28 lF

Abstract

Keywords

Common-law employment contract; labour legislation; good faith; fairness; implied duty of trust and confidence; implied duty of fair dealing; constitutional development of the common law; right to fair labour practices; breach of the employment contract.

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1 Introduction

It is trite that employment relationships in South Africa are very heavily regulated by means of labour legislation. One of the primary objects of such legislation is to infuse the individual employment relationship and collective labour relations with fairness, something that was traditionally not highly prized by the common law of contract, and which seldom featured in the application of its sometimes archaic and one-sided rules and principles. The labour legislation was passed in order to give effect to the right to fair labour practices as guaranteed in section 23 of the Constitution of the Republic of South Africa, 1996 (hereafter the Constitution). And our courts, when developing the common law, must promote the spirit, purport and objects of the Bill of Rights.1 Our courts are obliged, in applying the Bill of Rights and in order to give effect to a right in the Bill, to apply or if necessary develop the common law to the extent that legislation does not give effect to that right.2

All of this is trite, but some issues regarding the role of the common law of contract in the context of the employment contract are not. One such issue, which will be the focus here, is the role of good faith and good faith dealing in the contractual relationship between employer and employee. Allied to this is the role of fairness, or equity, in this relationship, something that in recent years has increasingly also engaged the attention of general contract law scholars as well as the courts.

In this piece (which is in three parts)3 I will revisit a debate that raged a few years ago in the academic literature and the courts, and which seems to have died down of late, although remaining extremely relevant to our system of labour law and of labour dispute resolution. More ambitiously, I hope that this piece will rekindle the debate on an issue which I believe is potentially important for the development of our employment law in the constitutional dispensation. In fact, I believe that the issue under discussion here may be a central (and indispensable) string to the bow of the constitutional guarantee of fair labour practices, and would contribute greatly to the achievement of the vision of the drafters of both the Constitution and our labour legislation. I

will track the development of the notion of an implied "duty of fair dealing"4 in the employment contract, a supposed source for fairness in employer/employee relations, which derives from the common law rather than the labour legislation. This exposition will cover developments in case law (primarily in a line of judgments by the Supreme Court of Appeal (SCA), which were rendered in the decade before this court was stripped of its jurisdiction in labour law matters5) as well as academic commentary. Ultimately, I will argue in favour of the recognition of such a duty as a form of constitutional development of the common law relating to the employment contract, based on the labour law cases and commentary to be considered, as well as on related developments regarding the role of substantive equity in the broader law of contract, outside of employment law.

But I need to include one important disclaimer: Despite the focus here on the role of the common-law employment contract, this piece is not intended (primarily) to revisit the debate on the "jurisdictional quagmire" caused by the dual avenues for labour disputes arising from either the employment contract or in terms of the labour legislation. The primary source of such a system of dual avenues for employment disputes is section 77(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA), which provides as follows:

The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract.

In the context of unfair dismissal and unfair labour practice disputes, section 195 of the Labour Relations Act 66 of 1995 (LRA) provides as follows:

An order or award of compensation made in terms of this Chapter is in addition to, and not a substitute for, any other amount to which the employee is entitled in terms of any law, collective agreement or contract of employment.

These provisions, read separately and in conjunction, clearly show that contractual rights arising from the common law remain enforceable, and that civil courts may adjudicate disputes about such rights even though such disputes would emanate from the employment relationship. While some continue to criticise the failure of the legislature to remove the concurrent

jurisdiction provisions from the labour legislation (arguing in favour of exclusive jurisdiction for the Commission for Conciliation, Mediation and Arbitration (CCMA) and Labour Courts in all employment-related matters),6 I will proceed from the premise that the approach of the SCA in Makhanya v University of Zululand7 on the jurisdiction of civil courts in disputes arising from the contract of employment has largely settled the issue.8 Conduct by a party to the employment relationship or an event (for example, the termination of employment) may give rise to more than one cause of action, either under the common law of contract or in terms of the labour legislation, and the civil courts retain jurisdiction to consider breach of contract claims related to an employment contract (as the SCA confirmed in a line of cases).9 When such a contract-based claim is brought before the civil courts, it is not a question of whether the court enjoys jurisdiction, but rather of whether the claim is good or bad in law (that is, whether the claimed cause of action exists). Accordingly, my focus will be on the more substantive question relating to the content of the common-law contract of employment, rather than on jurisdiction in contract-based claims emanating from the employment relationship.10

