Can you be dismissed without an employment contract?

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Dismissals are defined by section 186 of the Labour Relations Act which sets out the various circumstances where they are deemed to have occurred. For example, terminating an employee’s contract of employment with or without notice is deemed to be a dismissal.

Most of the circumstances included with this provision refer to a “contract of employment”, and this gives rise to a curious inconsistency with the Basic Conditions of Employment Act. You see, the BCEA defines an employee as “any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration.”

Notice how the BCEA’s definition does not include any reference to a “contract of employment”. While section 29 of the BCEA requires employers to provide their employees with the terms of their employment in writing, these notices are not synonymous with employment contracts. In other words, you could still employ someone even if you break the law by failing to document the terms of their employment.

So, what happens if you fire someone who doesn’t have a documented employment contract, but is still legally deemed to be an employee? Would this constitute dismissal?

A situation like this might arise if you hired someone verbally, only to terminate their employment later due to a dispute over the terms of your agreement. Verbal agreements are legally binding contracts but proving the terms of such an agreement (and whether they give rise to an employment contract or not) can be very tricky – especially if those terms are in dispute.

Thankfully, the amendments to the Labour Relations Act clear up this ambiguity once and for all by removing references to contracts in its definition of dismissal. So, for example, “terminating an employee’s contract of employment with or without notice” will be replaced with “terminating an employee’s employment with or without notice.”

It’s a subtle difference, but it has an important implication: when determining whether a dismissal has occurred or not, it will no longer be necessary to prove that an employment contract existed which, as we have just seen, can be very tricky in the case of verbal agreements. Instead, all that has to be shown is that the person who was allegedly dismissed was, in fact, employed – which is a lot easier to prove.

If indeed an employment relationship does exist – but only needs to be proved – then such action would seem to hold little advantageous consequence for the employer, other than to buy some time. However, if the nature of the relationship is in genuine doubt, then the nature of the relationship could be contested, perhaps to the advantage of the respondent. There is a test that can be applied in such cases to determine the existence of an employment relationship as opposed to that of the independent contractor.

This is known as the “dominant impression test”, and in fact amounts to nothing more than requiring the arbitrator to arrive at a decision “on the balance of probability.” Very basically, the facts that indicate an employment relationship are listed in one column, and the facts that indicate an independent contractor (or the facts that do not indicate an employment relationship) relationship are listed in an adjacent column.

The arbitrator must then weigh up the facts in both columns and decide which list carries more weight and constitutes the stronger indication of a relationship. Is the list of the employment indicators heavier than the list of independent contractor indicators?  If so, then an employment relationship exists, and the dispute will fall under the jurisdiction of the CCMA (or Bargaining Council etc.).

By Cindy Ross

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Sihle Bolani

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