Automatic Termination Provisions in Contracts of Employment

25 Nov, 2015

In the recent case of South African Transport and Allied Workers Union v Fidelity Supercare Cleaning Services Group (Pty) Ltd [2015], the court was asked to consider whether an employer was entitled to rely on the contractual provisions in an employment contract to bring that employment relationship to an end.

It was held that where an employment contract provides that it will automatically terminate on the occurrence of an event, the employer may rely on that event to bring the employment relationship to an end. However, it was held that the term ‘event’ must be given a narrow interpretation to maximise protection of job security and the constitutional right to fair labour practices. It was therefore held that a contractual provision that provides for automatic termination at the behest of a third party, undermines the employee’s right to fair labour practices and is contrary to public policy and unenforceable.

Therefore, labour brokers may no longer provide for an employee’s employment to automatically terminate upon instructions from a client or when the client terminates its contract with the labour broker. Instead, in such a case, an employee must be dismissed for operational requirements and the proper retrenchment procedure must be followed.