Having mentioned that the debate regarding fairness in the common law employment contract appears to have died down, and also having referred to the opposition from some quarters to the continued role of the civil courts in hearing contractual claims deriving from employment contracts, it needs to be stressed that these issues are not moot, not by a long chalk. Parties to employment contracts still take contract-based claims to the courts with varying degrees of success – compare South African Football Association v Mangope (a claim for damages for the unlawful breach of a fixed-term employment contract),11 Ramabulana v Pilansberg Platinum Mines (a claim for an order for specific performance in the form of reinstatement to enforce a contractual right to a pre-dismissal hearing),12 KwaZulu-Natal Tourism Authority v Wasa (a claim for damages for the breach of contract under the BCEA),13 and Randwater v Stoop (a claim for damages by an employer

against an employee).14 The contractual element of the employment contract and contractual remedies for the breach of such contracts have survived the establishment of legislative rights and remedies. Labour lawyers should not underestimate the role of the common law of the employment contract, and it bears close and constant consideration in the context of the regulation of the employment relationship.

This piece is in three parts. The section (section 2) that follows in this part, Part 1, will briefly sketch the broader context for the topic under discussion here, which is very much concerned with the interaction between the main sources of our labour law within the one system of law introduced by the Constitution. In section 3 I will examine the judicial pronouncements and academic opinions on the subject of good faith and the duty of fair dealing in the employment contract. It will cover the main SCA judgments on this issue, which include Fedlife Assurance Ltd v Wolfaardt and Murray v Minister of Defence. In Part 2, I will critically consider the SCA's judgment in SA Maritime Safety Authority v McKenzie, which has commonly been interpreted (in my view, wrongly) as having brought an end to the importation of terms regarding fairness into the employment contract.15 I will then consider where we currently are following McKenzie. In Part 3 I will discuss some of the perceived deficiencies of the labour legislation (specifically the LRA and the BCEA) in sufficiently giving effect to all employees' right to fair labour practices, and I will also engage with some of the most popular arguments against the recognition of an implied duty of fair dealing in the employment contract and explain why we need it. Throughout, I will argue in favour of the recognition of such a duty as a necessary development of the common law of the employment contract in line with section 8(3) of the Bill of Rights in order to give effect to the constitutional right to fair labour practices. I will conclude with a discussion of the reasons for the recognition of such a duty of fair dealing. In section 3 of Part 3 I will then examine the issue in the context of developments regarding the role of good faith and substantive fairness in the broader, general law of contract, and its implications for the employment relationship. Section 4 in Part 3 will summarise the discussion in parts 1-3 and conclude.

2 The rules of the game in the new legal order

The introduction of the constitutional dispensation has of course fundamentally and irrevocably altered all aspects of our legal system. This is

evident in labour law as much as it is in other branches of law. And this is especially relevant for the present purposes in evaluating the interaction between legislation and the common law (and the Constitution). O' Regan J, in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism,16 expressed the nature of such interaction in the context of administrative law:

In Pharmaceutical Manufacturers Association of SA and Another: In Re Ex Parte President of the Republic of South Africa and Others, the question of the relationship between the common law grounds of review and the Constitution was considered by this Court. A unanimous Court held that under our new constitutional order the control of public power is always a constitutional matter. There are not two systems of law regulating administrative action — the common law and the Constitution — but only one system of law grounded in the Constitution. The courts' power to review administrative action no longer flows directly from the common law but from [the Promotion of Administrative Justice Act 3 of 2000, or PAJA] and the Constitution itself. The grundnorm of administrative law is now to be found in the first place not in the doctrine of ultra vires, nor in the doctrine of parliamentary sovereignty, nor in the common law itself, but in the principles of our Constitution. The common law informs the provisions of PAJA and the Constitution, and derives its force from the latter. The extent to which the common law remains relevant to administrative review will have to be developed on a case-by-case basis as the courts interpret and apply the provisions of PAJA and the Constitution.17

The same undoubtedly applies to the interaction between the common law of the employment contract and the labour legislation (for example, the LRA). The touchtone for evaluating such interaction in the present context is the issue of fairness.

