Employment Contract Termination

Employment Contract Termination

Employment Contract Termination

While it may seem like an obvious and simple aspect of employment law, many employers find themselves at the CCMA for unfair dismissal or unfair labour practice because the employment contract termination was not done properly.

The Basic Conditions of Employment Act sets out what the minimum notice period is in this regard:

  1. One week, if the employee has been employed for 6 months or less;
  2. Two weeks if the employee has been employed for more than 6 months but less than 12 months; and
  3. One month if the employee has been employed for more than 12 months.
The employment contract should always specify what the notice period is.

The above periods may be extended by agreement, but they may not be reduced.  The notice period applicable to the employer must be the same as the notice period applicable to the employee.

Notice of termination should always be given in writing unless the employee is illiterate.  Even an employee subject to probation is entitled to a proper notice of termination.

Employers should also caution against assuming an employee has resigned from work, purely because that employee has not returned to work.  The necessary procedural steps should be followed to call the employee for a disciplinary hearing before any notice of termination is issued. A disciplinary hearing should always precede any summary dismissal.

For assistance with, or advice on, termination of an employment contract or your other labour law needs, please contact our Labour Law specialist, Claire Delport on claire@fouriestott.co.za or 031 266 2530.

 

RETENTION AND USE OF PERSONAL INFORMATION

The protection of personal information is paramount these days with the advancement of computers and the internet. It is vital that both public and private bodies know what their rights and duties are in terms of The Protection of Personal Information Act 4 of 2013 (“POPI”) as the consequences of non-compliance could be severe.

 

POPI clearly sets out the rights and duties which need to be taken into account in order to ensure compliance. It is a process of weighing up the legitimate needs of an organisation to collect and use personal information for business and other purposes against the rights of individuals to have their personal information kept private and safeguarded against misuse.

 

POPI is wide in its definition of “personal information”. It includes but is not limited to:

  • Any information relating to the race, gender, sex, pregnancy, marital status, national, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, belief, culture, language and birth of a person.
  • Information relating to education, medical, financial, criminal or employment history of a person.
  • The email address, physical address, telephone number or any other particulars assigned to a person.

 

“Processing” of personal information includes the collection, receipt, recording, storage, updating or modification, retrieval, dissemination as well as merging, erasure or destruction of personal information.

 

Personal information can be shared when the client (or “data subject”) has consented to the processing or where there is an obligation imposed by law. An example would be the relationship between an attorney and an estate agency in the course of a property transaction. But at any time a data subject may object to his/her information being processed and is generally entitled to do so.

 

All personal information collected needs to be correctly and safely stored to prevent any unlawful access to the information and to prevent any loss and/or damage. Appropriate steps will need to be taken to ensure that the appropriate infrastructure is in place in order to secure the information. The information will need to be retained for the period of time set out in Section 14 of POPI and then the appropriate steps will need to be followed in order to delete or destroy the information.

Rouwkoop and Penalty Clauses in Sale Agreements

A rouwkoop clause comes from our common law. The word is derived from the Dutch words meaning “regret” and “purchase”. In essence, it is a clause in an agreement that entitles a party to that agreement to pay an agreed sum of money in order to be allowed to withdraw (or purchase his/her freedom) from the agreement. If a purchaser in an agreement containing a rouwkoop clause withdraws from the agreement and pays the agreed rouwkoop amount, the purchaser will be acting in accordance with the terms of the agreement and his/her withdrawal will not amount to a breach of the agreement.

 

A rouwkoop clause is distinguishable from a penalty clause which would come into operation where there was a breach of the agreement.

 

Regrettably many agreements have confused the law and merged these two clauses. It is common to see a clause in a sale agreement providing that, if the purchaser breaches the agreement and the seller cancels the agreement as a result, the purchaser will forfeit his/her deposit as rouwkoop. This is an incorrect use of the concept of rouwkoop.

 

There is nothing wrong with having a penalty clause in an agreement stating that the purchaser will be required to pay the seller’s damages if the purchaser breaches the agreement and the seller cancels it as a result. The penalty must, however, not be out of proportion to the harm suffered or it will fall foul of the Conventional Penalties Act of 1962. Providing in an agreement for forfeiture of a deposit may therefore be unlawful.

 

We provide in our sale agreements that, if a buyer breaches the agreement and the seller cancels the agreement as a result, the attorneys are authorised to hold the deposit in trust pending determination of the seller’s damages. In this way, once his/her damages are quantified, the seller will have access to the deposit without having to chase the purchaser, and the purchaser will receive the difference, if the damages are less than the deposit.

 

Very few modern agreements contain a proper rouwkoop clause. It seems to be unpopular nowadays because South Africans appear to desire certainty that the other party is locked into the agreement for the duration of the agreement.

Immovable Property and Invasive Species

Ian Cox, one of our colleagues in the Imber Group (www.imbergroup.co.za) has just written an article on recent legislation which requires a seller of immovable property to disclose to his/her buyer the existence of all invasive species on the property, failing which there could be a large fine or even jail time. Click below to read the article.

Seller or Sinner

Contracting with a Trust

It is common practice for a trustee of a trust to enter into a contract with a third party on behalf of his/her trust. However trustees must be aware that they must obtain the prior written (not verbal) authorization of all (or in the case of some trusts, a majority) of trustees before entering into contracts on behalf of a trust. If there is no prior written authority (usually in the form of a resolution), the contract will be void. This situation doesn’t apply to companies or close corporations where authorization can be given after the contract has been concluded.

 

A void contract cannot be rectified by ratification (i.e. the remaining trustees can’t approve – and thereby resurrect – a void contract after it has been signed). This was confirmed by our Supreme Court of Appeal in the case of Thorpe and Others v Trittenwein and Another 2007 (2) SA 172 (SCA). In this case one trustee (who was also the founder and a beneficiary of a trust) signed a sale agreement for the purchase of land without the prior written authority of the other trustees. The other trustees subsequently ratified the first trustee’s act but the Court held that this was not possible and the seller was free to sell to someone else.

 

A second vital aspect to consider is the trust deed itself. Trustees can only exercise a power if that power is given to them in the trust deed. If, for example, the trust deed doesn’t give the trustees the power to buy and sell property, a unanimous resolution of trustees to do so doesn’t cure this defect – the agreement will still be void.

 

If you are dealing with a trust (or if you are a trustee of a trust), you should be very careful to ensure that you are concluding a valid agreement. It is important to remember that:

 

  1. A trust is not a Partnership and should not be treated as such;
  2. the trustees are not the agents of the trust or beneficiaries;
  3.  the trustees must act jointly;
  4.  the trust deed must authorize the proposed transaction.

 

Third parties considering contracting with a trust should therefore call for:

 

  1. the latest Letters of Authority for the trust (to confirm who the current trustees are);
  2.  a resolution of trustees (dated before the date of the transaction) authorizing the transaction and the trustee who will sign the contract on behalf of the trust;
  3.  the trust deed (to confirm that the trust deed authorizes the proposed transaction).

 

Obtaining proper authorization before a contract is concluded and scrutinizing the trust deed will ensure that the contract remains valid and binding and that unnecessary litigation costs are avoided.

 

Should you require advice on any aspect regarding trusts or need us to review, advise on or amend your trust deed, please contact either Stuart Fourie or Vicky Stott.