What are an employee’s obligations to an employer once the employment relationship ends?

 

Notice

 

The employee is obliged to give notice in terms of the contract of employment or if there is no contract, in terms of the Basic Conditions of Employment Act 75 of 1997 (BCEA). The BCEA provides for minimum notice as follows:

• One week’s notice, if the employee has been employed for six months or less.
• Two weeks’ notice, if the employee has been employed for more than six months, but not more than one year.
• Four weeks’ notice, if an employee has been employed for one year or more or is a domestic worker or a farm worker who has been employed for more than six months.

An employee may not take leave, other than sick leave or maternity leave during the notice period.

If the employee refuses to serve a notice period, this amounts to a breach of contract of employment or law, and the employer is entitled to pursue its rights in this regard.

An employee who does not work out the notice period owes the employer an amount equal to what would have been earned in wages during such period. Employers often have difficulty claiming such money because the BCEA does not allow an employer to make wage deductions without an employee’s consent. This may be remedied by way of the inclusion of a clause to this effect in the contract of employment/written particulars of employment or a collective agreement.

 

Employer assets / belongings

 

At the conclusion of employment, the employee is obliged to return any items belonging to the employer. This would include any equipment, uniforms, or tools of trade that have been issued in order for the employee to perform their work.

What are an employer’s legal obligations to an employee once the employment relationship ends?

 

The employment relationship ends when:

• The employee is dismissed;
• The employee resigns;
• The employee is retrenched;
• The employee retires;
• A fixed-term contract comes to an end;
• By mutual agreement; and
• The death of either party.

 

1. A certificate of service must be given to an employee on termination of his/her services.

2. A letter of termination that briefly sets out the reasons for termination of services must be given to the employee in a form and language that the employee can reasonably understand. If an employee is illiterate or does not understand the contents of the letter, it must be explained orally by the employer, or on behalf of the employer by someone in a language that the employee understands.

3. Notice – In the case of dismissal, unless there are grounds, such as gross misconduct, for dismissing the employee without allowing him/her to work out his/her notice period (‘summary dismissal’), the dismissal must be with notice. The employer can decide whether to allow the employee to work out the notice period, or to pay out the notice period without the employee having to remain at work. Payment in lieu of notice is advised when an employee is dismissed.

 

NB – An employer may not give notice to an employee when they are on leave, be it annual, sick, or maternity leave. Leave may also not be taken during the notice period. Statutory notice periods are as follows:

 

• One week’s notice, if the employee has been employed for six months or less.
• Two weeks’ notice, if the employee has been employed for more than six months, but not more than one year.
• Four weeks’ notice, if an employee has been employed for one year or more or is a domestic worker or a farm worker who has been employed for more than six months.

4. Pay outstanding leave – This is compulsory for all forms of termination of employment.For an employee that dies in service, outstanding leave should be paid in accordance with the Master’s letter appointing an executor.
5. Deductions – An employer may not make any deductions from an employee’s remuneration unless the employee agreed to this in writing (including a contract) or the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.
6. Unemployment insurance (ÚIF) – When an employee is dismissed, retires, is retrenched or passes away in service, or the contract comes to an end, the employee or the employee’s  dependants, are entitled to claim benefits from the Unemployment Insurance Fund.

To enable them to do this, the employer must supply them with a properly completed UI19 form which can be downloaded from the Department of Labour website, see link below.

The ‘basic guide to claiming UIF unemployment benefits’ is also available on the department of labour website.

 

7. Compensation for Occupational Injuries and Diseases Act (‘COIDA’) – Notice of employee leaving.
   The employer must notify the compensation commissioner when an employee has left the employer’s services when completing the monthly COIDA return.
8. Payroll – The employer should ensure that the employee’s details are removed from the payroll, and that access to the business premises is revoked or restricted – this applies when an employee leaves for any reason.

What happens when a fixed-term contract comes to an end?

 

What is a fixed-term contract?

