Clauses in restraint of trade agreements concluded between an employer and an employee often present difficult legal issues to deal with. This complexity is due to the fact that a court, in deciding whether to enforce a restraint provision, has to strike a balance between two equal but competing policy considerations, namely, the sanctity of the contract and the freedom of movement of people in a market economy. In striving to balance the sanctity of contract with the right of freedom to trade, it is necessary to decide which of these two policy considerations should take precedence by having regard to the public interest served by them in the particular circumstances. In the watershed case of Magna Alloys and Research(SA)(Pty) Ltd v Ellis, the Appellate Division decided the sanctity of contract had greater precedent in South African law and that undertakings in restraint of trade were prima facie valid and enforceable, unless the party seeking to avoid its obligations could show that the restraint of trade was contrary to public interest. The second consideration, namely that a person should be free to engage in useful economic activity and to contribute to the welfare of society, tempers the sanctity of contract considerations. Accordingly, the courts have struck down any unreasonable restriction on the freedom to trade where it was regarded as contrary to public interest. In considering the reasonableness and therefore the acceptability of restraint of trade provisions from a public policy perspective, the following five questions need consideration: Is there a legitimate interest of the employer that deserves protection at the termination of the employment agreement? If so, is that legitimate interest being prejudiced by the employee? If the legitimate interest is being prejudiced, does the interest of the employer weigh up, both qualitatively and quantitatively against the interest of the employee not to be economically inactive and unproductive? Is there another facet of public policy having nothing to do with the relationship between the parties but requires that the restraint should either be enforced or rejected? Is the ambit of the restraint of trade in respect of nature, area and duration justifiably necessary to protect the interests of the employer? In enforcing a restraint, the court will consider all the facts of the matter as at the time that the party is seeking to enforce the restraint. If a court finds that the right of the party to be economically active and productive surpasses the interest of the party attempting to enforce the restraint, the court will hold that such restraint is unreasonable and unenforceable. Consideration of the enforceability of restraints is often found to be challenging in view of the answers to the above stated five questions often remaining of a factual nature and subjective, i.e. the view and perceptions of the presiding officer play an important role. A further complexity is the limited early effect which the Constitution of the Republic of South Africa had on dispute resolution pertaining to restraints of trade in the employment context and the prospects of imminent changes to the pre-Constitutional era locus classicus of Magna Alloys and Research (SA)(Pty) Ltd v Ellis.

