CFI Holdings v Peggy Rambanepasi and Others SC 17 – 22

Act 5 of 2015 removed the employer’s right to terminate a contract of employment on notice. It only prescribed that the right only exists when the employer terminates a contract through a code of conduct, mutual separation or when the employer is pursuing a retrenchment exercise. The same provisions were maintained in the Labour Amendment Bill of 2021. Despite the changes brought about by the 2015 amendments some employers still labour under the misconception that they can terminate a contract of employment on notice. Thankfully, the Supreme Court in CFI Holdings v Peggy Rambanepasi and Others SC 17 – 22 clarified this issue.

The facts

The facts of this are pretty much straightforward. The appellant employer terminated 3 senior managers’ contracts on notice on 26 January 2016. They were all given three months’ notice which they were not allowed to serve. Aggrieved, the respondents placed a dispute before a labour officer who ruled that the terminations were unlawful. The Labour Court confirmed the Labour Officers ruling as it also concluded that the terminations were unlawful.

The law

In reaching its conclusion, the Supreme court had to answer the question as to whether the employer complied with the law on termination on notice as provided under section 12(4a) of the Labour Amendment 5 of 2015.[1]

The court observed that the legislature’s intention when it came up with section 12(4a) was so that employees terminated on notice would not “walk away empty-handed”.[2] It further observed that section 12(4a) applied to employees in specified circumstances.[3] Through the so-called golden rule of statutory interpretation, the court concluded that termination on notice can only happen when there is full compliance with the section under discussion. The court thus argued:

“In order to comply with s 12 (4a) the parties could only terminate the contract of employment if there was a registered Code of Conduct for the workplace, or in the absence of such code, a model code, or there was mutual agreement to terminate the contract of employment. It is common cause that there was no code of conduct used. It is also common cause that there was no agreement as between the parties to terminate the contract.”

The court added that it is only when there is full compliance with section 12(4a) that the accompanying provisions that talk about payment of a minimum retrenchment package can be applied. In the absence of full compliance with section 12 (4a), section 12 (4b) cannot be applicable.

Conclusion

At the end of the dispute, the court concluded that the Labour Court was right in confirming the labour officer’s draft ruling that the employee’s contracts were terminated unlawfully.

Own Comment

The case has at the very least, confirmed that the blanket common law right to terminate a contract on notice is no longer part of our law. Termination on notice can now only happen in terms of section 12 (4a) of the Labour Act as amended. Full compliance with the mandatory provisions of that law must happen. Termination on notice can only happen if the termination is in terms of a code of conduct, a mutual separation or when retrenchment is being pursued. Outside these specified conditions, termination on notice is unacceptable. A similar approach was adopted in NMB Bank Limited v Ashton Kupara and 25 Others where the court argued that the employer must fit all terminations on notice within the provisions of section 12 (4a) of the Labour Act as amended in 2015.

We believe that these cases are correct and the clarity they bring is a welcome development in our labour law. The common law right that gave employers to end contractual relationships on notice ended in 2015. One cannot exercise rights that have since been statutorily abolished.


[1]           The section reads: (4a) No employer shall terminate a contract of employment on notice unless— (a) the termination is in terms of an employment code or, in the absence of an employment code, in terms of the model code made under section 101(9); or (b) the employer and employee mutually agree in writing to the termination of the contract; or (c) the employee was engaged for a period of fixed duration or for the performance of some specific service; or (d) pursuant to retrenchment, in accordance with section 12C.

[2]           CFI Holdings v Peggy Rambanepasi and Others SC 17 – 22 on paragraph 11.

[3]           CFI Holdings v Peggy Rambanepasi and Others SC 17 – 22 on paragraph 11.

430 Views

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!