Fairness, we were told by Cameron J, Froneman J and Majiedt AJ in South African Police Service v Solidarity obo Barnard,18 "is a foundational constitutional value". In fact, it is "one of the core values of our constitutional order",19 and "it is a standard the Constitution recognises in the specific context of employment practices".20 Most significantly, our Constitution takes the unique step of entrenching a fundamental right to fair labour practices in the Bill of Rights. In respect of the importance of section 23, this fundamental right must be taken as constituting one of those few core rights which directly reflect specific underlying constitutional values (such as section 9's reflection of the underlying value of equality, and section 10's reflection of the

underlying value of human dignity). The right to fairness as reflected in section 23 is also directly constitutive of the more general underlying value system of Ubuntu (which will be referred to in greater detail in Part 3, in the context of the developing law of contract).

Of course, under one system of law, fairness must also find expression in the law which derives its force from the Constitution, that is, in both the labour legislation and the common law. The key labour statutes, the LRA, the BCEA and the Employment Equity Act 55 of 1998 (EEA) are all very fundamentally concerned with importing fairness into the employment relationship, throughout its various phases. The EEA significantly does so at the stage where no employment relationship exists (yet), by protecting even applicants for employment from unfair discrimination. During the existence of the employment relationship, all three statutes provide in various ways for the fairness of labour practices and the conduct of an employer towards its employees. The prime example, of course, is the concept of unfair labour practices as defined in section 186(2) of the LRA, but other examples abound. Compare the "floor of rights" provided for in the BCEA, which regulate terms and conditions of employment (such as working hours, leave and other issues). And the LRA concerns itself specifically with fairness at the termination of the employment relationship, by means of the unfair dismissal provisions contained in chapter VIII of the Act.

Which then poses the question, considering the "one system of law" principle, of the extent to which fairness plays (or should play) a role under the common law. Is fairness to be the exclusive domain of the legislation? Does the fact that the legislation so significantly deals with fairness mean that there is little or no room for fairness also to feature through the mechanism of (development of) the common law? I am no expert on administrative law, so I am not sure, but I would suggest that the common law in that field has been more significantly eclipsed by the consolidation of constitutional principles in legislation (PAJA) than is the case with labour law. The labour legislation frequently refers to the contract of employment, and there is general consensus that "the contract of employment and statutory labour law … together, form the heart of individual labour law".21 Accordingly, O' Regan J's reference in the dictum quoted above from Bato Star to the "extent to which the common law remains relevant" would be overstated in the context of labour law. The common law is definitely still very relevant.

I refer here to the "development of the common law", because the traditional understanding, of course, is that the common law of contract gave little if any weight to considerations of fairness.22 Parties were constrained in their conduct towards each other by the notion of lawfulness. This position prevailed for many years and was one of the major reasons for judicial and legislative intervention in our labour law (the former, predominantly in the form of the erstwhile Industrial Court's fairness-based jurisprudence, which was established even before the advent of the Constitution). But the Constitution, in its mission to transform all our law in its image, does not constrain itself to calling only on the legislature to give effect to the Bill of Rights (as it does in the text of some of the fundamental rights, such as sections 9(4), 23(5), 23(6), 25(5), 26(2), 27(2), 32(2) and 33(3)). Maybe significantly, it does not contain such a call to the legislature in the text of section 23(1), as confirmed recently by the Constitutional Court.23 It also places a constitutional duty on the courts, which "in order to give effect to a right in the Bill, must apply, or if necessary develop, the common law to the extent that legislation does not give effect to that right",24 and bearing in mind that in such development of the common law the courts must "promote the spirit, purport and objects of the Bill of Rights".25 Clearly the common law also has a significant role to play in ensuring that all the different sources of law which make up the one system of law give effect to the constitutional rights and values. And in the present context, this means that the common law also has a role to play in importing fairness into the employment relationship. After all, when compared to other branches of law, our labour law aims to give effect not only to constitutional values, but to an actual constitutional right to fairness – this is unique not only compared to labour law regulation in other jurisdictions, but it is also unique in comparison with other branches of our own law, which lack the express constitutional entrenchment of fairness.26

When one considers the law of contract generally27 and other specific forms of contracts (such as the contract of sale, consumer contracts, insurance contracts, building contracts, etcetera) it is pertinent to note that none of these contracts exist and function in a milieu that is governed by a discrete constitutional right to fairness. This to my mind throws the role of fairness in the common law of the employment contract into sharp relief. The development of the common law (and how this is accomplished by the judiciary) is the focus of this piece, specifically in respect of one prime mechanism through which such development takes place, namely the importation of terms (regarding fairness) into the employment contract.

