What are the consequences of disavowal clauses?
With reference to Pikitup Johannesburg (Soc) Ltd v Muguto and Others (2019) 30 SALLR 186 (LC), the following consequences may be identified:
- In most instances, such contracts contain the standard clause expressly stating that the employee had no right to renewal or expectation of a renewal (the so-called disavowal clause). It is accepted, on the authority of Mediterranean Woollen Mills (Pty) Ltd v SACTWU (supra), that, despite these clauses, a reasonable expectation could still arise during employment if assurances, existing practices and the conduct of an employer led an employee to believe that there was hope for a renewal, whether on a temporary or an indefinite basis. Even then, these factors are still subject to an objective assessment.
- In the end, however, when a renewal or extension is effected, it cannot be said that, on its own, it varies the original terms and conditions of the contract for the purposes of creating or proving a legitimate expectation, unless this is expressly stated when the contract is renewed or extended.
- Significant with the facts of this case is that, at some point of the duration of the fixed-term contract, Muguto had been moved to another position as general manager: bulk. Even then, the letter of transfer dated 27 March 2014 had expressly stated that, other than the change in roles and reporting structures, her remuneration and other terms and conditions remained the same.
