Can you be dismissed for refusing to sign a contract of employment?

“It is the spirit and not the form of law that keeps justice alive.” – Earl Warren

Article by Wessel Brits (Senior Labour Advisor) and Nichole Turner (Senior Labour Advisor)

Introduction

In October 2021, we published an article discussing the importance of a letter of appointment, in a follow up article, in August 2022; we explained the legal position of the situation whereby your Employer presents you with a new contract of employment, many years after the commencement of your employment. 

Today we discuss the legal position of working without a contract and refusing to sign a contract of employment presented to you.

Definition of Employee/Employer

In order to determine whether one can be dismissed for the refusal to sign an employment contract, we consider the definition of both an Employer and Employee and what constitutes an Employment Relationship.

Section 213 of the Labour Relations Act 66 of 1995 (LRA) defines an Employee as follows:

“Any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration; and (b) any other person who in any manner assists in carrying on or conducting the business of an employer and ’employed’ and ’employment’ have meanings corresponding to that of ’employee.”

The MIBCO Main Collective Agreement that governs the Motor Industry (expired 31 August 2022), provided a similar definition.

Section 200A of the LRA provides for a presumption as to who is an employee presenting factors for consideration, such as whether the person is subject to the control or direction of the employer, whether the hours of work are prescribed, with an average of at least 40 hours per week, whether they form part of the organisation – such as the company policies and disciplinary code, whether they are economically dependent on the provider of work, whether tool of the trade are provided, and whether the person only renders service to that person.

Now whilst, a contract is not necessary to constitute an employment relationship; section 29 of the Basic Conditions of Employment Act, 75 of 1997 (BCEA), and clause 3.2 of the MIBCO Main Collective Agreement, make specific provision for a written particulars of employment / letter of appointment to be provided to an Employee.

Having a signed contract of employment is far more beneficial than not having one, as it amounts to an agreement between the parties, stipulating mutual obligations: to render a service and in turn to be paid for that service. However, an oral agreement can still amount to a valid contract.

In the matter of Naidoo v National Lotteries Commission & Others (Case no: JR1588/19 on 8 April 2021) the Labour Court determined as follows:

Mr. Naidoo was employed by the National Lotteries Commission (NLC) in 1999. After a restructuring process in 2016, he became head of publicity and media with a remuneration package of approximately R 1.3 million p/a.

Later that year, he was appointed into a new position, with a five-year non-renewable contract, at a reduced package. The reduced salary was not agreed upon. He refused to sign the contract, but took up the position regardless. In 2017 he received an inflation-linked increase (given to all members of the agency).

In December 2017, the NLC gave him an ultimatum to sign the contract within three days, to which he refused. The NLC thereafter sent him a letter stating that they “formally accepts your repudiation of the relationship with the commission,” and he was escorted from the premises.

After referring an unfair dismissal dispute, the NLC argued that there was no dismissal, as the termination was borne from the repudiation of the employment relationship. The CCMA ruled that Mr. Naidoo’s failure to sign on the date effectively amounted to a resolute condition, which “triggered the termination of the temporary agreement or the effluxion of the fixed period of employment.”

The Labour Court on the other hand, differed in its opinion, stating that there was indeed a dismissal; which was substantively and procedurally unfair. The court awarded re-instatement with full back pay, and attorney costs in favour of Mr. Naidoo, stating that the employer was “clearly disingenuous as well as cynical”.

Conclusion

Do not sign a contract that incorrectly captures the terms of your employment. However, think twice before you refuse to sign an employment contract. Instead, contact MISA to provide you with advice and guidance, and assist you in resolving the contractual conflicts.

MISA – Just a phone call or an e-mail away!

Kindly utilise the following e-mail addresses and links for assistance: 

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