14/06/2017
Resolutive and suspensive conditions
By: P.A.K le Roux
In CLL vol 25 no 4 we discussed the automatic
termination of contracts of employment
where employers have utilised the
mechanism in the context of labour broking or
contracting arrangements. However, in Nogcantsi
v Mnquma Local Municipality & others
(2017) 38 ILJ 595 (LAC) the Labour Appeal
Court dealt with this issue in another important
and often occurring context.
The appellant in this case, a Mr Nogcantsi, applied
for the position of a close protection officer
at the Mnquma Municipality. His application
was successful but his contract contained
a ‘resolutive condition’ to the effect that
his appointment was subject to a vetting and
screening process that was being conducted
and that -
‘… should the revealed outcomes become
negative, your contract will be automatically
terminated.’
The vetting process resulted in the Municipality
receiving a letter from the South African
Police Service in which it was revealed that
Nogcantsi had various criminal charges pending
against him, including attempted murder
and defeating the ends of justice, and that he
had been dismissed from the Police Service.
He had not disclosed this to the Municipality.
The Municipality relied on the resolutive condition
referred to above.
Nogcantsi referred a dispute to the relevant
bargaining council and argued that he had
been dismissed and that the dismissal was
both procedurally and substantively unfair.
The arbitrator found that Nogcantsi had not
been dismissed – his contract had terminated
automatically.
Nogcantsi then sought to review the award in
the Labour Court. His legal representative relied
on the decision of the Labour Appeal
Court (LAC) in Post Office Ltd v Mampeule
(2010) 31 ILJ 2051 (LAC) and the decision of
the Labour Court in Mahlamu v CCMA &
others (2011) 32 ILJ 1122 (LC) where automatic
termination clauses were found to be invalid
because they were in breach of section 5
of the Labour Relations Act, 66 of 1995
(LRA). In the Mampeule decision the clause
provided for the automatic termination of a
senior executive’s employment in the event
that he was removed as a director of the company
he served. In the Mahlamu decision the
clause stated that the contract of a security officer
would terminate automatically on the expiry
of the contract between his employer and
the client of his employer where he was
providing his services; alternatively, if the client
no longer required his services ‘for whatsoever
reason.’ The Labour Court rejected
this argument in the following terms –
‘[10] In my view the present instance is not
one that falls into the category of the unacceptable.
To provide, in the contract of employment
of a security officer, that his appointment
is conditional on a positive vetting
and that the contract will terminate
automatically should the vetting not be
positive, does not serve to deprive an employee
of the right to security of employment
in the same sense as the examples cited
above. In the present instance, the applicant
agreed to the terms of the contract,
and did not dispute that he understood that
should he not be positively vetted, his employment
contract would terminate. The
vetting process was not in the hands or
control of his employer — the letter listing
the pending charges against the applicant
and the fact of his dismissal was generated
by the SAPS. The case is therefore not one
like Mampeule, where the minister as
shareholder took a decision to remove
Mampeule as a director knowing full well
that the clause in question providing for
automatic termination would be triggered.
The present instance is not unlike one
where a clause in an employment contract
provides that a person engaged as an airline
pilot must produce proof of a pilot’s licence,
or a chauffeur proof of an unqualified
driver’s licence, failing which the contract
will terminate. I am unaware of any
decision to the effect that such provisions,
where the condition is not met, deprive the
employee of the right to security of employment.’
Nogcantsi then appealed to the LAC. In argument
his legal representative referred to another
important decision in support of his case,
namely National Union of Leather Workers v
Barnard NO & another (2001) 22 ILJ 2290
(LAC). In this matter the shareholders of a
company had passed a special resolution in
terms of section 349 of the now repealed
Companies Act of 1973 to the effect that the
Company would be wound up. In terms of section
38 of the Insolvency Act, 24 of 1936, this
meant that the contracts of employment of the
employees of the company were terminated automatically
by the operation of law. When the
employees claimed that they had been unfairly
dismissed the employer raised the defence that
there had been no dismissal. The Labour Court
accepted this argument. On appeal, this finding
was overturned. The LAC found that a dismissal
takes place when an employer has engaged
in an act which brings the contract of employment
to an end in a manner recognized as valid
by the law. The special resolution passed by
the shareholders constituted such an act.
The LAC came to the conclusion that, the negative
vetting was not an act of the employer,
the Municipality, that caused the resolutive
condition to take effect and the automatic termination
to take place. This was the action of
the South Africa Police Service. In addition -
‘[32] The act referred to in Barnard (and
Mampeule) must also be understood as a
‘deliberate’ or ‘intentional’ act. The employer
(or the third party) in performing the
act that results in the termination, must, at
least, have directed its will to causing a dismissal.
The latter consequence must have
been the object of its act.
[33] So, on the objective facts, in the light
of the decision in Barnard and the dictum in
Mampeule, there was no dismissal — since
the automatic termination was not caused
by any decision or act of the municipality or
SAPS, which had as its objective the termination
of the appellant’s employment contract.
The appellant bore the onus to prove
a dismissal on a balance of probabilities,
and failed to discharge that burden.’
The LAC also found that the automatic termination
provision did not contravene section 5
of the LRA. Nogcantsi’s lawyer appears to
have drawn a distinction between a suspensive
condition and resolutive condition. If a contract
contains a suspensive condition the contract
does not come into force until such time
as the condition is fulfilled. If a contract contains
a resolutive condition the contract comes
into existence but will terminate automatically
if the condition is fulfilled. It stated the following
-
‘[38] In my view, that criticism of the court
a quo is not valid. It does not matter whether
the condition is suspensive or resolutive.
What does matter is whether the condition
prevents the employee from exercising any
right conferred by the LRA, which is what s
5(2)(b), read with s 5(4) of the LRA, is set
against. The enquiry should be whether the
agreement entered into prevents the employee
from exercising any of such rights,
and not whether the condition is suspensive
or resolutive.
[39] As in the case of a condition requiring
a person appointed, say, to the position of a
driver, to produce a valid driver’s licence,
the vetting condition in this case did not
prevent the appellant from exercising any
right conferred on him by the LRA. Therefore,
the court a quo did not err by likening
the cases of a pilot and a chauffeur to that
of the appellant.’
The examples referred to in these excerpts illustrate
the importance of this decision.