Article 47/2021

Labour Edge

Which principles govern breaches of contracts in the employment sphere?

In Naidoo and Another v Standard Bank SA Ltd and Another (2019) 30 SALLR 183 (LC), the labour court recently stated the following:

  1. in Sihlali v SA Broadcasting Corporation Ltd (2010) 31 ILJ 1477 (LC), the court held that, where an employee resigns without giving the required notice period, that employee breaches the employment contract;
  2. in this situation, what would be the recourse available to the employer? This question was aptly answered in Vodacom (Pty) Ltd v Motsa and Another [2016] 5 BLLR 523 (LC); (2016) 37 ILJ 1241 (LC), which was quoted with approval in Sihlali as follows:

‘When an employee gives the required notice the contract terminates at the end of the notice period. When an employee leaves his or her employment without giving the required period of notice the employee breaches the contract. Ordinary contractual rules dictate that the employer may hold the employee to the contract and seek an order of specific performance requiring the employee to serve the period of notice. Alternatively, the employer may elect to accept the employee’s repudiation, cancel the contract and claim damages.’;

  1. a different view was expressed in Coetzee v Zeitz Mocca Foundation Trust and Others (2018) 39 ILJ 2529 (LC) and the unreported case of Mzotsho v Standard Bank South Africa Limited (J2426-18 handed down on 10 July 2018). In Coetzee, the court seems to suggest that Mtati was no longer persuasive since the correct reflection of the law was the one expounded in Vodacom;
  2. Vodacom restated the contractual principle that an employer, who is confronted with an immediate resignation in breach of the contract of employment, could hold the employee to the contract by seeking an order for specific performance;
  3. since it is accepted that the resignation terminates the contract of employment unilaterally, the order of specific performance would, in essence, reinstate the contract and direct performance with its terms;
  4. it is accepted that an order for the specific performance of a contract of employment will, in the exercise of the court’s discretion, not normally be granted (see Masetlha v President of the Republic of South Africa 2008 (1) SA 566 (CC); 2008 (1) BCLR (CC)). However, it does not mean it would never be granted.  A typical example is to be found in Nationwide Airlines (Pty) Ltd v Roediger and Another [2006] JOL 17221 (W), where an airline captain was held to his contractual undertaking to give three months’ notice; and

whilst the labour court in the present matter had concurred with both Coetzee and Mzotsho on contractual principles, it had, however, disagreed with the view that Standard Bank could proceed with the disciplinary hearing without first approaching the court for an order for specific performance.  There was no legal basis for such an approach.

The scenario is as follows: an employee is reinstated, not to the date of his dismissal but limiting the employee’s entitlement to remuneration to 24 months.  The employee argues that he or she is entitled to interest on the back pay payable for the 24-month period in terms of s75 of the Basic Conditions of Employment Act 75 of 1997.  Is the employee, according to Mashaba and Another v Telkom SA Soc Ltd (2020) 31 SALLR 147 (LAC); (2020) 41 ILJ 2437 (LAC), entitled to be paid interest on the back pay from the date of the judgment or, alternatively, entitled to also be paid interest in respect of the periods before the judgment?

A reinstatement order does not in itself reinstate an employee.  How did the labour appeal court recently, in Kubeka and Others v Ni-Da Transport (Pty) Ltd (2021) 32 SALLR 14 (LAC), determine the consequences of such order and how is such reinstatement order enforced?

What is the distinction between s50(2)(a) compensation and s50(2)(b) damages of the EEA and compensation when an automatically unfair dismissal, in terms of s187(1)(f) of the LRA, occurs?