Annelise Petzer | SchoemanLaw Inc  

Category: Contract Law | Employment Law  

Introduction 

The question of whether a written and signed contract of employment is needed for employment to be considered legally binding is a common one in South African labour law. In this article, we will explore this question in detail, looking at relevant case law and legislation. We will also examine what would happen if a dispute arose where no valid contract of employment had been signed. 

The Importance of a Written Contract of Employment 

While a written contract of employment is not strictly necessary for the validity of an employment relationship1, it is the foundation of the relationship between an employee and their employer, and it links the two parties in an employment relationship. The existence of an employment relationship is the starting point for the application of all labour law rules. If there is no employment relationship between the parties, the rules of labour law do not apply to that relationship2. 

Types of Contracts of Employment 

Several types of contracts of employment can be used in South Africa. These include: 

Permanent Contracts: 

Permanent contracts are a cornerstone of traditional employment relationships. They are designed to be open-ended and have no specific end date. The intention behind a permanent contract is to establish a long-lasting and ongoing employment relationship between the employer and the employee. Employees under permanent contracts typically enjoy greater job security and a stable income. These contracts are suitable for roles where the employment is expected to continue indefinitely, such as those in management, professional positions, or positions that are essential to the core operations of the company. While permanent contracts offer stability, they also come with certain obligations for employers, including adherence to labour laws, employee benefits, and notice periods in case of termination. 

Fixed-Term Contracts: 

Fixed-term contracts, as the name suggests, have a defined duration and are established for a specific period or the completion of a particular task or project. These contracts are often used when an employer needs additional workforce for a temporary period or when the nature of the work is project-based and not ongoing. Fixed-term contracts can provide flexibility to employers in managing their workforce and resources. However, they must be careful to ensure that the terms and conditions of these contracts comply with labour laws, including provisions for renewals, termination, and notice periods. Employees on fixed-term contracts are entitled to certain benefits and protections as stipulated by employment laws and regulations. 

Independent Contractor Contracts: 

Independent contractor contracts are distinct from traditional employment contracts in that they establish a different legal relationship. These contracts are typically used when individuals or entities are engaged to provide specific services to a company, but they are not considered employees. Independent contractors are often hired for specialized work, and these contracts are meant to protect the company from some of the obligations that come with traditional employment, such as payroll taxes, benefits, and certain labour rights. However, it's essential to note that misclassifying individuals as independent contractors when they should be employees can lead to legal issues and liabilities. Labour laws and court rulings often determine whether someone is a true independent contractor or an employee, and companies must be careful to abide by these regulations. 

In the case of independent contractor contracts, employers should also be aware that certain jurisdictions may impose legal obligations and restrictions to prevent the misuse of such contracts to evade labour laws or employee rights. Companies must ensure that these contracts are accurately structured and adhere to relevant employment regulations to avoid legal disputes and safeguard the rights of the workers involved. 

Case Law and Legislation 

The Labour Relations Act ("LRA")3 and the Basic Conditions of Employment Act ("BCEA")4 are the main employment law statutes in South Africa5https://www.ilo.org/ifpdial/information-resources/national-labour-law-profiles/WCMS_158919/lang--en/index.htm. While the LRA does not require a written contract of employment, it does require that employers provide employees with certain information in writing, such as the terms and conditions of employment, the employee's remuneration, and any other benefitshttps://www.ilo.org/ifpdial/information-resources/national-labour-law-profiles/WCMS_158919/lang--en/index.htm. The BCEA, on the other hand, requires employers to provide employees with a written contract of employment not later than the first day of the employee's employmenthttps://labourguide.co.za/employment-condition/the-importance-of-the-employment-contract.  

In Georgieva – Deyanova / Craighall Spar 6, it was held that an employer must provide an employee with written particulars of employment, including the nature of the employment, the date on which employment commenced, the employee's remuneration, and any other benefits. Failure to provide this information can result in a dispute between the employer and the employee. 

What Happens if a Dispute Arises? 

If a dispute arises where no valid contract of employment has been signed, the employee can approach the CCMA or a bargaining council for assistance. The CCMA or bargaining council will then attempt to resolve the dispute through conciliation. If conciliation fails, the dispute can be referred to arbitration or the Labour Court.  

In the case of the National Union of Metalworkers of South Africa and Others v Fry's Metals (Pty) Ltd7, it was held that an employment relationship could exist even if there is no written contract of employment. In this case, the employer argued that the employees were independent contractors and not employees and, therefore, not entitled to certain benefits. The court held that the employees were, in fact, employees and were entitled to the benefits in question. 

Conclusion 

While a written contract of employment is not strictly necessary for the validity of an employment relationship, employers are required by law to provide employees with a written contract of employment. The contract of employment is the foundation of the relationship between an employee and their employer, and it links the two parties in an employment relationship. If a dispute arises where no valid contract of employment has been signed, the employee can approach the CCMA or a bargaining council for assistance. The CCMA or bargaining council will then attempt to resolve the dispute through conciliation, and if conciliation fails, the dispute can be referred to arbitration or the Labour Court. 

Annelise Petzer | SchoemanLaw Inc  

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