A detailed exposition of the meaning and nature of implied terms (and the naturalia of a contract) is beyond the scope of this piece. Essentially, this piece will consider one specific such implied term, namely an implied duty of fairness (or fair dealing), which places a duty on the contracting parties to conduct themselves within certain parameters of equity and to refrain from unfair conduct which might harm or destroy the relationship between the parties. A breach of such an implied term would be a breach of contract, and may lead to contractual remedies (such as an order for specific performance or a claim for contractual damages). The implied term is one that, unlike a tacit term which derives from the actual but unexpressed intention of the parties, is implied by the working of the law (that is, it is an externally-imposed term of the contract, which may be implied for a number of reasons – for example, in order to give business efficacy to the contract, or to promote the public interest, or to give effect to the spirit, purport and objects of the Bill of Rights). Implied terms which appear in certain nominate contracts (such as contracts of sale, consumer contracts or contracts of employment) form the naturalia of such a contract.28 They automatically apply to such a contract, irrespective of the intention of the parties (that is, irrespective of whether or not the parties chose to expressly include such terms), although they can sometimes be excluded by the parties by agreement (usually by means of an exemption clause – compare the voetstoots clause in the contract of sale). However, some naturalia may not be open to exclusion by agreement of the parties (compare sections 49(1) and 51(1) of the Consumer Protection Act 68 of 2008). The implied duty of fair dealing in the employment contract, it will be argued in this piece, is one of the naturalia of that contract, and its purported exclusion by the parties would be against public policy and

unconstitutional (as it constitutes a term implied by law in order to give effect to the Bill of Rights, and specifically the constitutional right to fair labour practices, as will be discussed below). This piece will focus on the cases where the courts (specifically the SCA) have embarked on such development of the common law through the recognition of this role for fairness in the employment context.

There are, however, two significant qualifications in respect of the role of the courts in developing the common law in this way. The first is the principle of constitutional avoidance. The second relates to judicial deference to the legislature in giving effect to constitutional rights. And I would suggest that both of these principles are important for the purposes of the topic under discussion here. In a nutshell, constitutional avoidance forbids a claimant to rely directly on a constitutional right if legislation is in place which gives effect to that right. In casu, this relates to claimants being constrained to bring claims in terms of the relevant provisions of the labour legislation (for example, section 185 of the LRA in the case of an unfair dismissal) rather than directly through recourse to the constitutional right to fair labour practices. Constitutional (or judicial) deference relates to the courts' sensitivity to the constitutional principle of the separation of powers in order to respect the legislature's role in giving effect to constitutional rights.29 In essence, how judicial deference features in the present context is that opponents of the development of the common law employment contract in order to include notions of fairness frequently criticise such judicial development on the grounds that it ignores or negates the policy considerations behind the fairness provisions of the legislation (and thus circumvents legislative protection contrary to the legislature's intention). It is especially in the context of (unfair) dismissal that this issue arises, and where critics have been vocal about the need for claimants to follow the route of the legislative dispute resolution and adjudication system rather than to bring claims for breach of contract before the civil courts. This last will be specifically considered in Part 3.

I will argue in section 3 below in favour of the judicial development of the common law in the SCA judgments. But in the process, the evaluation of the very specific question of the recognition of an implied duty of fair dealing in

the employment contract will undoubtedly raise more general questions regarding our labour law landscape and especially the interaction between the sources of law, particularly legislation and the common law. This issue of the interaction of rights and remedies from these sources is crucial to an understanding of our single system of law subject to the Constitution, in order to give effect to the Bill of Rights. And, to my mind, such a conception of a single system eschews a parochial "rating" of common law and legislative rights and remedies, and rather calls for an inclusive and unifying understanding of how different sources of law may – or must – collectively (and in a supplementary manner) pursue the achievement of constitutional objectives. As Kollapen AJ recently observed:

The inclusion of labour rights in the Bill of Rights signalled a significant and seismic development in the recognition of the rights of workers. However, in much the same way, the Bill of Rights recognises the existence, on equal footing, of a host of other rights and it does so not on the basis that rights are hierarchical but rather on the basis that they are interdependent, interwoven and mutually reinforcing.30

As already said, the debate about an implied term of fairness in the employment contract appears to have died down of late, and I will call for it to be reopened and re-energised. And I believe that this also calls for further debate on the broader issue of the continuing interaction between legislation and contract.

