THE LEGALITY OF THE AUTOMATIC TERMINATION OF CONTRACTS OF EMPLOYMENT

Abstract

The Labour Relations Act (66 of 1995) (LRA) protects employees against unfair dismissal. In terms of section 186(1)(a) dismissal means that “an employer terminated a contract of employment with or without notice”. In order to fall within the ambit of this provision and benefit from the protections afforded by the LRA, an employee must prove that an overt act on the part of the employer has resulted in the termination of the employment contract (Ouwehand v Hout Bay Fishing Industries 2004 25 ILJ 731 (LC)). The onus then shifts to the employer to prove that the dismissal is both substantively and procedurally fair, failing which the employee will be entitled to the
remedies afforded by section 193 of the LRA. However, not every termination of an employment contract constitutes a dismissal and a number of scenarios exist where an employment contract terminates lawfully by operation of law. The termination of a fixed-term contract by effluxion of time, termination of the contract due to supervening impossibility of performance and the attainment of a contractually agreed or implied retirement age all give rise to the lawful termination of an employment contract. Similarly the statutory “deemed-dismissal” provisions of application to employees in the public sector provide for the automatic termination of employment contracts in circumstances that the employee is absent without authorisation for a designated period of time. The effect of such automatic termination is that the employment contract terminates by operation of law and not by means of an act of the employer, resulting in the dismissal provisions of the LRA being legitimately circumvented. Labour-broking contracts typically include automatic termination clauses that provide for the automatic termination of employment contracts, between labour-brokers and their employees, when the broker’s client no longer requires the services of such employees. Similarly employers have sought to rely upon grounds of supervening impossibility of performance in order to argue that an employment contract has automatically terminated in the instance of absconding and imprisoned employees. This article will be examining the legality of the automatic termination of employment contracts in these contexts and the impact on employees’ rights to protection against unfair dismissal.