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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This month's newsletter looks again at the newly promulgated Code on Sexual Harassment. Last month we looked at the definition of sexual harassment. This month we focus on the Code's requirements of how sexual harassment should be managed. We also look at two new decisions, one dealing with the creation of an expectation of a renewal of a fixed-term contract and the other with the unilateral withdrawal of benefits.

This public newsletter is a free edited version of the subscriber newsletter, and does not contain all the information contained in the subscriber newsletter.


Creating an expectation of renewal of a fixed-term contract

Many employers opt for fixed-term contracts, often for sound reasons but also to avoid making permanent appointments. All too often the fixed-term contracts are rolled over year after year, leading to frustration among the employees. This scenario arose in King Sabata Dalindyebo Municipality v CCMA & others (2005) 26 ILJ 474 (LC) where the employer municipality had employed 44 employees since 1999 on one-year fixed-period contracts to provide cleaning services. These contracts were renewed in 2000 and 2001. In 2002 the employees demanded permanent positions and the municipality initially refused to renew the contracts, but once the employees withdrew their demand, the contracts were renewed. In 2003 the employees were advised that their contracts would not be renewed as there had been a decision to provide the employment to unemployed persons on a rotational basis rather than retain the employees.

The Labour Court upheld the CCMA's decision that the renewing of the contracts had created a reasonable expectation that their contracts would be renewed, because the money was available and the work was necessary. The arbitrator had held that the dismissal was unfair and ordered reinstatement. The Labour Court upheld this decision.

The unilateral withdrawal of benefits

How should an employer go about withdrawing benefits that have been available to employees for some time? If there is a sound business reason for it, can the employer withdraw the benefits without consultation?

This issue arose in Protekon (Pty) Ltd v CCMA & others (2005) 26 ILJ 1105 (LC). The employer unilaterally withdrew travel concessions to staff which had been enjoyed for many years and replaced this with a once-off salary increase. It was alleged that the unilateral withdrawal of the benefit was an unfair labour practice. The employer argued that the travel concession was a privilege, not a benefit, and could be withdrawn without consultation.

The Labour Court held the travel concession was a benefit and said there were two instances where the CCMA can scrutinise the provision of benefits. The first is where the employer fails to comply with an existing contractual obligation and the second is where the employer exercises a discretion that it enjoys under the contractual terms of the scheme conferring the benefit.

The Court endorsed the approach that where there has been a withdrawal of a benefit, there should be a fair reason (substantive fairness) for the withdrawal and there must have been a fair procedure (procedural fairness) prior to its withdrawal. The Court found the employer had a genuine commercial rationale for the withdrawal of the concession and that this amounted to a fair reason. The Court criticised the conclusion reached at the CCMA that simply because there was a fair reason, the employer could make the decision without consultation.


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Bruce Robertson
August 2005
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