3 "Fair dealing" in the common law employment contract: the courts and academic commentary

South African courts recognise the existence of an implied term of trust and confidence in the employment contract like that recognised in a number of other common-law jurisdictions.31 In the United Kingdom (UK) case before

the House of Lords of Malik v Bank of Credit and Commerce International SA,32 Lord Nicholls of Birkenhead formulated the content of this duty as imposing an obligation that an employer "would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee".33 Cohen explains the raison d'etre and working of this duty as follows:

Whilst the law has traditionally recognised the employee's duty to serve the employer loyally and faithfully, modern thinking accepts that this obligation assumes a mutual dimension in terms of which both employer and employee are required to conduct themselves in a manner that is not likely to damage or destroy the employment relationship. This obligation is referred to as the obligation of mutual trust and confidence or fair dealing. In terms of this obligation contracting parties are required to have regard to the interests of the other party without subjugating their own, in recognition of the fact that the continued and harmonious relationship between employer and employee is imperative for the successful fulfilment of the employment contract. By imposing a broad set of behavioural standards for employers and employees the implied obligation forms both a 'core common law duty which dictates how employees should be treated during the course of the employment relationship' and a rule of construction in terms of which all the obligations of the contract can be interpreted and understood. The implied obligation of mutual trust and confidence thus ensures that the employer's interests in deriving the maximum benefit from his or her business are equitably balanced against the interests of the employee in being treated fairly.34

In Council for Scientific & Industrial Research v Fijen35 the then Appellate Division recognised that this common-law duty also forms part of the South African employment contract.36 As Bosch points out, the court held that the duty is reciprocal and the court suggested that it was more a naturalia contractus than an implied term (that is, it is not derived from the intention of the parties or inferred from the facts, but rather a term implied ex lege, which

arises due to the existence of an employment contract).37 Bosch in fact suggests that the term should be viewed as an essentialium of the employment contract, as without it the contract would not be one of employment. With reference to Barmes,38 Cohen describes the impact of the mutual duty as follows (highlighting the importance of this duty in the context of the employment contract as a relational contract):

[T]he implied obligation of mutual trust and confidence is responsible for the recognition of behavioural standards and commitments arising out of the employment relationship. In terms of this obligation contracting parties are required to have regard to, yet not subjugate their own interests to, the interests of the other party. This is in recognition of the fact that the continued and harmonious inter-relationship of the employer and employee is imperative for the successful fulfilment of the employment contract.39

The courts (including the SCA40 and the Labour Appeal Court41) and academic commentators42 have subsequently confirmed the recognition of the implied term of trust and confidence in Fijen and its application to employment contracts. However, even in the light of the judicial recognition of this implied term in employment contracts, the debate about the continued availability of common-law remedies in employment disputes (outside of the legislative scheme of labour rights) seemed to throw a spanner in the works in the mid-to-late 2000s. Employers faced with breach of contract claims resorted to raising special pleas regarding the jurisdiction of the civil courts to hear such matters (especially in cases involving the termination of employment by an employer). Recourse by claimants to the mutual duty of trust and confidence as an implied term of the employment contract would be problematic if the courts were to follow a line of diminishing the role of the contract in favour of access, exclusively, to the legislative remedies. The SCA was called upon to provide clarity on this by considering the proper role for the civil courts and the common law of contract in the context of employment-related disputes in the light of the extensive legislative regulation of this relationship.

In Fedlife the majority of the SCA, by way of Nugent AJA, confirmed that the codification of rights and remedies relating to unfair dismissal in Chapter VIII of the LRA did not deprive employees of their common-law remedies in the

event of the termination of employment by an employer (in that case, in the specific context of the premature termination of a fixed-term contract). The court's exposition of the "dual avenues" of labour disputes (disputes to enforce "LRA rights", such as the right not to be unfairly dismissed or the right not to be subjected to unfair labour practices, on the one hand, and disputes based on the breach of contract under the common law, on the other hand) is less important for the present purposes. What is important for this discussion is that both the majority and the minority in Fedlife saw fit to include statements regarding the constitutional development of the common law of the employment contract in respect of the importation of fairness into the contract, outside of the influence of the provisions of the labour legislation. Nugent AJA had the following to say:

