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Termination Clauses

Automatic termination clauses

Thu, 18 Aug 2011 11:52

Jonathan Goldberg

By Jonathan Goldberg

Temporary employment contracts are common, whereby employers have successive temporary employment contracts with their employees which has the effect that the employee is not considered a permanent employee and as such, is not afforded all the rights they would be entitled to in terms of legislation. Employers have been accused of facilitating such a scenario in order to purposefully circumvent the obligations they have in terms of their employees.

With these type of temporary contracts, the applicable clause usually states that the contract will come to an end upon a specified even or specified date occurring, eg. “On the 4th August 2011 the contract of employment will end” or “When the construction of 4 Atholl Road is completed, the employment contract will come to an end”.

This type of clause is viewed by the Courts as being acceptable and legal as the termination is not viewed as a dismissal, but that the contract of employment simply ended and the employee’s rights are not being denied to him / her. The employee has some sort of predictable future in front of them and can plan accordingly.

Other types of automatic termination clauses have neither defined specific date nor event. This clause might simply state that the employment contract will come to an end when the employee’s services are no longer required or when the employer simply does no longer want to keep the employee in their employ.

The Labour Courts find these type of clauses repugnant as they do not allow the employee any form or predictability or security. These are not compliant with the law and the purpose is more often than not an attempt to circumvent the obligations of the applicable labour legislation. These employees may be then regarded as unfairly dismissed if the employer relies on such clauses.

Employers are cautioned to consider the wording of the termination clauses and the purpose for which they are drafted. The Courts are actively stamping out the abusive versions and will penalise employers severely should they fall foul of the requirements for legality of such employment contracts.

Jonathan Goldberg, CEO of Global Business Solutions.