Archive for the Questions and Answers Category

Can an employer withold payment of pension benefits?

Posted in Questions and Answers, Retirement with tags , on October 13, 2009 by labourlawoffices

Section 37 D (1) (b) of the Pension Funds Act, 1956 allows a Pension Fund a discretion to withold payment of an employee’s pension benefit in respect of an employee’s liability for compensation in respect of any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the employee.

The Labour Court has had no hesitation in giving practical effect to this provision and has been prepared to order a Pension Fund to withhold payment of a member’s pension benefits pending the determination or acknowledgement of such member’s liability as aforesaid.  In so doing the Pension Fund has to balance the competing interests between the prospects of the employer’s claim and the potential prejudice an employee may suffer if not permitted to access his pension benefits on an urgent basis.

Where to go with an individual retrenchment dispute?

Posted in Dismissals, Questions and Answers, Unfair Dismissal with tags , , , on October 8, 2009 by labourlawoffices

The powers of a CCMA or Bargaining Council Commissioner in respect of procedural unfairness in individual operational requirements dismissals became problematic when a Labour Court decision found that the CCMA has jurisdiction only if the dispute relates to substantive fairness.  If procedural fairness is at issue, the Court held the CCMA was deprived of jurisdiction and the matter had to be referred to the Labour Court.

However, a more recent Labour Court decision has decided differently on this issue.  The Court found that the wording of Section 191 (12) of the LRA is clear and a single employee dismissed for operational reasons is free to refer the dispute either to the CCMA or to the Labour Court on whatever procedural and or substantive fairness basis the attack may be mounted.

The CCMA has now also followed the guidance from the most recent Labour Court decision and it follows that an individually retrenched employee can prosecute an unfair dismissal claim in either the CCMA / Bargaining Council or the Labour Court, at his / her discretion.

Who owns the copyright in computer programs written by an employee?

Posted in Questions and Answers with tags on June 25, 2009 by labourlawoffices

Section 21 (1) (d) of the Copyright Act 1998 of 1978 provides that where a work is “made in the course of the author’s employment by another person under a contract of service”, the employer is ”the owner of any copyright subsisting in the work”.  In an action in the High Court, the Applicant sought to enforce a copyright claim in certain written computer programmes against his former employer.  The employee claimed to have created the programs in his own time, at home, to assist him personally in the performance of his duties as employee.  He alleged that it was not part of his duties as a meteorologist to write computer programmes.  The employee claimed that the programs had not been “written in the course and scope of his employment” and that ownership of the copyright in the programmes vested in him and not in his employer.

When the case was decided in the Supreme Court of Appeal it was held that the phrase, “in the course of employment” was not ambiguous and did not require anything by way of extensive or restrictive interpretation.  The Court held that a practical and common sense approach directed at the facts usually produces the correct result.  The Court pointed out that it was dangerous to formulate generally applicable rules to determine whether or not the work was authored in the course of an employee’s employment.  It remained fundamentally a factual issue that depended not only on the terms of the employment contract but also on the particular circumstances in which the particular work was created.  In this case the factual basis for the employee’s claim was not supported by the available evidence.  As meteorologist the employee had to collect and collate meteorological data and transmit it to head office for analysis and storing.  The employee developed his programs for this very purpose.  Although he may not have done it to make his own job easier, he did it because of his employment with his employer.

The Court went on to find that although it had to be accepted that the employee’s initial programming took place at home it was clear that as time passed he spent increasingly more of his office hours developing programs, to such an extent that he failed to give sufficient attention to his duties as Head of a Regional office.  In any event, the Court held, the fact that an employee creates work at home (or even during office hours at the premises of the employer) is but one factor that has to be taken into account in answering the question whether the work was made in the course of his employment.  The earlier Court finding that the programs had indeed been made in the course of the employee’s employment was thus endorsed.

Retirement may not be as simple as it seems!

Posted in Questions and Answers, Retirement with tags on January 30, 2008 by labourlawoffices

Generally a contract of employment stipulates the age at which an employee must retire.  If the contract does not specify a retirement age and the employee is unclear of the age of retirement, what steps can the employer take in order to ensure that it is not faced with an automatically unfair dismissal dispute? 