The clear purpose of the legislature when it introduced a remedy against unfair dismissal in 1979 was to supplement the common law rights of an employee whose employment might be lawfully terminated at the will of the employer (whether upon notice or summarily for breach). It was to provide an additional right to an employee whose employment might be terminated lawfully but in circumstances that were nevertheless unfair. That position was perhaps ameliorated with the adoption of the Interim Constitution in 1994 which guaranteed to every person the right to fair labour practices in s 27(1) and rendered invalid any law inconsistent with its terms (which has been repeated in the present Constitution). Thus it might be that an implied right not to be unfairly dismissed was imported into the common law employment relationship by s 27(1) of the Interim Constitution (and now by s 23(1) of the present Constitution) even before the 1995 Act was enacted.43

Froneman AJA, in his minority judgment, expressed similar sentiments on the subject:

In my view the Constitution has a material impact on [the] particular conceptual distinction between the proper domain of contract and that of the statute, namely that the former has little to do with fairness, whilst only the latter has (I must emphasize that I am dealing only with the contract of employment and labour legislation – what effect the Constitution may have on the law of contract generally, or other legislation, is not relevant for present purposes). Section 23(1) of the Constitution provides that everyone has the right to fair labour practices. It seems to me almost incontestable that one of the most important manifestations of the right to fair labour practices that developed in labour relations in this country was the right not to be unfairly dismissed. Had the Act not been enacted with the express object to give effect to the constitutional right to fair labour practices (amongst others), the courts would have been obliged, in my view, to develop the common law to give expression to this constitutional right in terms of section 39(2) of the Constitution. To the extent that the Act might not fully give effect to and regulate that right, that obligation on ordinary civil courts remains.44

Both these statements relate to the importation of fairness into the common-law contract, derived from the fair labour practice guarantee in the Constitution. While both refer specifically to the right not to be unfairly dismissed, by definition they would also apply to the right not to be subjected to unfair labour practices (of which unfair dismissal is arguably the worst form). Accordingly, both statements would appear to allude, more broadly, to a right to fair treatment in employment, something that would appear to be a natural evolution of the implied duty of trust and confidence in the constitutional dispensation. Nugent AJA expresses the view that such an importation of fairness into the common law by way of the Constitution might already have taken place before the enactment of the LRA. Froneman AJA, on the other hand, stresses that such a development of the common law would have had to be undertaken by the courts had the LRA not been enacted. Both see this process as inevitable. What is of particular interest is that Froneman AJA adds that "[t]o the extent that the [LRA] might not fully give effect to and regulate [the section 23 right to fair labour practices], that obligation on civil courts remains". More will be said on this later, in the discussion of the role of constitutional avoidance and judicial deference in this context.45

Following Fedlife, the SCA continued along the path of recognising the importation of fairness into the common-law employment contract under the influence of the Constitution. Whilst what had been said in this regard in Fedlife (as quoted above) had been couched in rather speculative language, this court now started to make more definite pronouncements on the issue. In Old Mutual Life Assurance Co SA Ltd v Gumbi46 Jafta JA stated that "It is clear … that coordinate rights [to the right to a pre-dismissal hearing under the old LRA] are now protected by the common law: to the extent necessary, as developed under the constitutional imperative (s 39(2)) to harmonise the common law into the Bill of Rights (which itself includes the right to fair labour practices."47 Gumbi was followed a fortnight later by the SCA's judgment in Boxer Superstores Mthatha v Mbenya,48 where Cameron JA (relying on Gumbi) held that "the common-law contract of employment has been developed in accordance with the Constitution to include the right to a pre-dismissal hearing … This means that every employee now has a common

law contractual claim – not merely a statutory unfair labour practice right – to a pre-dismissal hearing."49

Less than a year later, the SCA's trend of recognising the constitutional development of the common law to import fairness into the employment relationship continued in Murray, which involved a common-law claim of constructive dismissal brought by an employee who was not covered by the LRA. (As the plaintiff was a member of the SA National Defence Force, he was excluded from the ambit of the Act.50) In the absence of LRA protection the parties agreed in argument that the plaintiff was entitled to rely directly on the Bill of Rights (the section 23 right to fair labour practices, and the section 10 right to dignity). Cameron JA, however, believed that direct reliance on the relevant fundamental rights was not necessary:

However, it is in my view best to understand the impact of these rights on this case through the constitutional development of the common law contract of employment. This contract has always imposed mutual obligations of confidence and trust between employer and employee. Developed as it must be to promote the spirit, purport and objects of the Bill of Rights, the common law of employment must be held to impose on all employers a duty of fair dealing at all times with their employees – even those the LRA does not cover. This case involves the particular application of that duty where the employee terminates the contract of service.51