The burden that South African labour law has to bear in relation to the economy is very heavy by international standards. In most industrially developed countries, the economy is strong enough either to provide jobs for most work-seekers or, failing that, an adequate social security system for households without breadwinners in place. In most developing countries with high unemployment rates, the labour law system makes only perfunctory effort to reach out to those facing economic marginalisation. South Africa, essentially a developing country, is not like that. The legal system is strong, works off a firm human rights base, and sets out to grapple with the issues. That is how it should be, but it comes at a price – an oftengraphic exposure of the limits of the law in a stressed society. Businesses operate for profit and survival according to the unsentimental ways of the market, and employees back in a bid to save jobs, lifestyles and livelihoods. The stakeholders use power when they have it, and make claims on the law when they don’t. The legislation and the case law reflect, add to and, to a degree, shape the complexities of these contests, and no more so than in the area of business restructuring.1 The new South Africa has quickly become the destination for foreign investment. The weakness of the rand against the dollar, pound, euro and with the “cost to sell and produce” being so low against these currencies, players on the corporate stage constantly change their make-up and composition. The larger engulfs the smaller, one company buys shares in another, or buys it out entirely, or all or part of its assets, and others are liquidated. In all these situations, employees in South Africa may find themselves with new bosses on the morning after. Under common law employees in this situation were deemed to have been discharged by the former employer, whether or not they have been offered positions in the transformed structure. If they did not want to work under it, they could not be forced to do so. That was because an employment contract was deemed in law to be one of a personal nature that could not be transferred from one employer to another without the employees consent. This research is conducted at an interesting time, when the amendments to the Labour Relations Act 66 of 1995 in respect of the transfer of a business, and in particular section 197, dealing with such matters comes into effect. It is also interesting in the sense that most judgements of the Commission for Conciliation, Mediation and Arbitration (CCMA) and judgements of the Labour Court were moving more or less to a common approach or interpretation of section 197 of the Labour Relations Act 66 of 1995 (hereinafter “the LRA”). Section 197 of the LRA sought to regulate the transfer of a business as a going concern and altered the common law regarding the transfer of a business in two situations – firstly when there is no insolvency, factual or legal, concerned, and secondly in the instance where the transferor is insolvent. The first extreme was when an employer is declared insolvent and the contracts of employment terminated automatically. The second extreme was from the first whereby the employer has to terminate the services of his employees and be liable to pay severance pay in terms of section 1893 of the LRA, which has also been amended along with section 197 of the LRA. It is as if this section was introduced to remedy these extremes. These extremes will be dealt with in detail in this paper. The transfer of goodwill and assets from the seller to the buyer occurs when a business is sold as a going concern. At common law the employees of a business cannot be transferred in the same manner. The Labour Relations Act 66 of 1995 altered this position. By enacting this section the legislature wanted to protect the interest of the employees in such transactions. Whether the legislature has succeeded or not is a matter that will be dealt with in this paper. It is all dependent on the interpretation of this section by the commissioners and judges. By including section 197 in the LRA, the legislature’s intention was to resolve the common law problem where employment contract terminated upon the sale of a business, and this section was intended to be an effective tool for protecting the employment of employees. In order to understand the labour law consequences of the transfer of a business, it is important to understand the provisions of sections 197 and 197A of the Labour Relations Amendment Act 2002. This will be dealt with and each section will be discussed in detail using relevant case law and literature. In considering investing in a South African based company by way of purchasing a share of the company and giving it your own flavour, one has to carefully consider the effects of this transaction. Companies wishing to restructure, outsource, merge or transfer some of its operations will need to understand what the implications of the labour legislation will have on their commercial rationale. Section 197 regulates the employment consequences when a transfer of a business takes place. This is defined to mean the transfer of a business by one employer (the old employer) to another employer (the new employer) as a going concern. Business is defined to include the whole or part of the business, trade undertaking or service. Like the current provision, the new provision referrers to the transfer of a business. It is therefore a wider concept than the sale of a business.4 No attempt is made to define what constitutes a going concern and the controversial issue of whether an outsourcing exercise can constitute a going concern transfer is also not explicitly dealt with. The fact that a business is defined to include a service may be an indication that it was intended to typify outsourcing as a going concern transfer, but this is not necessarily the case.5 The amendments to the Act6 came into effect on 1 August 2002. Sections 197 and 197(A) of the Act consequently seeks to regulate the transfer of a business. These regulations will be dealt with individually and in a format that would make each of the sections in sections 197 and 197(A), easy to understand and interpret. It will also become clear as to what the implications of each of the subsections will have on that commercial rationale. The issues highlighted above will be dealt with detail in this paper giving an overview of the Common Law, the Labour Relations Act 66 of 1995 and the new Labour Relations Amendment Act 2002.

The purpose of having labour laws in South Africa is to regulate employment contracts and the relationship between the employer and the employee. Once a legally binding contract comes into being the Labour Relations Act of 1995 automatically applies alongside the Basic Conditions of Employment Act and various other labour legislations. Common law rules play a vital role in the formation of an employment contract. For an ordinary contract to have legal effect, four basic requirements need to be met. Briefly, parties to the contract must have reached consensus, parties’ performance of their obligations must be possible, the conclusion and objectives of the contract must be lawful and that both parties to the contract must have the necessary capacity to conclude the contract. Once these requirements have been met one is said to have concluded a valid contract. Nevertheless for the purposes of this study, we focus specifically on the employment contract. Aside from the general common law requirements for a valid contract, for an employment contract to be recognised and protected by labour legislations, it is important to distinguish an employee from an independent contractor since only the former enjoys legal remedies afforded by labour law. Common law contractual rights and duties automatically apply once an employment relationship is established in addition to the rights and duties specified in the contract itself. Common law rules regarding morality plays a major role in our modern day societies, as shall be discussed the workforce has not been left untouched by this important principle. Morality greatly influences a society’s view concerning acceptable and unacceptable behaviour or practices. It goes without saying that a contract should not be contrary to the moral views of the society in which the parties find themselves in. A contract can be complying with all the statutory requirements for a valid employment contract; however it may at the same time be tainted with illegality as the object of performance is considered immoral in the society such as an employment contract to perform prostitution. Conversely, another scenario may involve a party to an employment contract who is a child below the age of 15 years old; the contract is invalid as it contravenes section 43 of the Basic Conditions of Employment Act. Despite clear statutory prohibitions this practice may be perfectly acceptable in the eyes and minds of the society. The purpose of this study is to evaluate prohibited and unlawful contracts of employments, how the law (both common law and statutory law) treats such contracts in the sense that; whether they are protected or not and to what extent these laws have been developed to influence modern attitudes concerning such contracts. One stark example is illustrated through case law where the court had to determine the validity of an employment contract concluded between an employer and an illegal immigrant.

