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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. Worklaw’s March 2004 newsletter looks in depth at whether managerial prerogative includes the amending of contracts of employment. We also look at a new decision dealing with dramatic changes to the way labour cases are being brought when employees use the constitutional right to fair labour practices

This public newsletter is a free edited version of the subscriber newsletter.


Higher damages awards ahead?

In the recent case of Denel (Pty) Ltd v D P G Vorster (SCA Case No: 13/2003 Judgment delivered 5 March 2004) the Supreme Court of Appeals (SCA) appears to have lifted the cap on employee claims from the 12-month maximum allowed in terms of the LRA.

The principle laid down by the court is this: Where the employment contract incorporates the disciplinary code, and where the employer fails to follow the laid down procedure, there has been a breach of contract by the employer. Contractual damages may be payable where the employee’s position would have been different if the employer had fulfilled its contractual obligations.

This case is important for a number of reasons. The first is that employers could face higher damages claims in labour disputes because the Supreme Court of Appeal indicated that the Labour Court does not have sole jurisdiction over labour matters. One of the advantages of taking a matter to the High Court are that there is no limit on the damages that can be claimed, and an application does not have to be made within 30 days. In accepting the matter from the Pretoria High Court, bypassing the Labour Court, the SCA indicated that it believed it had the right to govern decisions of all the other courts.

While it is clear that the Labour Court is soon to merge into the High Court and the Labour Appeal Court into the SCA, what must be of concern to employers is that the employee used the constitutional guarantee of fair labour practices as a means of freeing himself from the constraints of the LRA, as regards time periods and the limitation on compensation. The Pretoria High Court heard the matter without hesitation, as did the SCA on appeal. It seems to us that this is a troubling development because it upsets the predictability of the LRA and does not seem to appreciate the policies underpinning the LRA.

To avoid procedural fairness being seen as a breach of contract, it seems that employers must separate the disciplinary code from conditions of employment. Even then there is no guarantee that the High Courts will not see every deviation from an agreed procedure as a violation of the constitutional right to fair labour practices.

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Bruce Robertson
March 2004
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