South African Maritime Safety Authority v Fafie Fortune McKenzie

Mr McKenzie was employed by the South African Maritime Safety Authority (SAMSA) as its chief internal auditor and was dismissed on 1 March 2005 in a manner he alleged was both procedurally and substantively unfair. After pursuing his remedies under the Labour Relations Act 66 of 1995 (the LRA) and reaching a settlement with SAMSA in terms of which he was paid an amount equivalent to one year's salary, he instituted an action in the High Court claiming damages for breach of contract. He alleged that his contract of employment was subject to an explicit, alternatively implied, alternatively tacit term that the employment contract would not be terminated without just cause, and that this term had been breached when he was dismissed in a procedurally and substantively unfair manner. He claimed R5.2 million in damages calculated on the basis that he would otherwise have continued working for SAMSA until retirement. SAMSA filed special pleas which were dismissed by the High Court. SAMSA sought leave to appeal.

• Whether section 185 of the Labour Relations Act 66 of 1995 creates a contractual right not to be unfairly dismissed
• Whether the High Court has jurisdiction to entertain a claim for damages for unfair dismissal based on alleged breach of contract
• Whether a term prohibiting unfair dismissal can be implied into contracts of employment by operation of law
• Whether the statutory scheme under the LRA for unfair dismissals creates contractual rights or only statutory rights
• Whether the common law of employment should be developed under section 39(2) of the Constitution to incorporate a right not to be unfairly dismissed

The appeal was upheld. The order of the High Court was altered to read: 'The plaintiff's claim is dismissed and both parties are to pay their own costs.' Both parties were ordered to pay their own costs in the appeal including the costs of the applications for condonation. Leave to appeal was granted and condonation for late lodging of the application was granted.

Section 185 of the Labour Relations Act 66 of 1995, which creates the right not to be unfairly dismissed, together with the related provisions establishing procedures and remedies for unfair dismissals, constitutes a complete statutory scheme that does not create or imply contractual terms in employment contracts. These provisions create only statutory rights enforceable through statutory mechanisms (the CCMA or Labour Court) with statutory remedies subject to statutory limitations. A term that an employment contract cannot be terminated unfairly is not implied into contracts of employment by operation of law from the LRA provisions. To imply such a term would render the carefully balanced statutory scheme redundant, allow circumvention of statutory limitations on remedies, and would be contrary to the clear legislative intention. Where legislation already gives full effect to constitutional rights (such as the right to fair labour practices under section 23 of the Constitution), there is no constitutional imperative under section 39(2) to develop the common law to duplicate those rights by implying them into contracts. The jurisdiction of the High Court to hear claims for breach of employment contracts is not in question, but a claim based on an alleged implied term prohibiting unfair dismissal has no merit where the contract does not expressly or tacitly contain such a term and it cannot be implied by law from the LRA.

The Court noted that previous statements in Old Mutual Life Assurance Co SA Ltd v Gumbi [2007] 5 SA 552 (SCA) and Boxer Superstores Mthatha v Mbenya [2007] 5 SA 450 (SCA) suggesting that the common law has been developed to include a contractual right to a pre-dismissal hearing were obiter dicta and not authoritative findings. The Court observed that many cases have erroneously characterized challenges to the substantive merit of claims as 'jurisdictional' challenges, when in fact they concern whether a good cause of action exists. The Court expressed the view that 'the least said about jurisdiction in such cases the better' and that courts should focus on the substantive issue of whether employees have rights outside the LRA. The Court noted that where an employee is not subject to the LRA (such as members of the National Defence Force), there may be scope for developing the common law to import terms giving effect to their constitutional right to fair labour practices, but this was not necessary to decide in this case. The Court observed that the order for costs reflected the constitutional significance of the issues and the reluctance to penalize individuals seeking to vindicate constitutional employment rights, even where unsuccessful.

This case is a landmark decision in South African labour law as it definitively resolved the question of whether the statutory right not to be unfairly dismissed under the LRA creates a parallel contractual right. The judgment clarifies the relationship between statutory labour rights and the common law contract of employment, establishing that statutory rights under the LRA do not automatically become implied terms of employment contracts. This prevents employees from circumventing the carefully crafted limitations and procedures of the LRA (such as compensation caps and time limits) by pursuing common law damages claims in the High Court. The decision provides important guidance on when the common law should be developed under section 39(2) of the Constitution, holding that where legislation already gives full effect to constitutional rights, there is no basis for duplicating those rights through common law development. It also clarifies what were previously treated as 'jurisdictional' challenges, explaining that the real issue in such cases is the substantive merit of the claim rather than which court has jurisdiction to hear it. The judgment helps prevent the 'jurisdictional quagmire' that would result from allowing parallel contractual and statutory claims for unfair dismissal.