 

An employer may have a need for someone to fill a specific position or do a specific job. To meet this need, the employer may use a fixed-term employment contract.

 

A fixed-term contract is defined in section 198B of the Labour Relations Act 55 of 1996 (LRA) as one which expires upon:

1. the occurrence of a specified event;
2. the completion of a specified task or project;
3. a fixed date, other than an employee’s normal or agreed retirement

Note that section 198B of the LRA applies to employees who earn below a specific threshold as set out in section 6 of the Basic Conditions of Employment Act 75 of 1997.

 

For more information on section 198 contracts, see the Information Sheet “Different forms of non-standard employment contracts and when they are used”.

What constitutes a dismissal in terms of section 186 (1) (b) of the LRA?

A dismissal arises, in terms of section 186 (1) (b) of the LRA if:

“…an employee employed in terms of a fixed-term contract of employment reasonably expected the employer-

(i) to renew a fixed-term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or

(ii) to retain the employee in employment on an indefinite basis but otherwise on the same or similar terms as the fixed-term contract, but the employer offered to retain the employee on less favourable terms, or did not offer to retain the employee…”

 

If the contract period has expired, the contract comes to an end automatically. In such a case there is no dismissal.

 

Fixed-term contracts may terminate prior to a fixed date for a reason recognised in law – e.g. misconduct or poor performance. However, a fair procedure has to be followed as per the requirements of the LRA.

 

What must the employee prove in order to succeed with a claim of dismissal?

 

In terms of section 192 of the LRA, an employee bears the duty of proving that there was a dismissal. To prove that he/she was dismissed an employee must prove:

1. the existence of a fixed-term contract of employment;
2. conduct on the part of the employer that led the employee to reasonably expect:

• the employer to renew the contract on the same or similar terms, but the employer offered to renew it on less favourable terms ,or the employer did not renew it, or
• to be retained in employment on an indefinite basis but on the same or similar terms but the employer offered to retain the employee on less favourable terms, or the employer did not offer to retain the employer.

 

What situations are envisaged as dismissals in terms of section 186(1) (b)?

 

Four kinds of situations are envisaged:

1. The first, the most common, is where the employer does not renew the fixed term contract at all.
2. The second situation where this provision may come into play, is where the employer does renew the contract, but on less favourable terms than before.
3. The third is where the employer does offer to retain an employee in employment on an indefinite basis, but on less favourable terms.
4. The last situation is where the employer fails to offer to retain the employee on an indefinite basis.

 

What is meant by a reasonable expectation of renewal?

 

The fact that the employer does not renew the contract does not in itself amount to a dismissal. It is only if the employee had a reasonable expectation that the contract would be renewed that section 186(1) (b) comes into play.

The Labour Appeal Court has made a number of important points in this regard:

• The duty is on the employee to prove that s/he had a reasonable expectation of renewal.
• To discharge this duty, the employee must place facts before the commissioner to show what the expectation was based on. The test is objective: it does not focus solely on the employee’s wish or subjective feelings or perceptions.
• The test can be summarised as follows: “The enquiry is whether a reasonable employee, in the circumstances prevailing at the time, would have expected the employer to renew his or her fixed-term contract on the same or similar terms”.
• Fixed-term contracts almost always contain a clause stating that the employee should have no expectation of renewal. However, if there is such a clause in the contract, the employee will have to present even more evidence to show that he or she had a reasonable expectation of renewal. The employee’s evidence must, in such a case, be even more compelling.

Fixed-term contracts are often over-used or used inappropriately by employers.

Employees on fixed-term contracts have the same rights and obligations as indefinite-period employees. Therefore, if a fixed-term contract employee commits misconduct, this should be dealt with through the normal disciplinary procedures.

What happens when an employee retires?