This treatise will therefore critically discuss fairness requirements in dismissal law within the context of the education sector from: i) the perspective of a dismissed employee; and ii) the perspective of an employer who wishes to dismiss employees fairly; and iii) the perspective of a deemed dismissal. It will be proper to flow this discussion from the premises of what should be considered procedural and substantive fairness in dismissals.

The establishing of good cause subsequent to a deemed dismissal, as practiced currently only in the public sector, has been a controversial issue for the courts, labour law commentators and academics alike. It has been so because of a number of legislative deficiencies which caused the inconsistent application of the deeming provisions across the public service. Amongst others, the legislative deficiencies regarding establishing good cause are; the time-limit for establishing good cause, what happens when the employee returns, whether establishing of good cause should be entertained through written response or a hearing, the Termination of Employment Convention, 1982(No. 158) is silent on the deeming provisions, review of the employer’s discretion not to reinstate the absconding employee and the legal position regarding the traditional healer’s certificate. There will be an intensive investigation on the validity of the traditional healer’s certificate. Majority of South Africans rely on the THP for a number of illnesses. In some cases, they use the traditional healer’s certificate to establish good cause subsequent to a deemed dismissal. The traditional healer’s certificate is not yet valid given the pending legislative processes. This issue will be broadly explored in order to uncover the causes for the delay in finalising this crucial issue. Most of the absconding employees have a problem of alcoholism. There is a causal relationship between deemed dismissal and alcoholism. It is again the intention of this study to fully investigate this phenomenon and provide solutions for the employers faced with this challenge. Practical solutions will be proposed for each identified legislative deficiency and any related challenge to help employers to manage the deeming provisions in a very effective and efficient manner.

Fundamental to any contract of employment is the obligation that rests on an employee not to be absent from work without justification. Under the common law, if an employee did that, the employer would be entitled to dismiss him or her on notice. The International Labour Organization Convention (ILO) 158 of 1982 provides that the employer must have a reason for a dismissal and sets out broad categories or reasons for dismissals . Section 23 of the Constitution of the Republic of South Africa, 1996(Act 108 of 1998) provides that “Everyone has the right to fair labour practices”. Section 33 of the Constitution provides that “Everyone has the right to administrative action that is lawful, reasonable and procedurally fair. The Promotion of Administrative Justice Act 3 of 2000 (PAJA) is designed to give effect to just administrative action. Section 1 and 3 of the Labour Relations Act,1995(Act 66 of 1995)(LRA) require compliance with Article 7 and 8 of the ILO Convention 158 of 1982, when the employment of a worker has been terminated by his or her employer. The LRA protects employees against unfair dismissal. In the Department of Education, Section 14(1)(a) of the Employment of Educators Act, 1998 provides for the discharge of an educator in the event that he or she absents himself or herself from work for a period exceeding 14 consecutive days without the permission of the employer. A similar provision, Section 17(5)(a)(i) of the Public Service Act, 1994 provides for the discharge of an officer other than an educator who absents himself or herself from his or her official duties without the permission of the Head of Department for a period exceeding one calendar month. Section 14(2) of the Employment of Educators Act, 1998 and 17(5)(b) of the Public Service Act,1994 afford an employee who has been deemed discharged to show good cause why he or she should be reinstated. Against this background, the critical legal question is the constitutionality of the deeming provisions. The study will examine the validity of these provisions in relation to the ILO Conventions, Constitution, LRA and PAJA.

South Africa has over the years and particularly since the enactment of our new Constitution, attracted an increasing number of foreigners. One of the main problems associated with the large number of illegal immigrants in this country is that they are placing strain on South Africa‟s already scare resources such as housing and healthcare. A further problem is that these illegal immigrants are competing with South Africans for jobs which are already scarce, and thus aggravating the unemployment situation. Nevertheless, these illegal immigrants are being employed and by virtue of their circumstances are easily exploited and often the victims of cheap labour, corruption, eviction and assault. Given that these workers are illegal immigrants not in possession of the required work permits, their employment is prohibited by the Immigration Act 13 of 2002. They are thus illegal workers. Another category of illegal workers are those, predominantly women, who are employed in an industry which offers easy income with no contractual obligations – the prostitution industry. Despite the prohibition of prostitution by the Sexual Offences Act 23 of 1957, the prostitution industry throughout South Africa continues to exist. These workers are also particularly vulnerable and easily exploited and abused by their employers. Illegal immigrants and sex workers in South Africa have until recently been denied access to the protection of our labour legislation, by virtue of the illegality of their employment contracts. However two recent controversial decisions, that of the Labour Court in the Discovery Health case, and that of the Labour Appeal Court in the Kylie case, have changed this position.

