Long-standing practice or contractual term?

It is trite law that the employment contract commences from the moment the parties reach agreement on its essential terms.

The parties are free to regulate their respective rights and duties in the contract in any manner they please, subject to the requirements of the law. It is also an accepted principle that a long-standing practice may give rise to a tacit term. However, such a practice will not necessarily be contractually binding. The case of Edcon Ltd v Commission for Conciliation, Mediation and Arbitration and others (PR09/15)[2016] ZALCPE 25 (9 December 2016) has recently confirmed this principle.

The employee was employed by Edcon (Pty) Ltd (Edcon) as a store assistant on a casual contract. The contract recorded that Edcon could place the employee in any department where business needs required, provided he was competent for the job. At the time of his dismissal for gross insubordination, the employee enjoyed eight years of service, mostly at the warehouse, in terms of the casual contract.

When the employee challenged the fairness of his dismissal, the CCMA ordered Edcon to reinstate the employee on the same terms and conditions as governed at the date of dismissal.

Edcon required the employee to report to the Greenacres store as the staff complement at the warehouse was full. The employee refused as he was of the view that the CCMA award required him to work at the warehouse. Ultimately, the employee was again dismissed for insubordination as a result of his refusal to report for duty at the Greenacres store.

In finding in the employee’s favour, the CCMA observed that the “days of slavery are long gone”. The CCMA also found that the employee had a contractual right to work at the warehouse - the custom and practice of him working there had created a term and condition in his employment contract. He was re-instated once more.

Taken on review, the Labour Court had a different view and held that the regularity of an occurrence does not in itself give rise to a contractual term unless it is the intention of the parties to create a contractual right. The Labour Court confirmed that there is authority to support the proposition that a long-standing practice can give rise to a term of the contract of employment, however, this is dependent upon the parties’ intention. In this instance, there was no intent on the part of Edcon to change the terms of the contract. The commissioner had made a material error of law in the absence of evidence of such intention and had accordingly exceeded his powers by effectively rewriting the contract between the parties.

The employee therefore remained employed on the terms of his initial contract and was contractually bound to render services as required by Edcon in accordance with its operational needs.

The Labour Court’s decision in Edcon emphasises the well-known principle that the intention of the parties when drawing up a contract of employment is paramount and a court will therefore exceed its powers if it seeks to re-write a contract without any evidence of the relevant intention. Establishing a long-standing practice will not give rise to a contractual obligation unless the intention of the parties supports such additional contractual term.

Rebecca Cameron and Gavin Stansfield, Employment practice and services, Cliffe Dekker Hofmeyr.

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