Section 187 (1)(f) of the Labour Relations Act 66 of 1995, (“the LRA”) provides that:

”A dismissal is automatically unfair if the employer, in dismissing the employee, acts contrary to section 5, or, if the reason for the dismissal is:
f)       that the employer unfairly discriminated against an employee, directly or indirectly on any arbitrary ground including, but not limited to race, gender, sex,   ethnic or social origin, colour, sexual orientation, age, disability, religion     conscience belief, political opinion, culture, language, marital status or family responsibility;”

Section 187(2)(b) of the LRA states that:

“Despite subsection (1)(f) –a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.”

There have been decisions of the Labour Court where it was held that once an employee reaches or passes the retirement age for persons employed in the same position as he/she is, then the dismissal is fair. The court has not, however, considered whether the procedure by which the employees services were terminated was fair or not.

In a recent Labour Court case this issue came up for decision. In this matter the Applicant’s services were terminated by the employer for the reason that he had attained the retirement age of 65 years. The Applicant, an appraiser, did not agree with this and declared a dispute alleging that his dismissal was automatically unfair on the basis that he was discriminated against because of his age.   The employer argued that there was a tacit or implied agreement between the parties that the age of 65 years would be the Applicant’s retirement age. The employer further argued that a previous employee had retired at this age. 

Evidence was led by the Applicant and confirmed by the Respondent to the effect that a meeting was held with the Applicant prior to the letter, notifying him that his services were to be terminated, was delivered to him. The meeting addressed the issue that the deceased estates department of the Respondent was not doing well financially and should matters not improve, this department would have to close down.  Applicant contended that this was an ulterior motive which gave rise to his dismissal.

After hearing Respondent’s evidence, the court formed the view that the reason for the Applicant’s dismissal was not because he had reached the retirement age, but rather for reasons relating to his work performance and the Respondent’s operational requirements.  The Court then posed the following question: Should there be no agreement deciding the retirement age, does this mean that Applicant would continue to be employed by the Respondent until the Applicant terminated the agreement?    The Court answered this question in the negative.  In support of this answer the court held that the Respondent was entitled to determine the Applicant’s retirement age at the standard or normal retirement age in the sector he was working in.  On the facts of the matter the court found this age to be 65 and consistent with the normal retirement age in many of the sectors in this country where appraisers are employed. The court also stated that the decision to maintain an employee in the company’s employ falls within the managerial prerogative and is not something which can be decided by the employee.  On these grounds the court held that the dismissal was substantively fair.

The court then went on to consider procedural fairness and found the procedure to be unfair for the following reasons:
No retirement age was identified. The issue of retirement was not even discussed with the Applicant even after he had turned 65.  Applicant did not know when his services would come to an end. Some form of consultation is required and the decrees of fairness so demand.  The consultation process envisaged by the court was not that as contemplated in Section 189 of the LRA when considering retrenchments, but should involve the employer broaching the question of retirement with the employee concerned, discussing some possible retirement dates and discussing alternatives to an immediate retirement date.

Based on the above the court found that although the termination of the Applicant’s services was substantively fair, it was procedurally unfair and in the circumstances the court awarded Applicant three months’ compensation.   Employers, should, mindful of this judgment, embark on consultations prior to notifying an employee of an intention to terminate their services so as to avert similar disputes from arising.

Section 187(2)(b) of the LRA was once again the subject matter in a recent Labour Appeal Court case.  To summarise the facts of the case very briefly: The Respondent was in the employ of a company called Datakor (Pty) Ltd as a general manager for its division called Technology Application Group (TAG).  It was a term of his employment contract that his retirement age was 65.

Based on this the Respondent made arrangement for his future plans, including financial plans and made contributions to a pension scheme in terms of which he would receive a pension at that age. During April 1998 Datakor (Pty) Ltd sold TAG to the appellant as a going concern.  This entailed that the contracts of employment of the employees of TAG will then be transferred automatically to  the appellant. 

The implication of this is that the new employer steps into the shoes of the old employer in regard to the employment contract of the employees.   The appellant’s contracts of employment with its employees did not specify a retirement age.  However, appellant did have a staff manual, which included a clause to the effect that the Respondent could amend the provisions of the manual.

Independant Contractors

Posted in Employee status, Questions and Answers with tags , , on January 12, 2008 by labourlawoffices


I require additional clerical “staff” for six months of every year and would like to engage these people as independent contractors. What are the legal parameters in establishing whether an employer/employee relationship exists when taking on an independent contractor?