This paper is divided into two distinct sections. The first being an analysis of the legal protection of temporary employees as things currently stand. It deals with the various labour laws that currently regulate temporary employment as well as the temporary employment contract and the common-law. The second section summarises and analyses the provisions of the Labour Relations Amendment Bill and the Basic Conditions of Employment Bill as they apply to fixed-term employees. Temporary employees are protected by the general protection extended to all employees in terms of section 23(1) of the Constitution of the Republic of South Africa, 1996, guaranteeing all employees the “right to fair labour practice”. The Labour Relations Act has as one of its main objectives to give effect to and regulate the fundamental rights contained in the Constitution. Thus the Labour Relations Act must not only give effect to constitutional rights but it must also ensure that it in no way unreasonably or unjustly denies or limits constitutional rights. Temporary employees have a number of labour laws protecting their interests. Where the provisions of the Basic Conditions of Employment Act, a Bargaining Council Agreement or a Sectoral Determination do not apply the employee will rely on the terms of the fixed-term employment contract and thereafter the common law for protection. The only protection offered to temporary employees contained in the Labour Relations Act is in section 186(1)(b), where a dismissal is defined to include the non-renewal of temporary contracts of employment where there is a reasonable expectation of renewal on the same or similar terms. This provision has proved to be highly controversial in that it does not expressly cater for temporary employees who harbour reasonable expectations of indefinite employment. An analysis is made of the most important cases relating to section 186(1)(b). The second section unpacks and critically analyses the Labour Relations Amendment Bill and the Basic Conditions of Employment Bill which have been long in the offing and when they are finally enacted, will bring with them sweeping changes for atypical employment . The amendments will drastically change the way employers make use of fixed-term employees as well as the way in which Temporary Employment Services may conduct business if they are in fact able to keep working at all. There is very little literature of substance written about the Labour Relations Amendment Bill as it applies to atypical employment. The fact that the proposed amendments have changed so many times over such a long period of time might have deterred many writers from investing time and effort in attempts to analyse and summarise the amendments. Articles posted on the internet are in the main short and have very little content. No books were found with any discussion that pertains to the amendments. The amendments divide employees involved in atypical employment into two different categories. These categories consist of employees earning above the threshold in terms of section 6(3) of the Basic Conditions of Employment Act and those earning below this threshold. All fixed-term employees may rely on the provisions of section 186 of the Labour Relations Act. Employees earning below the threshold are considered to be the most vulnerable and have been afforded additional protections in terms of sections 198(A), (B) and (C). Issues surrounding Temporary Employment Services and fixed-term employees have been very divisive and have been the topics of heated debate at all levels of Industrial Relations for a long time. Discussions regarding the use of the services of Temporary Employment Services can be highly emotive, with Temporary Employment Services being accused of committing wideThis paper is divided into two distinct sections. The first being an analysis of the legal protection of temporary employees as things currently stand. It deals with the various labour laws that currently regulate temporary employment as well as the temporary employment contract and the common-law. The second section summarises and analyses the provisions of the Labour Relations Amendment Bill and the Basic Conditions of Employment Bill as they apply to fixed-term employees. Temporary employees are protected by the general protection extended to all employees in terms of section 23(1) of the Constitution of the Republic of South Africa, 1996, guaranteeing all employees the “right to fair labour practice”. The Labour Relations Act has as one of its main objectives to give effect to and regulate the fundamental rights contained in the Constitution. Thus the Labour Relations Act must not only give effect to constitutional rights but it must also ensure that it in no way unreasonably or unjustly denies or limits constitutional rights. Temporary employees have a number of labour laws protecting their interests. Where the provisions of the Basic Conditions of Employment Act, a Bargaining Council Agreement or a Sectoral Determination do not apply the employee will rely on the terms of the fixed-term employment contract and thereafter the common law for protection. The only protection offered to temporary employees contained in the Labour Relations Act is in section 186(1)(b), where a dismissal is defined to include the non-renewal of temporary contracts of employment where there is a reasonable expectation of renewal on the same or similar terms. This provision has proved to be highly controversial in that it does not expressly cater for temporary employees who harbour reasonable expectations of indefinite employment. An analysis is made of the most important cases relating to section 186(1)(b). The second section unpacks and critically analyses the Labour Relations Amendment Bill and the Basic Conditions of Employment Bill which have been long in the offing and when they are finally enacted, will bring with them sweeping changes for atypical employment . The amendments will drastically change the way employers make use of fixed-term employees as well as the way in which Temporary Employment Services may conduct business if they are in fact able to keep working at all. There is very little literature of substance written about the Labour Relations Amendment Bill as it applies to atypical employment. The fact that the proposed amendments have changed so many times over such a long period of time might have deterred many writers from investing time and effort in attempts to analyse and summarise the amendments. Articles posted on the internet are in the main short and have very little content. No books were found with any discussion that pertains to the amendments. The amendments divide employees involved in atypical employment into two different categories. These categories consist of employees earning above the threshold in terms of section 6(3) of the Basic Conditions of Employment Act and those earning below this threshold. All fixed-term employees may rely on the provisions of section 186 of the Labour Relations Act. Employees earning below the threshold are considered to be the most vulnerable and have been afforded additional protections in terms of sections 198(A), (B) and (C).

