Gauteng Business News

Send  Share  RSS  Twitter  17 Apr 2012

LEGISLATION: Senior Employers- a Potential End to Costly Employment Litig


Recent Gauteng Business News

Should the amendments to labour legislation be passed into legislation and survive constitutional scrutiny, one amendment will mean that terminating the employment of senior employees will be simpler. No longer would there be long, drawn out disciplinary enquiries followed by equally lengthy arbitration proceedings. This is according to Aadil Patel, Director and National Employment Practice Head, Cliffe Dekker Hofmeyr.

“This could at least, in theory, ensure that once a senior employee's employment is terminated, an organisation regains its stability fairly quickly in that it can focus its energy on the business instead of keeping one eye on the dispute resolution process following the dismissal,” he says.

Employment Dismissal According to Earning Threshold

Patel explains that the proposed amendment to the Labour Relations Act inserts a provision (s188B) entitled "dismissal of employees earning above a threshold". In essence, it provides that employees earning above a threshold as determined by the Minister may be terminated on three months' notice or such other period as determined in their contracts of employment. The proposal at present is that this provision will apply to employees earning above R1 million per annum. This amount must still be negotiated at Nedlac.

“Once notice is provided to the senior employee, the termination will be deemed to be procedurally and substantively fair. The proposed amendment will apply to contracts of employment concluded before the commencement of the Section. However, it will only be effective two years after the commencement date of the s188B. The commencement date of the proposed section will be determined by the legislature,” he says.

Could This Mean ‘Unfair Dismissal’ from Employment‘

Patel notes that the question as to whether senior employees may, despite this provision, rely directly on the Constitution to protect them against "unfair dismissal" remains to be seen. The debate on the development of the common law and contract of employment in the light of the exclusion from statutory protection against unfair dismissal will certainly heat up again as well.

“Should this amendment come into effect the employment contracts of senior employees will need to be revisited. New contracts of employment would have to be carefully drafted so as to ensure a balance of power between the interests of employers and employees,” he adds.


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