 

People often use the expression “going on retirement”. In many cases, employees are aware of their retirement age, and there are no issues when they retire. However, there are situations in which an employee does not want to “retire,” leading to the employer terminating the employment relationship. When an employer terminates the employment relationship this is termed a dismissal as per section 186 (1) (a) of the Labour Relations Act 66 of 1995 as amended (“LRA”).

According to section 187(1)(f) of the LRA an employee may not be unfairly discriminated against on any arbitrary ground, including age. The LRA goes on to state that a dismissal based on age is fair if the employee has reached the normal or agreed retirement age.

 

Our courts have given the following important guidelines regarding termination of employment based on age:

 

• Dismissal based on age will be automatically unfair unless the employer can show that the employee has reached the normal or agreed retirement age for persons employed in that capacity.
• It is not unfair for an employer to terminate the services of an employee based on age at any time after the employee has reached his/ her agreed or normal retirement age.
• Employers may include the retirement age in the contract of employment. Under such circumstances this may be regarded as the agreed retirement age.
• The “normal retirement age” applies when there is no agreed retirement age. When determining the normal retirement age, the provident or pension fund rules, company policy or the “norm” (custom and practice) may be relevant considerations.
• If an employee who has reached or worked beyond the agreed or normal retirement age is dismissed for reasons unrelated to age, such as misconduct, incapacity, or the employer’s operational requirements, then the employer must ensure that the dismissal is both procedurally and substantively fair.
• Where an employee continues to work beyond the normal or agreed retirement age, his/her contract may be terminated at any stage thereafter, unless the parties had agreed to a fixed term of post- retirement employment in which case the employer should allow the employee to complete that term of employment.

When does a resignation amount to a constructive dismissal?

 

What is a constructive dismissal?

 

In terms of section 186(1) (e) of the Labour Relations Act 66 of 1995 (LRA), one form of dismissal is when the employee terminates the employment contract (with or without notice) because the employer made continued employment intolerable.

 

This is generally referred to as constructive dismissal or where the employee is forced to resign. At first glance, this does not look like a dismissal at all as it is the employee who resigns. However, it is because the employer makes the working environment so unpleasant and intolerable that the resignation is regarded as a dismissal.

 

What must the employee prove to claim that there has been a constructive dismissal?

 

According to the labour court there are three requirements that an employee must prove in order to claim constructive dismissal, namely:

(1) the employee ended the contract of employment;

(2) the continued employment had become intolerable for the employee; and

(3) the employer must have made continued employment intolerable.

According to the constitutional court, the test for constructive dismissal does not require that the employee has no choice but to resign, but only that the employer should have made continued employment intolerable.

 

The employee must prove that there was a dismissal

 

In terms of section 192 of the LRA, an employee has the duty of proving that there was a dismissal. This applies to equally to constructive dismissals. It means that the employee must prove (by presenting evidence) that s/he resigned because the employer made the employment relationship intolerable.

Objective approach

 

When considering whether there was a constructive dismissal, an objective approach is used. The focus is not on the employee’s (subjective) feelings and perceptions. The employee must introduce evidence to show that he or she reasonably believed that the employer’s actions made further employment impossible.

 

The fact that the employment relationship has become ‘inconvenient’ is not enough. While a single incident may lead the employee to believe that the employment relationship is at an end, it is more often the case that there is a pattern of conduct on the part of the employer.

Taking disciplinary action or incapacity steps against an employee are also not a grounds for constructive dismissal.

 

Resignation must be the last resort

 

An employee should give the employer sufficient time to address the situation or problem.

 

Resignation must be the last reasonable resort available to the employee.  All internal procedures to air the grievances should be followed, and the employee should make every attempt to alert the employer to the problems and not just walk out.  However, in specific circumstances this may not be possible and this would be taken into account in dealing with the matter. For example, an employee who has been seriously assaulted by the employer cannot be expected to remain at work pending a grievance procedure.

 

The resignation must not be voluntary

 

The employee’s resignation must not be voluntary. This means that the employee must not have intended to terminate the employment relationship of his/her free will. An employee who resigns and then later tries to retract the resignation cannot claim to have been constructively dismissed.

