Can my employer give me a new contract, years after I start working for the company?

“A verbal contract isn’t worth the paper it’s written on.” – Samuel Goldwyn

Article by Anel Oosthuizen (Labour Relations Officer)

Introduction

A contract of employment governs the material terms and conditions of an employment relationship. It provides for the rights and obligations of each party, to offer clarity to the parties of what is expected of them.

An employer is required, by law, to provide an employee with a written contract of employment, this aspect was discussed in a recent article published by MISA; today we discuss the situation whereby an employer offers you a new contract of employment, sometime after the commencement of employment. 

Legislation

Clause 3.2 Letter of Appointment of the Motor Industry Bargaining Council (MIBCO) collective agreement, provides “(1) Every employer shall, in respect of every employee, upon commencement of employment prepare written particulars of employment by way of either an employment contract or a letter of appointment as prescribed in Section 29 of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997) [BCEA].”

Section 29 Written Particulars of Employment of the BCEA, provides that the employer must provide the employee with the following minimum information at the commencement of employment:

1. the full name and address of the employer;
2. the name and occupation of the employee, or a brief description of the work for which the employee is employed;
3. the place of work, and, where the employee is required or permitted to work at various places, an indication of this;
4. the date on which the employment began;
5. the employee’s ordinary hours of work and days of work;
6. the employee’s wage or the rate and method of calculating wages;
7. the rate of pay for overtime work;
8. any other cash payments that the employee is entitled to;
9. any payment in kind that the employee is entitled to and the value of the payment in kind;
10. how frequently remuneration will be paid;
11. any deductions to be made from the employee’s remuneration;
12. the leave to which the employee is entitled;
13. the period of notice required to terminate employment, or if employment is for a specified period, the date when employment is to terminate;
14. a description of any council or sectoral determination which covers the employer’s business;
15. any period of employment with a previous employer that counts towards the employee’s period of employment;
16. a list of any other documents that form part of the contract of employment, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained (such as the Disciplinary Code and Grievance Policy).

The above is not an exhaustive list and various other particulars, specific to the employment relationship, may be included in the contract of employment, for example conflict of interest; internet usage; reporting structures; and benefits such as company vehicle and medical aid.

The employer has no discretion in this regard, it must be provided. It is worthy to note however, that the written particulars need not be in the form of a contract, although, it is advisable to conclude a formal contract of employment – if no contract is in place, it can lead to unnecessary disputes; contracts provide the much needed evidentiary proof to establish the terms and conditions of employment.

The Absence of a Contract of Employment

The Labour Court (LC) in the matter of Temo v Van Niekerk and Others (JR1772/13) [2015] ZALCJHB 160 [PAR 11] held that “it should be pointed out that the absence of a signed agreement does not take the employment relationship outside the provisions of the Labour Relations Act [LRA]. An oral employment contract provides an employee with no less rights than those rights envisaged in the Labour Relations Act as those employed in terms of a written contract. To this extent, an employee employed in terms of an oral agreement has the right not to be unfairly dismissed or subjected to an unfair labour practice in terms of section 185 of the LRA.”

In line with the above, it is also important that the contract of employment cannot be in contravention of any provisions of relevant legislation – this includes BCEA and LRA, as well as the MIBCO Collective Agreement. Thus, an employment contract may only be the same, or more favourable than legislation.

New Contract of Employment After Commencement of Employment

This is relevant to receiving a contract of employment for the first time after being employed for a period of time, or being handed with a new contract of employment even though one was signed upon commencement of employment.

Clause 3.2 of the MIBCO Collective Agreement further provides “(2) Every employer shall, in respect of every employee who at the time of coming into operation of this Agreement, was not in possession of a letter of appointment, provide such employee with an abridged letter of appointment setting out the existing conditions of employment.”

Unabridged, by definition, means “complete”, and “not shortened in any way”. It is also important to note that it should set out the existing terms and conditions of employment.

The employer may not amend any terms and conditions, initially agreed upon, unless the employer consults with the employee, and the amendments are reduced to writing and signed by both parties, i.e. agree to the change. Further, the need for the proposed changes must be an operational necessity – i.e. for the sustainability of the business.

The Aveng Case

Section 187(1)(c) of the LRA, provides that a dismissal will be automatically unfair if the reason for the dismissal is “a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer.”

In National Union of Metalworkers of South Africa v Aveng Trident Steel (a division of Aveng Africa Proprietary Ltd) (JA25/18) [2019] ZALAC 36; (2019) 40 ILJ 2024 (LAC); [2019] 9 BLLR 899 (LAC) the following was established:

Aveng gave notice of possible retrenchments in terms of section 189(3) of the LRA, as they were confronted with a decrease in sales and increased costs.

Workforce restructuring, which included redefining jobs and was provided as an alternative, and/or measure to avoid retrenchments, by handing all employees with new contract of employment. Aveng informed the employees that if the contracts of employment were rejected, the employees would be dismissed. When the contracts were rejected by the employees, Aveng gave notice of termination of their contracts of employment.

After considering the facts, the Labour Court, Labour Appeal Court and Constitutional Court found that the purpose of Aveng making the proposal was to restructure the business for operational reasons to ensure Aveng’s long-term survival. The employees’ rejection of the proposal necessitated the dismissal due to operational requirements. It is therefore essential that the dominant reason for the dismissal should therefore be the employer’s operational requirements – if it is not, it may be an automatically unfair dismissal.

Your Rights

If a new employment contract is handed to you in the absence of a retrenchment process, it is important to note the contents of the contract and provide reasons in writing why you are not comfortable with the new contract, in order to start the process of consultation and negotiation. It is not advisable to merely refuse to sign the new contract of employment, but to rather be proactive and sort out any concerns you might have.

The employer does retain their right to amend aspects that are not fixed or set out in the contractual relationship. The employer will apply their prerogative to change aspects that goes to the core of their operational requirements, such as a change in the shift system. In this instance, consultation will suffice and does not have to be ‘negotiated’ with employees.

Conclusion: 

If you do not have a contract of employment, your basic rights will not be compromised, as they are covered by relevant legislation. However, it is important to insist on a contract of employment on commencement of employment, to clearly set out the terms and conditions and expectations of both employee and employer.

If you are in doubt, as to whether your employer is correctly providing you with a new contract of employment, remember MISA is just a phone call away!

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

Legal/Labour-related enquiries                      Legal@ms.org.za  

Legal Reception                                                011 476 3920 / 071 880 9682  

MISA Benefit claim-related enquiries            Claims@misa.org.za   

Any other enquiries                                          Info@ms.org.za  

Website                                                              www.misa.org.za    

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