Unsigned employment contracts, what to do
Jan du Toit
Contrary to popular believe there is no requirement in terms of labour legislation that an employer and employee must enter into a written contract of employment in order for an employment relationship to exist. This is confirmed by proposed changes to section 186 (1)(a) of the Labour Relations Act where we will see the deletion of the word “contract”. However in terms of section 29 of the Basic Conditions of Employment Act an employer must present to employees in writing, on the day they start to work for the employer, with particulars regarding the employment relationship. This is normally done in the form of a contract of employment, making the document formal and binding on both parties.
The importance of an employment contract and the conclusion thereof prior to commencement of employment cannot be emphasised enough. The contract of employment formalizes the relationship and creates certainty for both parties in the employment relationship. Without a contract of employment employers will find it for instance difficult to prove that the relationship with the employee was for a limited duration or that the employee for instance agreed to work overtime in terms of section 10 of the BCEA.
For some strange reason employees will almost always refuse to sign a contract of employment after commencing employment. The reasons for this could be that the employee believes that the employer is trying to exploit him by inserting something in the contract to which they did not agree, or simply because he (foolishly) believes that he will be untouchable and not bound by the rules of the company in the absence of such an agreement. The latter is definitely not true and such employees will quickly learn that the company’s rules and policies are not employment conditions and that if they were aware of such rules or could reasonably have been expected to be aware of them then they may face disciplinary action.
The written particulars that must be disclosed to the employee follows:
(a) the full name and address of the employer;
(b) the name and occupation of the employee, or a brief description of the work for which the employee is employed;
(c) the place of work, and, where the employee is required or permitted to work at various places, an indication of this;
(d) the date on which the employment began;
(e) the employee's ordinary hours of work and days of work;
(f) the employee's wage or the rate and method of calculating wages;
(g) the rate of pay for overtime work;
(h) any other cash payments that the employee is entitled to;
(i) any payment in kind that the employee is entitled to and the value of the payment in kind;
(j) how frequently remuneration will be paid;
(k) any deductions to be made from the employee's remuneration;
(l) the leave to which the employee is entitled;
(m) the period of notice required to terminate employment, or if employment is for a specified period, the date when employment is to terminate;
(n) a description of any council or sectoral determination which covers the employer's business;
(o) any period of employment with a previous employer that counts towards the employee's period of employment;
(p) a list of any other documents that form part of the contract of employment, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained.
When any matter listed above changes the written particulars must be revised to reflect the change(s) and the employee must be supplied with a copy of the document reflecting the change. If an employee is not able to understand the written particulars, the employer must ensure that they are explained to the employee in a language and in a manner that the employee understands. The written particulars in terms of section 29 must be kept by the employer for a period of three years after the termination of employment.
So how must employers deal with employees that for some strange reason refuse to sign their employment contracts? Well the answer should be simple and that is that if the applicant was presented with a contract prior to commencement of employment and refused to sign the agreement, then no agreement was reached and the applicant will not work for the employer and cannot be considered to be an employee of the employer.
In most cases however the applicant became an employee on the day that he / she commenced employment in the absence of a signed employment agreement. In such cases I would definitely discipline the person that allowed this to happen in the first place. If the employee now refuses to sign the agreement, the employer may have to become creative and first use a bit of “child psychology” in order to confirm the specifics of the employment relationship. It is therefore suggested that the rights of the employee in terms of the BCEA and the verbal agreement held between the parties are confirmed instead of agreed upon.
An example could be;
“We hereby confirm that you have the following rights:
1) the right to work not more than 40 hours per week.
2) the right to be paid R10 000 per month for your services if you have worked 40 hours per week, etc”
The employee may be more disposed to confirm his or her rights rather than to sign a “traditional” formal contract of employment.
Another approach may be to remind the employee of the contract that must be signed, instruct the employee to sign the contract within a reasonable period of time and invite the employee to submit reasons for his / her failure to sign the contract. If the employee does not raise any objections in terms of the contents of the contract he / she may now be disciplined for refusal to adhere to a valid instruction. If the employee however objected against something specific in terms of the contents of the contract, then the employer will not able to prove that the employee is guilty of misconduct and a dismissal may as stated earlier be deemed to be an automatic unfair dismissal.
In Mahlangu vs. Footballers For Life (Pty) Ltd  1 BALR 46 (CCMA), the employee was dismissed for insubordination. Mahlangu was given several opportunities to sign his employment contract, or to give reasons why he would not sign the contract, but failed to adhere to several reasonable deadlines. The employer considered this to be insubordination and dismissed him after being found guilty in absentia. Mahlangu referred his dismissal as an unfair dismissal to the CCMA where the commissioner had the following to say;
“I do not believe that the employer could have been expected to continue with an employment relationship with the employee when the employee had no regard to its instructions. The employer even withheld the employee’s salary in an attempt to have him discuss the contract. The employee ignored such an attempt and he worked for the employer for almost 2 months without receiving a salary.”
Recently an employer deemed it to be an inherent (operational) requirement that all employees must have signed employment contracts in place in order to work for the employer. The employees that did not sign contracts were retrenched based on this inherent requirement in terms of section 189 of the Labour Relations Act. This matter ended up in the Labour Court and it was confirmed that there does not have to be a signed employment contract in place in order for an employment relationship to exist.
Employers must also take note that they cannot dismiss an employee that refused to sign an employment contract if the employee for instance objected to specific provisions in the contract. If the employee is dismissed in order to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee, then that dismissal will be automatically unfair in terms of section 187 of the LRA. An automatic unfair dismissal will be heard by the Labour Court and could result in up to 24 months of the employee’s remuneration to be awarded as compensation.
On the flip side employers must understand that if they have entered into a binding employment agreement with an applicant, that applicant effectively becomes an employee even though the employee has not yet started to work for the employer. Should the employer decide to cancel the employment agreement before the anticipated start date it could be seen as an unfair dismissal in terms of section 186 of the Labour Relations Act. In Wyeth SA (PTY) Ltd vs. Manqele and others (2005, 6 BLLR 523) Manqele signed an employment contract that was terminated shortly before he was due to commence employment with Wyeth. Manqele and Wyeth disagreed over the make of the company vehicle that Manqele was entitled to in terms of this employment agreement. Manqele referred the termination of his contract to the CCMA as an unfair dismissal. Wyeth argued that the applicant has not yet started to work for the company and the termination of the employment agreement that they have entered into could not constitute a dismissal. The matter ended up in the Labour Court and the Court confirmed that the applicant became an employee the minute that he signed the employment agreement.