- 2011/10/02 -

The judgement in Mahlamu v CCMA &Others [2011] 4 BLLR 381 (LC) is excellent. Let me explain why. The facts of this case were as follows. The employee was employed by the employer as a security guard in terms of an employment agreement that provided the employment contract would expire automatically on termination of the contract between the employer and his client or if the client no longer required the employee’s services “for whatsoever reason.”  These types of fixed terms contracts are prevalent within the private security and cleaning industry and have the effect that the employment of the employee is wholly dependent  on the will or whim of the client.  The clause in question is described as an “automatic termination” clause.

The inclusion of an “automatic termination” gave the employer the right to remove from site simply because the client did not want the employee any longer and to terminate the employee’s services.

The Court in considering the effect of the clause in question concluded that the employment of the employee was entirely dependent on the will or whim of the client. The Court held “The client could at any time, for any reason, simply state that the applicant’s (employee) services were no longer required and having done so, that resulted in the termination of the contract , automatically and by operation of law, leaving the applicant (employee) with no right of recourse.”

The Court noted that section 185 of the LRA provides that every employee has the right not to be unfairly dismissed. Section 5 (4) provides that any provision in a contract that directly or indirectly contradicts or limits an employees freedom of association or the protection afforded by section 5 (1),(2) and (3), is invalid.

The Court considered whether an “automatic termination” clause falls foul of section 5 (4) and whether such a clause is invalid in terms of section 5 (4). In concluding that an “automatic termination” clause is invalid the Court held that the effect of such a clause is to contract out of an employee’s right not to be unfairly dismissed.  Some may argue that there was no dismissal because the “automatic termination” clause provides for a consensual termination. The Court in overcoming this argument had regard to two English cases, Igbo V Johnson Mathey Chemical Ltd [1986] IRLR 215 (CA) and British Leyland (UK) Ltd v Ashraf [1978] IRLR 930 (EAT). In short the Court held that  in order to give effect to the injunction to interpret the LRA in terms of its primary objects and in compliance with the constitution the an “automatic termination” regard must be had to the compelling English judgements of Igbo. These judgements provided that a clause that had the effect of contracting out of the statutory right not to be unfairly dismissed was void. Applying the same reasoning the Court in the Mahlamu matter provided that the “automatic termination” void. Practically this meant that the employment relationship was not terminated in terms of the “automatic termination” clause and therefore the employment relationship came to an end as a result of the employer’s dismissal of the employee.

This is a good judgment for the following reasons.

The purpose of these types of contract is to give to the employer the power to terminate an employee’s services if the client no longer wants him on site or the contract between the employer and client comes to an end. Difficulties used to arise however where the client no longer wants the employee to render the service because they don’t like him or because of some minor infraction which in an ordinary employment relationship would have resulted in disciplinary action. The inclusion of an “automatic termination” gave the employer the right to remove from site simply because the client did not want the employee any longer and to terminate the employee’s services.  This type of contract was often relied to dismiss an employee for misconduct, incapacity and operational reasons. The reason why I like the Mahlawu judgment is that the capricious manner in which employees were dismissed without the opportunity of challenging the dismissal appears to be something of the past.  Well let’s hope so. Kevin Allardyce may be contacted on 011-694-4060 or Kevin@allardyce.co.za.