Proactive clauses in employment contracts

The World Economic Forum’s Global Competitiveness Report of 2014/2015 (WEFGC report), underlines the inefficiency of South Africa’s education, health and labour structures. Overall South Africa is rated 144th out of 144 countries in terms of cooperation in labour-employer relations. This creates a highly challenging environment where the employer must manage labour as a business risk in order to ensure the productivity and sustainability of his/her business.

An employment contract is crucial in managing labour relations as it is the basis of the relationship between the employer and the employee. It defines the terms and conditions as agreed upon between the parties and regulates their relationship. Furthermore the employment contract describes rules and responsibilities to be adhered to by both the employer and the employee. The employment contract is vital to keep confusion and discontent in the working relationship to a minimum.

Labour legislation prescribes certain basic requirements that must be complied with in the employment contract and which is not negotiable. However, the employer can use legislation to his/her benefit in the drafting of employment contracts. This entails implementing additional clauses in the employment contract to empower the employer by using labour legislation to eliminate possible future disputes between the employer and the employee.

The basic requirements that must be complied with in the employment contract:

The Basic Conditions of Employment Act, Act 75 of 1997, stipulates that at the start of employment, employers must provide an employee with Written Particulars of Employment containing the following information:

  • Employer and employee details – the employer’s full name and address as well as the employee’s name and occupation or a brief description of the work
  • Employment details – place/s of work, date of employment, working hours and days of work
  • Payment details – salary/wage or the rate and method of calculating wages, rate for overtime, any other cash payments, any payments in kind and their value, frequency of payment and any deductions
  • Leave details – any leave to which the employee is entitled
  • Notice and contract period – period of notice required for termination of the contract and period of the contract

Furthermore the employer is obliged to have a description of any Council or Sectoral Determination under which the employer’s business resides available for employees – Sectoral Determination 13 in the case of farming activities.

Additional clauses to empower the employer:

By including additional information in the employment contract employers empower themselves and can proactively manage possible future disputes, saving time and money. If the employer already has employment contracts in place, these proactive clauses can be implemented in the workplace through policies. General proactive clauses can be placed in categories involving time periods, the employee’s consent and other.

Time periodsEmployee’s consentOther
Retirement age
Short time
Daily rest period
Probation period
Additional deductions
Subtraction of training cost when employee resigns
Alcohol testing
Medical testing
Cameras in the workplace
Searching of personal belongings
Confidentiality
Restraint of trade

Time periods

proactive clauses in employment contracts_workplace

Retirement age:

Very few employers and employees think about retirement when they start a new job. When no retirement age is specified in the employment contract, an employee’s services cannot just be terminated when the employee reaches normal retirement age, but a whole procedure and consultation process has to be followed. Had the employer implemented a proactive clause regulating the retirement age at for instance 60 years in the employment contract, the employment contract will automatically terminate in the month/year of the employee’s 60th birthday. If the employee is still able to perform his/her duties and both parties are agreeable, the employer can provide the employee with a fixed term contract.

Short time:

If an employer is unable to employ his/her employees for the ordinary hours of work per week due to slackness of trade, shortage of raw materials, a general breakdown of plant or machinery caused by an accident or any other unforeseen emergency, the employer may implement short time during, but not exceeding the period of unforeseen circumstances. For the period of short time the employees are remunerated for the hours worked. Where practically possible, written notice regarding the implementation of short time must be given to the trade union representative and/or the employees in writing at least 24 hours prior to, or less if the circumstances are more urgent, the date on which short time will be implemented.

Why is short time important? At the end of 2014 load shedding was back in full force and employers can ensure that they are not further crippled by the power outages if they have short time clauses in their contract. Employers who don’t have this clause in their contracts have to compensate employees for the time at work even though the employees are unable to perform their duties. This can be very costly for employers, since employees have to be paid for their unproductive time.

Daily rest period:

By consent the daily rest period of one hour can be reduced to half an hour.

Probation period:

A probation period entails three months of evaluation where the employer can determine if the employee is suited for the job. If not the case, the employer can terminate the employee’s services after the probation period subject to regular consultation. Without a probation period clause in the employment contract normal poor work performance consultation procedure has to be followed which is a timely and costly procedure.

Consent

Deductions:

According to the Basic Conditions of Employment Act an employer is not allowed to deduct any money form an employee’s salary without the employee’s written consent or unless the deduction is required or permitted in terms of law, collective agreement, court order or arbitration award. Additional deductions that can be made with the employee’s consent include housing, failure to give statutory notice, training costs, rations, etc. If this clause is set out in the employment contract the employer can immediately make these deductions as they arise without then trying to get the employee’s consent.

Testing:

Employees can be requested to undergo medical testing as well as to be tested for alcohol during working hours, but only if this is so stipulated in their employment contracts or in an alcohol policy, or if the employee has given his/her permission. If the employee has not given his/her permission, the employer cannot force the employee to undergo medical/alcohol testing.

Cameras in the workplace / Searching of personal belongings:

These clauses are vital to manage theft and/or misconduct in the workplace. If this clause is set out in the employment contract and the employer suspects theft and/or misconduct, he/she can immediately install cameras in the workplace and/or search employees’ personal belongings without then trying to obtain the employee’s consent which can possibly alert the offender.

Other

Confidentiality and restraint of trade:

This clause may seem unnecessary but can protect the employer in future as his/her business develops.

We strongly advise employers to make use of proactive clauses in the employment contract and follow correct procedures with regards to all labour matters, especially dismissal, retrenchment and general discipline in the workplace, by acting pro-actively.

Contact the LWO for advice and assistance in this matter.

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LWO Regsadviseur - LWO Legal Advisor

LWO Regsadviseur - LWO Legal Advisor

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