Here we find the single most direct and I would suggest unequivocal52 acceptance by the SCA of the recognition of an implied duty of fair dealing in the common-law employment contract, derived from the constitutional right to fair labour practices.53 The wording is interesting, especially the last part of the highlighted section above. Section 8(3) of the Bill of Rights obliges courts to constitutionally develop the common law to the extent that legislation does not give effect to a particular fundamental right. Some would argue (as Wallis AJA later did in McKenzie)54 that the enactment of the LRA, and more specifically Chapter VIII of the Act, obviates the need for the development of the common law, as the Act already gives effect to the section 23 right and imports fairness into the employment relationship.55 But this

would seem to ignore the clear wording of Cameron JA's dictum, which I will repeat here for the sake of clarity:

This contract has always imposed mutual obligations of confidence and trust between employer and employee ... the common law of employment must be held to impose on all employers a duty of fair dealing at all times with their employees – even those the LRA does not cover.

It is clear that Cameron JA was of the opinion that the constitutional development of the common law to imply a duty of fair dealing is not confined only to cases where the LRA does not apply, and that the development which he declares has already taken place is universal in its application to employment contracts (including those covered by the LRA). And the judgment in Murray served to concretise and expand on the earlier notion of the importation of fairness into the common law. While Gumbi and Boxer Superstores involved recognition, very specifically, of an implied right to a pre-dismissal hearing, Murray grounded the importation of fairness in the implied duty of trust and confidence, while expanding its application and scope to equate to a much broader duty of fair dealing which permeates the entire relationship.

The Labour Court, in Mogothle v Premier of the Northwest Province, followed the judgment of Cameron JA in Murray. Van Niekerk J considered the findings of the respective courts in Boxer Superstores, Gumbi and Murray, and concluded as follows:

[T]he SCA has unequivocally established a contractual right to fair dealing that binds all employers, a right that may be enforced by all employees both in relation to substance and procedure, and which exists independently of any statutory protection against unfair dismissal and unfair labour practices … As controversial as the judgments in Gumbi, Boxer Superstores and Murray might be as a matter of law or policy, they unequivocally acknowledge a common-law contractual obligation on an employer to act fairly in its dealings with employees. This obligation has both a substantive and a procedural dimension. In determining the nature and extent of the mutual obligation of fair dealing as between employer and employee, the court must be guided by the unfair dismissal and unfair labour practice jurisprudence developed over the years.56

A further hint at judicial acceptance (by the SCA) that such a development of the common-law contract in line with Cameron JA's view above has taken

place can be found in Nugent JA's following statement in Denel (Pty) Ltd v Vorster:57

If the new constitutional dispensation did have the effect of introducing into the employment relationship a reciprocal duty to act fairly, it does not follow that it deprives contractual terms of their effect. Such implied duties would operate to ameliorate the effect of unfair terms in the contract, or even to supplement the contractual terms where necessary, but not to deprive a fair contract of its legal effect.58

And, of course, bearing in mind Froneman AJA's earlier-quoted dictum in Fedlife, the civil courts retain the ongoing obligation to develop the common law to the extent that the LRA does not fully give effect to the right to fair labour practices. It will be argued later that there are cases where the Act fails in this regard, and that the common law provides the vehicle to address such cases in line with the section 23 right.

Academic writers have been divided on the issue of the recognition of a common-law duty of fair dealing in the employment contract. Proponents such as Cohen59 and Bosch60 have argued in favour of such recognition with reference to the relational nature of the employment contract and the significant reach of the implied term of trust and confidence, which already enjoys recognition by the courts. Others, such as Du Toit, are less enthusiastic about an implied term incorporating fairness in the employment contract:

Judges are left to make critical decisions based on their personal interpretation of open-ended contractual rights and duties, such as 'fair dealing' or 'trust and confidence', much as the Industrial Court was at large to give meaning to the meaning of 'unfair labour practice'. It does not seem right.61

