Unlawful termination of employment contracts: No automatic right to specific performance
At a glance
- The finding in Passenger Rail Agency of South Africa and Others v Ngoye and Others [2024 45 ILJ 1228 (LAC) affirmed that the dispute resolution procedures in the Labour Relations Act 66 of 1995 (LRA) do not defeat an employee’s right to rely on the common law contractual recourse.
- Litigants should consider whether to institute an unfair dismissal claim in terms of the LRA or a claim for breach of contract based on an unlawful termination. The remedies contained in the LRA will only be considered in a claim contemplated under the LRA, and are not available to contractual claims.
- A claim made in terms of a contract will invite the court to hand down contractual remedies that may not always be appropriate in the employment context.
Litigants should carefully consider the prospects of success before instituting a contractual dispute or challenging the lawfulness of the termination, as opposed to using the unfair dismissal mechanisms contained in the LRA. Particular consideration should be given to the appropriate relief available once the employment contract is found to have been unlawfully terminated. Where an employment contract is found to have been unlawfully terminated, specific performance, i.e. reinstatement, is not a relief that automatically follows; it is a discretionary relief.
Courts are reluctant to grant specific performance in the context of employment contracts. When dealing with a claim for specific performance in the face of an unlawful termination of an employment contract, the LAC highlighted that:
- The granting of specific performance where breach of contract has occurred is subject to the court’s discretion, which must be exercised judiciously.
- Employment contracts are different to commercial contracts in that they are personal contracts. As such, exercising the discretion to grant reinstatement as specific performance may entail satisfying the court that the continued employment relationship is tenable or that granting specific performance in the form of reinstatement will not lead to conflict within the workplace, particularly where the former employee was a senior employee or was required to interact with senior management.
- Financial prejudice that former employees may suffer as a result of losing their income does not constitute a basis for granting specific performance.
Employees who claim an unlawful termination (breach of contract) should consider a claim for damages and plead their damages claim in the alternative to specific performance.
The remedies contained in the LRA will only be considered in a claim contemplated under the LRA and are not available to contractual claims. A claim made in terms of a contract will invite the court to hand down contractual remedies that may not always be appropriate in the employment context
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