22 June 2010 by

Section 185 of the LRA: a contractual right not to be unfairly dismissed?

"I feel so miserable without you; it's almost like having you here."- Stephen Bishop.

In South African Maritime Safety Authority v Mckenzie [2010] 5 BLLR 488 (SCA), the Supreme Court of Appeal (SCA) had to decide whether section 185 of the Labour Relations Act, 66 of 1996 (LRA) creates a contractual right not to be unfairly dismissed. This section of the LRA provides that an employee has the right not to be unfairly dismissed and not to be subject to unfair labour practices.

In law, an employer's actions may give rise to more than one cause of action. An employee may argue that the employer's actions constituted an unfair dismissal or an unfair labour practice, while the same action could also give rise to a claim for damages based on breach of contract. In Fedlife Assurance Ltd v Wolfaardt [2001] 12 BLLR 1301 (SCA), the SCA acknowledged the possibility that the right to fair labour practices expressed in section 23 of the Constitution, may lead to the courts accepting that a contractual right for an employee not to be unfairly treated could be incorporated into the employee's contract of employment. However, the much analysed Constitutional Court decision in Chirwa v Transnet Ltd and Others [2008] 2 BLLR 97 (CC) has been argued to be authority for the proposition that remedies provided for in the LRA are the only remedies, which employees can utilise and that contract remedies no longer exist Likewise, in Mohlaka v Minister of Finance and Others [2009] 4 BLLR 348 (LC), the Labour Court held that in situations where an employee has a remedy in terms of the LRA, there is no need to develop the common law and further held that common law contractual claims should not be entertained when it overlaps with a remedy provided for in the LRA.

In the most recent case, South African Maritime Safety Authority v Mckenzie, the employee, relying on his remedies under the LRA, referred his dismissal dispute to the CCMA alleging that his dismissal was substantively and procedurally unfair. The matter was settled at the CCMA with the employer paying the employee an amount equivalent to one year's salary. The employee proceeded to institute proceedings in the High Court and alleged that his dismissal was also a breach of his contract of employment in that it was subject to an express, alternatively implied or tacit term that the contract would not be terminated "without just cause" and claimed damages.

This case follows on the controversial judgments of Old Mutual Life Assurance Co SA Ltd v Gumbi [2007] 8 BLLR 699 (SCA) and Boxer Superstores: Mthatha and Another v Mbenya [2007] 8 BLLR 693(SCA), in which it was unequivocally acknowledged by our courts that there is a common law contractual obligation on an employer to act fairly in its dealings with employees.

The question that arose in South African Maritime Safety Authority v Mckenzie (and with which our courts have long grappled) is whether a beneficiary of a right can enjoy not only the benefit of the right itself but also a right to claim damages. In other words, if an Act provides a special remedy, should that exclude ordinary contractual remedies?

The SCA reiterated that the LRA was enacted to give effect to the labour rights guaranteed in section 24 of the Constitution. It also confirmed that section 185 of the LRA is one of the most important rights flowing from the Constitutional guarantee (of fair labour practices). The SCA held that insofar as employees are subject to and protected by the LRA, their contracts of employment are not subject to an implied contractual term that they will not be unfairly dismissed. It concluded that the LRA contains comprehensive statutory mechanisms for resolving disputes of this nature and that it is unnecessary to imply a term into a contract of employment, which not only deals with the same subject matter, but also overlaps with the statutory scheme and remedies provided.

In view of the strong rejection of attempts to circumvent the statutory scheme provided, it seems that the LRA and its statutory remedies still remain the "one-stop shop" for labour related disputes.

Aadil Patel, Director, Employment Law
Mariska van Zweel, Candidate Attorney, Employment Law

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