Du Toit mainly laments the dual avenues of labour dispute resolution established by the SCA, and his apparent critical stance towards the recognition of a duty of fair dealing should probably be read in that context. Benjamin is critical of the duty of fair dealing for a number of reasons. Firstly, he is of the opinion that the relevant SCA judgments, which dealt with the importation of fairness into the common-law contract (Gumbi, Boxer Superstores and Murray), were too brief in their consideration of the legislative scheme of labour law regulation.62 More specifically, he poses the

question whether such a general formulation of a duty of fair dealing was intended to cover all aspects of the employment relationship (which, he suggests, would blur the line between interest and rights disputes, and ignore or negate the fact that the legislature chose only to enshrine protection against specified forms of unfair conduct by employers in the legislation).63 Secondly, he believes that the notion implicit in such a duty of fair dealing, namely the focus on the fairness of employer’s conduct vis a vis employees, is out of step with "the factor that dominated [the SCA's] considerations in Sidumo — the importance of being fair to employers. The SCA does not find it necessary to ask what the impact of the duty of "fair dealing" is on the "function of management".64 Of course, the SCA's judgment in Sidumo did not survive scrutiny by the Constitutional Court. And this last point would seem to ignore the fact that Murray's duty of fair dealing is a reciprocal duty, which may also protect employers from unfair employee conduct (something I will return to in Part 3). All in all, it seems that Benjamin's criticism of Murray's duty of fair dealing relates more to the rather glib way in which the SCA came to the formulation of such an important concept (without evidence of the detailed consideration of policy considerations regarding (the) labour dispute resolution system(s) and the extent to which it is desirable that laws should regulate the employment relationship), while at the same time the author also expresses the more positive view that such a duty could be harnessed to assist the plight of vulnerable workers ("[t]he trilogy [of Gumbi, Boxer Superstores and Murray] may therefore provide an opportunity for inventive litigation on behalf of the vulnerable and unprotected workers outside of the LRA as well as those employed by labour brokers (temporary employment services").65

This academic commentary preceded the SCA's oft noted "final say on the matter" in 2010. This occurred in SA Maritime Safety Authority v McKenzie.

4 Conclusion to Part 1

In Part 2 of this piece I will critically evaluate the McKenzie judgment, in order to determine whether it overturned the Murray judgment in respect of its recognition of the constitutionally-developed common-law duty of fair dealing. I will then pose the question of where we are currently, after McKenzie, in respect of the role of fairness in the employment relationship under the common-law employment contract.

In Part 3 I will consider arguments for and against the recognition of the implied duty of fair dealing, and I will conclude the evaluation after considering the issues within the broader context of the role of good faith and substantive fairness in the general common law of contract.

Bibliography

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Case law

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism 2004 4 SA 490 (CC)

Boxer Superstores Mthatha v Mbenya 2007 5 SA 450 (SCA)

Chirwa v Transnet 2008 4 SA 367 (CC)

Commonwealth Bank of Australia v Barker 2014 HCA 32

Council for Scientific & Industrial Research v Fijen 1996 17 ILJ 18 (A)

Denel (Pty) Ltd v Vorster 2004 4 SA 481 (SCA)

Fedlife Assurance Ltd v Wolfaardt 2002 1 SA 49 (SCA)

Food and Allied Workers Union obo Gaoshubelwe v Pieman's Pantry (Pty) Limited 2018 5 BCLR 527 (CC)

Johnson v Unisys Ltd 2003 AC 518 (HL)

Jooste v Transnet Ltd t/a South African Airways 1995 16 ILJ 629 (LAC)

KwaZulu-Natal Tourism Authority v Wasa 2016 37 ILJ 2581 (LAC)

Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews 2009 4 SA 529 (CC)

Makhanya v University of Zululand 2009 30 ILJ 1539 (SCA)

Malik v Bank of Credit and Commerce SA 1998 AC 20 (HL)

Manamela v Department of Cooperative Governance, Human Settlement and Traditional Affairs, Limpopo Province (CJHB) unreported case number 1886/2013 of 5 September 2013

Mogothle v Premier of the Northwest Province 2009 30 ILJ 605 (LC)

Mohlaka v Minister of Finance 2009 30 ILJ 622 (LC)

Murray v Minister of Defence 2009 3 SA 130 (SCA)

Nakin v MEC Department of Education, Eastern Cape Province 2008 6 SA 320 (Ck)

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SA Maritime Safety Authority v McKenzie 2010 3 SA 601 (SCA)

South African Football Association v Mangope 2013 34 ILJ 311 (LAC)

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Basic Conditions of Employment Act 75 of 1997

Constitution of the Republic of South Africa, 1996

Constitution Seventeenth Amendment Act of 2012

Consumer Protection Act 68 of 2008

Employment Equity Act 55 of 1998

Labour Relations Act 66 of 1995

Promotion of Administrative Justice Act 3 of 2000

List of Abbreviations