 

Examples of constructive dismissal

 

There are many instances where a resignation may constitute a constructive dismissal.  Past cases offer some useful guidance:

• If an employee has been sexually harassed by a co-employee, has reported this to management and yet nothing has been done about the matter, a resignation by the employee may constitute a constructive dismissal. The employer is expected to take action to protect the victim of the harassment.
• Where there was suspension of employees without pay after the employer experienced financial difficulties.
• Where employees were encouraged to resign or face unfair summary dismissal.
• Where management promoted an under-qualified employee and failed to promote an employee without furnishing adequate reasons and knowing that this would be offensive to the employee.
• Where an employee of a temporary employment service was employed on terms that were exploitative and did not comply with the Basic Conditions of Employment Act 75 of 1997.

 

In the following cases the employee did not succeed in proving that there was a constructive dismissal:

• An employee resigned because the employer refused to provide the employee with salary-related information in terms of its existing policy. This was not conduct that (objectively) rendered the employment relationship intolerable.
• The employee failed to use the grievance procedure in circumstances in which there was no basis to conclude that the employer would not in good faith seek to resolve the grievance. The resignation was considered to be premature.
• An employee resigned, claiming unfair targeting for poor performance. The arbitrator found that, if an employer advises an employee of its required performance standards and gives the employee fair opportunity to meet them, the employee cannot terminate a performance review process by resigning and claiming constructive dismissal.

 

Constructive dismissal and section 197 transfers

 

Section 186(1) (f) of the LRA provides that a dismissal occurs where –

If an employee resigns after the transfer of the business, in order to claim constructive dismissal s/he must demonstrate that the terms and conditions or circumstances of work are substantially less favourable than with the previous employer. The new employer is entitled to place transferred employees on new pension and medical schemes, provided the benefits overall are not substantially less favourable. That will be determined by the facts of the case.

What happens when an employee resigns?

 

What is resignation?

 

Resignation is when the employee decides to end the employment relationship. It should be noted that the employer does not need to accept the resignation for it to be valid, as a resignation is a unilateral act giving rise to the end of the employment relationship.

 

Resignation and notice period

 

An employee is required to give an employer notice that s/he intends to resign. The purpose of giving notice is to advise the employer in advance of the date on which the employee will officially cease to work.

 

Resignations should ideally be in writing. However, a verbal resignation still has the effect of ending the employment relationship. Section 37(1) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) requires an employee to serve the following notice periods:

• One (1) weeks’ notice, if the employee has been employed for six (6) months or less.
• Two (2) weeks’ notice, if the employee has been employed for more than six (6) months, but not more than one year.
• Four (4) weeks’ notice, if an employee has been employed for one (1) year or more or is a domestic worker or a farm worker who has been employed for more than six (6) months.

 

The employee and employer may agree to a notice period which is longer than the notice period prescribed in the BCEA, however the employee may not be required to give a period of notice that is longer than that required of the employer.

If an employer decides that the employee need not work all or part of the notice period the employer must pay the employee for the notice period.

At times employees resign but do not work all or some of their notice period. Employers may apply for the court to issue an urgent order of “specific performance”, in other words, order the employee to work the required notice period. The employer could sue for damages, namely the loss the employer suffered as a result of the employee not working his/ her notice period. Pursuing these options may be difficult and costly and therefore employers seldom opt for them.

 

Voluntary resignation and UIF

 

A voluntary resignation is where the employee terminates the employment relationship of his/her free will. An employee who resigns voluntarily may not claim UIF benefits.

 

Withdrawal of notice

 

Because resignation is a unilateral act, the employer does not need to ‘accept’ or agree to an employee’s resignation. Should an employee decide to resign, perhaps in a moment of anger, and subsequently wish to withdraw the resignation, the employer is not obligated to grant such a request and can enforce the original resignation.