NOT WORTH THE PAPER IT’S PRINTED ON?
The One Month’s Notice Provision
in Employee Contracts
Most employment contracts in South Africa contain a clause that states, “Either party may terminate this contract of employment by giving one month’s written notice”. And many employers mistakenly believe that they can thus fairly terminate an employment contract by simply giving one month’s written notice to the employee. Simply speaking, you can’t!
The reason you can’t is because the Labour Relations Act says so. In terms of this Act, which supersedes any other agreement you may have with the employee, you have to (1) have a valid (substantive) reason to dismiss someone, and (2) you have to do it in a fair way (procedurally).
- Substantive fairness means that the employer has a valid reason to dismiss the employee and the only valid reasons for dismissal are based on:
- the employer’s operational requirements (retrenchment);
- the employee’s misconduct, e.g. theft or fraud or assault; or
- the employee’s poor performance (incapacity).
- Procedural fairness is following the correct procedure before dismissing an employee. For example, to effect a retrenchment, employers must follow a consultation process, to implement a dismissal for misconduct they must follow the disciplinary procedure, and for poor performance (incapacity) they must follow the counseling procedure.
In view of the above, why do employers even bother to put a notice of termination clause in an employment contract? The reason, again, is because the law says you must, i.e. the Basic Conditions of Employment Act, states that there must be a clause dealing with notice of termination.
What then is the relevance and applicability of the notice of termination clause apart from complying with the law? The answer is very little. If employers dismiss for misconduct or incapacity, they do not have to pay notice anyway, and if they retrench a notice period is required.
The only beneficiary of the requirement to put a notice period into employment contracts is the employee, who has the right, at any time and for any reason, to unilaterally terminate his/her employment contract by giving the employer the required written notice. And there is nothing in law that the employer can do to prevent this.