Fedlife Assurance Limited v Hendrik Johannes Wolfaardt

The respondent (Wolfaardt) entered into a fixed-term employment contract with the appellant (Fedlife Assurance Limited) for five years commencing on 1 December 1996. The appellant purported to terminate the contract on 31 December 1998 on the grounds that the respondent's position had become redundant. The respondent accepted this as a repudiation of the contract and instituted an action in the Witwatersrand Local Division of the High Court claiming damages for breach of contract. The appellant filed a special plea arguing that the Labour Court had exclusive jurisdiction over the matter in terms of section 157(1) of the Labour Relations Act 66 of 1995. The respondent excepted to the special plea on the grounds that it disclosed no defence. Odendaal AJ upheld the exception and set aside the special plea, following the decision in Jacot-Guillarmod v Provincial Government, Gauteng, and Another 1999(3) SA 594 (T). The appellant appealed with leave.

• Whether an action for damages arising from the unlawful repudiation of a fixed-term employment contract is legally cognisable at common law or whether employees are confined to remedies under Chapter VIII of the Labour Relations Act 66 of 1995
• Whether Chapter VIII of the Labour Relations Act 66 of 1995 codifies and exhausts all remedies available to employees upon dismissal, thereby abolishing common law contractual remedies
• Whether a claim for contractual damages arising from the premature termination of a fixed-term employment contract falls within the exclusive jurisdiction of the Labour Court in terms of section 157(1) of the Labour Relations Act 66 of 1995
• Whether the premature termination of a fixed-term employment contract constitutes a 'dispute about the fairness of a dismissal' under section 191 of the Labour Relations Act

Appeal dismissed with costs, including costs of two counsel. The special plea was correctly set aside. The High Court has jurisdiction to hear the respondent's claim for damages arising from breach of the fixed-term employment contract.

Chapter VIII of the Labour Relations Act 66 of 1995 does not exhaustively codify all remedies available to employees upon termination of employment and does not abrogate common law remedies for breach of fixed-term employment contracts. An employee whose fixed-term employment contract has been unlawfully repudiated by the employer retains the common law right to claim damages for breach of contract. Such a claim does not fall within the exclusive jurisdiction of the Labour Court under section 157(1) of the Act because it is not a 'matter' that the Act requires to be determined by the Labour Court. The Labour Court's exclusive jurisdiction is confined to specific disputes and issues identified in the Act, particularly those concerning the 'fairness' of dismissals under Chapter VIII. A dispute about the lawfulness of a dismissal (breach of contract) is distinct from a dispute about the fairness of a dismissal, and the former may be adjudicated by the ordinary civil courts. Section 195 of the Act expressly preserves an employee's entitlement to amounts owing under contract in addition to statutory compensation for unfair dismissal.

Nugent AJA observed that it would be difficult to conceive of circumstances where an unlawful dismissal would not also be unfair, citing Nienaber JA in National Union of Metalworkers of SA v Vetsak Co-operative Ltd 1996(4) SA 577 (AD). However, the Court noted that whether a particular dispute falls within section 191 depends upon what is actually in dispute - if the complaint is about lawfulness rather than fairness, the fact that the dismissal might also be unfair is coincidental and does not bring it within the Labour Court's jurisdiction. The Court also commented on the use of constitutional presumptions in statutory interpretation, noting that while the Constitution limits the field of application of the presumption against legislative alteration of existing law, the presumption still applies where existing rights are not unharmonious with the spirit, purport and objects of the Bill of Rights. Froneman AJA's dissent contains extensive obiter on the constitutional transformation of employment law, arguing that section 23(1) of the Constitution (the right to fair labour practices) fundamentally alters the conceptual distinction between contract and fairness in employment relationships, and that courts would be obliged to develop the common law to give expression to this constitutional right even if the LRA had not been enacted. He also commented that had the majority been correct, section 195 would still entitle dismissed employees to claim amounts greater than statutory compensation, which the Labour Court would have jurisdiction to determine under section 158(1)(a)(vi).

This case is significant in South African labour law as it clarified that: (1) The Labour Relations Act 66 of 1995 does not abolish common law contractual remedies for employees whose fixed-term contracts are prematurely terminated; (2) Employees retain the right to claim damages for breach of fixed-term employment contracts in the ordinary civil courts; (3) The exclusive jurisdiction of the Labour Court under section 157(1) is confined to specific matters identified in the Act as requiring determination by that court; (4) A distinction exists between disputes about the lawfulness of a dismissal (which may be determined by civil courts) and disputes about the fairness of a dismissal (which fall within the Labour Court's jurisdiction); (5) Section 195 of the Act preserves contractual entitlements in addition to statutory compensation for unfair dismissal. The case addresses the interplay between common law contract principles and the statutory labour law framework introduced by the LRA 1995. The dissenting judgment raises important constitutional questions about the transformation of employment law and the role of fairness in all employment relationships.