PRE-EMPLOYMENT DISMISSAL

In terms of section 185 of the Labour Relations Act 66 of 1995 (LRA), employees (and only employees) enjoy protection against unfair dismissal. The question as to who is an employee has always been a vexed question in our law: at present, our courts use the ‘dominant impression’ test to ascertain whether an applicant is indeed an employee, an independent contractor or something else (for instance, a director of a company, a partner or a member of a close corporation). The most recent (and, for that matter, one of the most useful) decision on the test for distinguishing between an employee and an independent contractor is SABC v McKenzie (1999) 8 LAC 6.11.1. The fact that only employees are protected against unfair dismissal has, of course, led to considerable problems of jurisdiction — the CCMA can, for instance, proceed with a conciliation of an unfair dismissal dispute if (and only if) the applicant is indeed an employee.
Obtaining the status of employee
In view of the fact that only someone who qualifies as an ‘employee’ enjoys protection against unfair dismissal, it appears, at first sight, to be nonsense to talk about pre-employment dismissal. However, the question has arisen as to when a person becomes an employee: when he or she agrees to the employment, signs a letter of appointment, signs the employment contract, or when he or she begins working? Does the fact that a person receives a letter of appointment in May indicating that she will begin working in July mean that this person is an ‘employee’ for June? Or does she only become an employee when she commences her duties with the employer?
From a contractual perspective, of course, it is worth bearing in mind that, technically speaking, someone who has been dismissed is no longer an employee. However, our law changes this common law rule by providing specifically for remedies relating to the unfair termination of employment. There is no such clarity in respect of when employment begins. Often a clause in an employment contract will specify when the contract or when the employment commences. But there may not be such a clause; even if there were, disputes may still arise. The contractual issue here is that of offer and acceptance: whether the employer’s offer had been accepted by the employee (as a rule, once an offer has been accepted, it cannot be revoked).
In the Labour Appeal Court
Woolworths (Pty) Ltd v Beverley Whitehead (2000) 9 LAC 6.12.2 is one of the best-known and, for that matter, one of the most controversial decisions ever handed down by the Labour Appeal Court. The importance of this case lies in the fact that it deals with issues such as discrimination on the grounds of pregnancy. The applicant was not appointed to a post; she argued that the employer’s failure to appoint her was based on the fact that she was pregnant.
But one of the issues before the Labour Appeal Court was whether the employer could change its mind:
“In that event the question that arises is whether, between the date of the interview and the date of the taking of the final decision by the employer on which of the candidates he gives the job to, an employer is not entitled to change his mind about which candidate he thinks is the best for the job. Clearly, an employer is entitled to change his mind between those two events provided he has not yet made an offer to anyone of the candidates. In my judgment it is irrelevant whether the change of mind is due to his own reconsideration of issues or whether he has spoken to a colleague or an adviser. The fact of the matter is that the period between the interview and the taking of the final decision is for the employer to consider all the candidates – their strengths and weaknesses as well as what his/her business requirements are before he makes the final decision to give the job to one of the candidates or, indeed, not to give the job to anyone of the candidates.” (at paragraph [22] of the judgment).
The Labour Appeal Court’s judgment in this case focused on other issues — it does not devote much attention to the issue of when employment starts. But before the matter got to the Labour Appeal Court, however, a judge in the Labour Court had considered the issue in some detail.
In the Labour Court
In Whitehead v Woolworths (Pty) Ltd (1999) 8 LC 6.12.4 the Labour Court held that it is not sufficient for an applicant to prove that a contract of employment had been concluded. The fact that there was an employment contract merely means that the applicant has a contractual claim, but it does not mean that the applicant is an employee for the purposes of protection in terms of the LRA. The contact of employee comes into existence, the court held, at the point where the employer’s offer is accepted, but the LRA’s protection only comes into effect at the point in time where the applicant ‘actually commences her performance or at least tenders performance in terms of the contract’ (paragraph [7]).
In Jack v Director-General Department of Environmental Affairs (2002) 11 LC 6.9.3 the employee received a letter of appointment and resigned his position in order to take up the new job. The day before commencing work with the new employer, however, the employee was told that there had been an administrative error and that his appointment had been cancelled. The settlement between the parties (reached before the matter went before the Labour Court) provided that the employee would be employed for a one year period only. The remaining issue before the court was the issue of costs: one of the points raised by the employer in this regard was that the person was not an employee because he had not yet rendered services and had not yet been remunerated — this meant, argued the employer, that the Labour Court did not have jurisdiction to order payment of costs. The Labour Court rejected this argument, ordering the employer to pay the employee’s legal costs.
More recently, the issue of termination of the relationship before the employee tenders or renders services was at issue in Wyeth SA (Pty) Ltd v Manqele & others (2003) 12 LC 7.1.1. The employee was offered a position as sales representative. A written employment contract was concluded on 15 March 2000, providing that the employment was to commence on 1 April 2000. But before 1 April came around, however, the employer informed the employee that it was no longer prepared to employ him. The reasons for this related to a motor vehicle: according to the employer, it was agreed that the employee could purchase a new motor vehicle; used vehicles were not allowed. However, the vehicle selected by the would-be sales representative turned out to be used. The employer regarded this as being a serious misrepresentation.
The ‘employee’ referred the matter to the CCMA, and one of the jurisdictional issues raised before the CCMA was whether the person was an ‘employee’. The CCMA concluded that he was (by virtue of the employment contract), and the employer sought to have the award reviewed and set aside on that point.
In an admirably lucid judgment, the Labour Court held as follows:
‘The interpretation of the definition of “employee” adopted in Whitehead v Woolworths (Pty) Ltd (supra) [the Labour Court decision referred to above] necessarily consigns a person such as the first respondent, who is an employee party to a valid contract of employment to become effective on a later date, to a jurisprudential limbo unless and until that party physically renders services in terms of that contract. Persons in these circumstances may well have resigned from their existing employment and put themselves at considerable financial risk in the expectation of commencing work in terms of an agreement that is binding on both parties at common law. To deny the statutory protection of the security of employment conferred by the LRA in the interregnum between the conclusion of a valid contract of employment and the physical commencement of work seems to me to be contrary to a purposive interpretation of the definition of “employee”.
A less literal approach to the statutory definition of employee is further justified by the extent of the constitutional protection of employment rights. Section 23(1) of the Constitution provides that “[e]veryone has the right to fair labour practices”. The choice of the word “everyone” was deliberate; other constitutional labour rights extend to a “worker”.
A person who is an employee party to a binding contract of employment is obliged to commence work, and entitled to receive remuneration on the date that the parties agree that these respective rights and obligations will commence. In my view, the term “employee” as defined in section 213 of the LRA and the requirement that a person “work” for another to be an employee extends to a person who is contracted to work.’ (paragraphs [20]-[22]).
The Labour Court rejected the employer’s review application.
Unsettled
While this point in our law appears to be unsettled, the decision of the Labour Court in Wyeth is extremely persuasive. One of the very few decisions to deal exactly with this point, its approach is perhaps preferable over the literal and technical approach of the Labour Court in the first Woolworths decision. It is also clear, especially on the facts of this case, that there is a lot at stake, especially for the employee. An employee would suffer considerable prejudice if he or she were to resign from one position in order to take up another, only to find that the employer does not intend to comply with the provisions of the employment contract. It should be borne in mind, however, that the unfair dismissal protection (as it was extended in the Wyeth decision) is only one option at the disposal of the employee — he or she could always approach either a civil court (or the Labour Court in terms of section 77 of the Basic Conditions of Employment Act) on the basis of breach of contract.