Issue to be determined
The issue was whether automatic termination clauses in
employment contracts are contrary to the provisions of the Labour
Relations Act (LRA) and therefore invalid?
In SA Post Office Limited v Mampeule (2009) 30 ILJ 664 (LC), the
LAC endorsed the view that parties may not contract out of the
dismissal requirements of the LRA, and that in such cases the
employer must prove that the termination clause was fairly
triggered. The court noted that section 185 of the LRA gives every
employee the right not to be unfairly dismissed. Section 5
prohibits employers preventing employees from exercising rights
conferred on employees, except by contractual provisions permitted
by the LRA. The question was, accordingly, whether the automatic
termination clause in the contract between the applicant and his
employer, was permitted by Section 5 of the LRA.
The court found in the Mahlamu case that the automatic
termination clause fell within the prohibition in section 5(2)(b)
of the LRA because the clause prevented the employee from
exercising his right not to be unfairly dismissed.
The commissioner had committed a reviewable error of law and the
court set aside his award and replaced it with a ruling that the
termination of employment constituted a dismissal. The applicant
was granted leave to refer the dispute concerning the fairness of
his dismissal either to the CCMA or the Labour Court, as the case
may be. It follows that the adjudicator will find that the
dismissal of Mahlamu was both substantively and procedurally
The Court found that the decision by the client had the effect
of unacceptably converting a substantive right into a conditional
one. The client could at any time, for any reason, simply state
that the employee's services were no longer required which
would result in the termination of the employment contract leaving
the employee with no right of recourse.
The importance of the case
The importance of this case is that it confirms the principle
that clauses in a contract of employment that provide for the
automatic termination of an employee's employment, in
circumstances where the labour broker's client no longer
requires the services of the employee, are invalid.
In Mahlamu, the Court drew a distinction between that case and
the situation where the end of an agreed fixed term is defined by
the happening of a particular event, for instance the completion of
a project. In the latter scenario, the Court said that there would
not be a dismissal for the purposes of 186(1) of the LRA.
This means that labour brokers may enter into fixed term
contracts with employees that they will be employed for the
duration of a specific project or task. Labour brokers may not
contract with employees for the automatic termination of their
employment contracts on expiry of the contract between the labour
broker and the client. This illustrates the importance of drafting
employment contracts which clearly explain the specific project or
task that the employees will be employed for.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Employees must understand the notice periods stipulated by law. When an employee gives notice of their resignation to an employer, they is advising the employer that they will cease to work for the employer from a certain date.
Nigeria is a federal constitutional republic located on the west coast of Africa. Modern Nigeria has its origins as a British colony through the 19th and 20th century until it achieved independence in 1960.
The jurisprudential basis is pithily expressed as staying in sync with the global position on employment relationship, easily summed up as "International Labour Standard" and "International Best Practice".
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