Article 21/2023

What is the quantum of damages suffered by an employee in all cases of the unlawful termination of a contract, including:

  • short notice
  • defective notice
  • giving no notice at all

or some other breach of contract giving rise to an election to terminate?


  • Unlike in the case of an unfair dismissal, in the case of exercising a contractual right to terminate an employment contract, the reasons or motives for exercising such right are normally irrelevant

(Mutsapha v Receiver of Revenue 1958 (3) SA 343 (A))

  • Where an employer reserves for itself the right to terminate an employment contract, the only potential actionable wrong is the failure to pay the requisite notice or permit the employee to work during such notice period – damages in this regard are limited to what the employee would have earned during the notice period

(Harper v Morgan Guarantee Trust 2004 (3) SA 353 (W), so referred to recently in Khan v MMI                        Holdings (2021) 32 SALLR 44 (LC))

  • The limited damages rule is applicable to all cases of unlawful termination, including short notice, defective notice, no notice given at all, or some other breach of contract giving rise to an election to terminate

(National Entitled Workers Union v CCMA (2007) 28 ILJ 1223 (LAC)

  • In summary, therefore, if an employer lawfully terminates an employment contract (i e giving proper notice or having paid in lieu of such notice, the employee has no further claim for contractual damages)

With reference to Potgieter v Samancor Chrome Ltd t/a Tubatse Ferrochrome (2022) 33 SALLR 190 (LC) and Van Rensburg and Others v Department of Justice and Correctional Services and Others (2022) 33 SALLR 280 (LC); (2022) 43 ILJ 2110 (LC).

In what instances does the jurisdiction of the supreme court of appeal trump the jurisdiction of the labour appeal court?

Where an employer prematurely terminates a fixed-term contract and the employee challenges such termination as being unlawful and claims damages and not specific performance, the labour court has up to now ordered damages even though same is an unliquidated claim for damages.