4 Instances when an employment contract automatically ends... And 3 when it doesn't

Taryn Strugnell, 14 Jan. 2016

Tags: employment contract, dismiss, dismissal, termination, terminate contract

An employment relationship isn't only over when your employee resigns or you dismiss him. There are the different ways a contract can terminate. Just make sure you follow the rules of each type of termination.

There's termination in 'common law' or 'by operation of law'. Now, I know it sounds like a lot of legalese, but you need to know the differences because there are different legal implications for you. If you don't know them, you could land up fighting a case of unfair dismissal!

Find out more below...

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You've spent hours and hours going through the necessary performance management steps. But now comes the tricky part.

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4 Reasons for employment to end automatically by operation of law

'By operation of law' terminations happen when the law kicks in automatically to end employment. This is through:

1. Death
The contract will automatically be over when your employee dies. You don't have to do anything to end the relationship.
2. Sequestration or liquidation
The equivalent of 'death' for the employer. When the entity goes under.
3. Expiry date
When a fixed term contract reaches expiry date it automatically ends without you or the worker having to take any other steps. For example, giving notice. This is unless the contract includes options for renewal or permanent employment.

4. Impossibility of performance
Circumstances that make it impossible for you or your employee to meet your obligations to each other. For example, a foreign national's work permit is revoked.

Warning: 1 out of 3 dismissals are deemed as 'unfair' by the CCMA!
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3 Reasons for employment to end under common law

Common law means a body of law not neatly set out in only one piece of legislation. It comes from court decisions from over the years and their interpretation of legislation. It moves and changes with the times, and includes commentary by prominent academics, etc.

The real difference between common law and operation of law is that either you or your employee need to do something to action the termination. Both of you must still follow legal procedures to end the relationship.

You do this for the following 3 reasons:

1. Misconduct. The employee conducts himself in a way against your policies and procedures.

2. Incapacity. The employee no longer has the capacity to meet his obligations.

3. Operational reasons. You can't carry on with the contract for operational reasons. For example, redundancy/retrenchment.

So now you know the difference, don't get caught on the losing end of a CCMA case!





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