Repudiation and dismissal

A common phenomenon in certain industries is that employers rely upon submissions and allegations made by employees in settlement negotiations or other discussions during their employment to allege that such employees repudiated their employment agreements. In practice, such repudiation is accepted with the aim of lawfully cancelling the employment agreement on a basis which suits the employer. This trite contractual remedy may not necessarily apply as a rule.

It is erroneously understood that if an employer indicates repudiation and accepts such repudiation, a dismissal will be viewed as fair.

Apart from establishing whether a dismissal is fair or unfair, one should determine whether there was a repudiation of the contract.

The relevant sections of the Labour Relations Act 66 of 1995 (“LRA”), together with Schedule 8, Code of Good Practice: Dismissal, should be referred to as this would guide an employer when considering whether a dismissal would be fair or not.

To logically understand these two concepts in co-existence with each other, it will be explained separately below:

Dismissal – fair or unfair

With reference to section 200A of the Labour Relations Act (“LRA”) in determining who is an employee, together with the dominant impression test, every employee has the right not to be unfairly dismissed.

Section 186 (1) of the LRA defines a dismissal:

An employer has terminated a contract of employment with or without notice.

When an employee is dismissed without any procedure and/or substance it will constitute an unfair dismissal.

In terms of Section 188 of LRA, a dismissal will be unfair if the employer fails to prove both (read together with the provisions of Schedule 8 of the LRA):

That the dismissal was for a fair reason which will normally relate to the employee’s conduct or capacity or the dismissal is based on the operational requirements of the employer; and

The dismissal was in accordance with a fair procedure.

For purposes of determining the fairness – or unfairness – of a dismissal, an employer should be reminded that any dismissal that is not in accordance with a fair reason or a fair procedure will constitute an unfair dismissal, even though the prescribed notice periods in terms of the employment contract and/or the proviso of the governing legislation were followed.

However, each case requires evaluation on its own merits to determine the appropriate sanction as dismissal may not necessarily be justified.

Three pertinent grounds might render a dismissal to be appropriate:

  • The conduct of the employee;
  • The capacity of the employee; and
  • The operational requirements of the Employer.
  • Factors relating to the employee itself:
  • Length of service;
  • Previous disciplinary record; and
  • Personal circumstances.

Further to the above, employers should establish disciplinary rules in their workplaces to guide the employees on the determining the conduct expected from them, which rules should be communicated in such a manner that all rules are understood by all employees.

Courts have endorsed a guideline for corrective/progressive discipline in the workplace and it is required that efforts be made in order to correct the employees’ behaviour.

Whilst it is not normally appropriate to dismiss an employee for a first offence, dismissal for some first offences would be justifiable, such as:

  • Gross dishonesty;
  • Willful damage to property of the employer;
  • Willful endangering the safety of others;
  • Physical assault; and
  • Gross insubordination.

Consistency in applying the sanctions by employers is a factor taken into account by the relevant forums when considering fair or unfair dismissals.

A dismissal should follow a fair procedure and the employee should, after being allowed reasonable and sufficient time to present his/her case, be afforded the opportunity to respond to all the allegations against him/her.

Repudiation of contract.

The second concept is the one of repudiation.

A breach of contract by either party entitles the other party to either accept the breach or reject same and order specific performance.

Material breach of contract constitutes repudiation where it evinces an intention on the part of the guilty party not to continue with the contract. As explained below, the conduct of an employee cannot easily be proven to constitute repudiation of its employment agreement. Moreover, repudiation in itself does not cancel a contract.

In the Labour Appeal Court in Fijen v CSIR (1994) 8 BLLR 8 (LAC), the appellant, a senior employee claimed in several correspondence to his employer that he considered the relationship between himself and his employer to be permanently damaged and suggested that the relationship be terminated on the basis of a voluntary redundancy together with a financial packaged payment. The employer, being the respondent in the matter, relied upon his statements to dismiss the employee based on repudiation of the agreement which was so accepted.

In the above matter and in respect of the alleged repudiation, the Court held that the appellant at no stage showed a clear and unambiguous intention not to adhere or continue with his employment, by neither words nor conduct. The appellant also did not act in a manner that would have led to a reasonable person to come to the conclusion that the employment contract was repudiated.

The Court found that the employee was entitled to propose termination of his employment and that such proposal did not constitute repudiation of his contract.

It needs to be mentioned that the court had no difficulty in finding that the respondent purportedly terminated the appellant’s contract on the basis that the contract was repudiated, and such repudiation was accepted. It was not considered whether notice had to be given or even whether a fair reason existed for accepting the repudiation.

The court subsequently found that the appellant was dismissed and such dismissal was substantively unfair.  Perhaps, should the set of facts be similar in a different discipline of law, for instance a dispute regarding a commercial contract, a different court might come to a different conclusion and confirm repudiation and the concomitant results.

By Douw Breed

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)