Rather Strange Retrenchment Judgement (Buthelezi v Municipal Demarcation Board, Labour Appeal Court, 2005)

September 12, 2016

Although the case dates to 2005, it appears that this judgement has mainly recently become more widely known.


The judgement (of the Labour Appeal Court) said that if an employee is on a fixed-term contract the employee cannot be retrenched earlier than the end-date of the contract. This means that should operational reasons dictate that the employee must be retrenched then the employer would have to pay the employee up to the end of the contract.


I do not agree with this judgement. It means that employment or the obligation to pay shall not end prior to the stated end-date even when a business identifies an objective need to retrench. The employer’s hands will be tied, even in desperate financial circumstances. This cannot be correct, and what if the employee resigns before the end of the stated period? Will the employer be able to claim the value of the salary due till the end of the stated period?


Another effect of this judgment is to give non-permanent employees more rights than permanent employees.

The judgment can be attacked from many angles supported by many reasons. However, let us consider ways to “rectify” matters for practical implementation in the workplace. I am sure another court or a superior court will take a different view. Let’s wait for that one.


In the meantime, it is suggested employers include a clause in the fixed-term contract along the following lines …..the employee agrees that this contract may be terminated for operational reasons or misconduct or incapacity or incompatibility prior to the stated end-date of this contract and that the employer’s obligation to pay a salary to the employee ends upon the date of retrenchment or redundancy or dismissal, as the case may be, and a notice period, or the giving and serving of notice, one party to the other, shall be x months.


If the contract is related to a specific project or function or event then provision should be made in the contract for the possibility of termination prior to the stated end-date due to the project, etc., ending earlier than anticipated.




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