The purpose of this treatise was to determine the distinction between the contract of service (employment) and the contract of work (independent contractor). A comprehensive literary survey was undertaken so as to establish if such a distinction does indeed exist. A logical point of departure was to study the contract of service and determine how the employment relationship is established by it. It is also necessary to establish under what circumstances a contract may be terminated and what the rights and obligations of the parties to the contract were. The contract between the parties will determine remedies to the breach of contract or applicability of labour legislation. It is also necessary to establish the definition of an employee under various statutes so as to understand what remedies exist should rights be infringed upon. Statutes considered include the Constitution of the Republic of South Africa, Labour Relations Act, Basic Conditions of Employment Act, Employment Equity Act, Unemployment Insurance Act, Compensation for Occupational Injuries and Diseases Act, Skills Development Act and the Income Tax Act. The effect of insolvency of the employer on the employee is also discussed. Outsourcing has played a major role in the emergence of the independent contractor. This phenomenon is considered from the point of the employer in terms of the reasons for choosing the option of outsourcing and the associated risks. The employee perspective is also dealt with in terms of why an employee would change his/her employment status. The various tests historically applied to determine the status of a worker is also discussed. These include the control, organisation, dominant impression and economic tests. Currently the dominant impression test is the one that is being applied to determine the employment relationship. Extensive reference was made to case law. United States of America cases are referred to with specific reference to the 20 Factor Test applied by the Internal Revenue Service. South African case law is dealt wit in terms of enforcement of Bargaining Council agreements, commission-earning persons, payment for services rendered, the intention of the parties and the identity of the true employer. The emergence of the dependent contractor is also addressed. This form of worker normally falls outside of the protection of labour legislation and social security. Amendments have been proposed to various statutes to remedy the situation in South Africa. A final aspect that is dealt with is that of vicarious liability. The applicability of this aspect lies in the liability of the employer for damages inflicted by the employee.

LL.M. (Labour Law) / Commentators have warned that when men are given absolute control over their fellow men, there is the danger that what appeared pragmatically desirable may become morally intolerable. The current usage of polygraph testing by employers undoubtedly confirms this. In what follows, it will be argued that there is a serious shortcoming in South African law in that there is no legislative framework that governs and regulates the use of polygraph testing in the workplace. It is fairly likely that many South African employers will at some time be faced with dishonesty or criminal activities, such as fraud or theft, without accurately being able to identify where, how, and by whom such dishonesty was committed. If dishonesty and criminal activities are not properly managed, there may be adverse ramifications. As a result, many employers have opted to insert a clause in the employment offer and employment contract that relates to security obligations on the part of the employees or prospective employees. The clause would normally read as follows: “The company may request that you subject yourself to a polygraph test before commencement of employment or if an incident has occurred or and random testing during your period of employment with the Company. The employee hereby declares that he is aware of the company polygraph policy and accepts that this policy as a term and condition of his employment. The employee undertakes to comply with the said policy in all respects and acknowledges that he is bound thereby”. Magna Alloys & Research v Ellis introduced a significant change to the Courts’ approach to restraint of trade agreements by declining to follow earlier decisions based on an English precedent that an agreement in restraint of trade is prima facie invalid and unenforceable. The implication of this decision is that a right to choose a trade, occupation, or profession freely may