The signed contract should clearly indicate that an independent contractor relationship and not an employer/employee relationship exists. The contractual terms and conditions of the contract and the intention of the parties at the time that it was signed (ie, objectively, was the intention to create the employer/employee relationship or the contract of service/ independent contractor relationship?) are very important factors which are considered when determining the existence of an employment relationship between parties to a contract.

In order to ensure that the person remains an independent contractor and does not become an employee you must try to ensure that the:

  • manner in which the independent contractor works and the hours that he works are not subject to the control and direction of the employer;
  • the independent contractor is not provided with the main/primary tools of trade or work equipment by the employer;
  • independent contractor is not bound to work or render services to the employer exclusively; and
    independent contractor is not disciplined by the employer.

However, these factors are not exhaustive nor are they individually decisive.

Sick Leave

Posted in Basic Conditions of Employment, Questions and Answers with tags , , on December 3, 2007 by labourlawoffices


I employ a storekeeper who has exhausted his sick leave entitlement in both of the last two years. He is now approaching the limit of his sick leave entitlement for the third consecutive year.  Am I entitled to dismiss him?


The Basic Conditions of Employment Act, 1997 (‘the Act’) provides that an employee’s sick leave entitlement is calculated with regard to a sick leave cycle constituting a period of 36 months’ employment with an employer from date of commencement of employment, and on an ongoing basis. The Act provides that during such sick leave cycle an employee is entitled to an amount of paid sick leave equal to the number of days the employee would normally work during a period of six weeks. 

The basic conditions of employment provided by the Act constitute a minimum floor of rights to which all employees are entitled. It follows that an employee can not be dismissed purely on the basis of using up all available paid sick leave days.  Where the employee excessively absents himself from work due to ill health, such employee would become entitled to unpaid sick leave in the normal course of events. If such employee fulfils a key duty or task or places unreasonable and impossible demands on the company and/or his fellow employees as a result of his constant and excessive absence from work, the employer may consider terminating employment based on operational requirements. 

To achieve such outcome the employer would have to consult with the affected employee and/or his trade union as required by the applicable provisions of Section 189 of the Labour Relations Act and show that the employee’s termination of employment became necessary based on the economic, technological, structural or similar needs of the employer.  However, if there is evidence available to show that the employee is in fact abusing his sick leave entitlement, in other words that he is absenting himself from work in circumstances where he is not in fact ill or unfit to attend work, such conduct may be regarded as misconduct and may form the subject of a disciplinary enquiry which may lead to dismissal.  In such an event, evidence of actual abuse eg false or fake medical certificates would naturally have to be proven.

Fraudulent employee sicknotes

Posted in Employee misconduct, Questions and Answers with tags , on October 12, 2007 by labourlawoffices


I have a question regarding a disciplinary hearing for an employee who has submitted numerous sick notes that have been fraudulently issued and signed by a medical institution.  As we became suspicious about the notes not reflecting any telephone or reference number and also no doctor’s name and practice number, an enquiry was made to the medical institution as to the authenticity of the documents. They verbally confirmed that the documents submitted were not valid sick notes from their institution and neither did the signatures match those of the doctors employed there. A written confirmation to this effect has been requested.  I need to ascertain if such fraudulent action can be regarded as a serious infringement and whether the employee can be summarily dismissed because of this without any oral and/or written warnings?


The question is whether or not the fraudulent misrepresentation by the employee has caused a breakdown in the relationship of trust between the employee and his employer.  From the facts furnished, it seems that there is a pattern of repeated fraudulent misrepresentation by the employee which has potential to cause, or has already caused, damage to the employer. Dishonest behaviour by an employee and repeatedly so, as in this instance, may be treated as very serious misconduct, which goes to the heart of the employment relationship and justifies a summary dismissal.  In order to observe the principle of fairness, theemployee should be charged with gross misconduct on the basis that he repeatedly misrepresented and presented fraudulent documents to the employer and he must be given an opportunity to defend himself against the allegations.If the misconduct is proven at the disciplinary hearing, dismissal will be a suitable outcome. Previous warnings are not a requirement where an employee’sconduct has caused the irretrievable breakdown in the trust relationship between the parties.