LABOUR LAW BY THE BOOK Volume 2: Key Developments in South African Employment and Labour Law

LABOUR LAW BY THE BOOK

Volume 2

Key Developments in South African Employment and Labour Law

March 2025

INTRODUCTION

Dear Reader

South African labour law continues to evolve through legislative amendment, regulatory refinement and judicial interpretation. Employers must not only understand the law — they must anticipate its direction and manage risk proactively.

This second volume of Labour Law by the Book, prepared by Deneys, examines:

• The Employment Equity Amendment Act and sectoral targets
• Proposed reforms to the Code of Good Practice on Dismissal
• Annual leave complexities
• Constructive dismissal risks
• Settlement agreement pitfalls
• The legal consequences of CV fraud
• Trade union constitutional limits
• Developments in parental leave jurisprudence

Our focus remains practical and strategic: what has changed, what it means, and how employers should respond.

PART I
LEGISLATIVE AND REGULATORY DEVELOPMENTS

1. Employment Equity Amendment Act: A Structural Shift

The Employment Equity Amendment Act came into operation on 1 January 2025. Its purpose is to accelerate transformation and introduce sector-specific accountability.

Redefinition of “Designated Employer”

Employers with fewer than 50 employees are no longer required to implement affirmative action measures, irrespective of turnover. This reduces regulatory burden on smaller businesses.

Expanded Definition of Disability

“People with disabilities” now includes long-term or recurring physical, mental, intellectual and sensory impairments. The amendment aligns domestic law with international disability standards.

Compliance Certificates and State Contracts

Employers seeking to contract with the State must obtain a compliance certificate. To qualify, employers must:

• Meet sectoral numerical targets or justify non-compliance
• Submit employment equity reports
• Have no recent adverse findings relating to discrimination or minimum wage non-compliance

Failure to comply may exclude employers from public procurement opportunities.

Sectoral Numerical Targets

The Minister may now set sector-specific numerical targets.

Draft regulations propose five-year targets across 18 sectors. Key features include:

• Minimum, not aspirational, targets
• Annual targets for underrepresented groups
• Alignment with provincial economically active population data

Recommended Action

Employers should:

• Identify their sector classification
• Benchmark workforce demographics
• Develop structured employment equity plans
• Monitor regulatory updates closely

Transformation compliance is no longer administrative — it is commercially material.

2. Draft Code of Good Practice on Dismissal

Published in January 2025 for comment, the Draft Code modernises the 2002 Code.

Key Proposed Changes

• Clearer guidance on operational requirement dismissals
• Recognition that small businesses may follow less formal procedures
• Expanded factors when assessing sanction fairness
• Greater emphasis on proportionality
• Recognition of probation as a genuine assessment period
• Expansion of incapacity to include imprisonment and incompatibility

Procedural Emphasis

The Draft Code reinforces that:

• The purpose of procedure is genuine dialogue
• Employees must have a reasonable opportunity to respond
• Formal hearings are not always required
• Exceptional circumstances may justify procedural deviation

Strategic Implication

While flexibility is introduced, scrutiny of fairness remains high. Employers should review disciplinary codes, performance management systems and retrenchment templates now.

PART II
COMMON EMPLOYMENT RISKS: WHAT EMPLOYERS SHOULD KNOW

1. Annual Leave: Compliance and Controversy

Annual leave is governed by section 20 of the BCEA.

Entitlement

Employees are entitled to:

• 21 consecutive days per 12-month cycle (15 working days)
• Alternative accrual by agreement

Leave accrues from commencement of employment.

Purpose

The law is clear: annual leave must be taken. It is restorative and cannot be replaced by payment, except on termination.

Key Risk Areas

Refusal of Leave

Employers may refuse leave for operational reasons, but must allow unused leave within six months after the cycle.

Forfeiture

There are conflicting Labour Court judgments on whether unused statutory leave lapses after six months. The prevailing view favours forfeiture, but higher court clarity is absent.

Employers should regulate forfeiture through policy to minimise exposure.

Notice Period

Employees may not be required to take leave during notice unless agreed.

Payment in Lieu

Permitted only on termination. Debate remains as to how many cycles must be paid out.

Practical Advice

Annual leave should be actively managed. Passive accumulation creates financial and legal exposure.

2. Constructive Dismissal: When Resignation Becomes a Claim

A constructive dismissal occurs when an employee resigns because the employer has made continued employment intolerable.

Legal Requirements

The employee must prove:

• Resignation
• Objective intolerability
• Employer causation
• That resignation would not have occurred otherwise
• Exhaustion of internal remedies

The threshold for intolerability is high.

Objective Standard

Courts assess intolerability from the perspective of a reasonable employee — not subjective sensitivity.

Delays between conduct and resignation undermine claims.

Employer Defence

Employers can defend claims by showing:

• The environment was not objectively intolerable
• Alternatives existed
• The employee failed to use grievance procedures

Prevention

Maintain effective grievance systems

Address complaints promptly

Ensure managerial decisions are defensible

Constructive dismissal claims often arise from unmanaged conflict rather than deliberate misconduct.

3. “Full and Final” Settlement Agreements: Hidden Risk

Settlement agreements are intended to extinguish disputes. Poor drafting can unintentionally extinguish more than intended.

In Wheelwright v CP de Leeuw Johannesburg, a broadly worded settlement agreement prevented enforcement of a restraint of trade.

Lesson

If a right — such as a restraint — is to survive settlement, it must be expressly preserved.

Key Principles

• Draft precisely
• Avoid generic “all claims” clauses unless intended
• Record surviving obligations clearly

Settlement drafting requires strategic clarity, not template reliance.

4. CV Fraud: Dishonesty at the Foundation

Courts consistently uphold dismissal where employees misrepresent qualifications.

Why It Matters

Employment is built on trust. Fraud at recruitment stage irreparably damages that trust.

Importantly:

• Later satisfactory performance does not cure original dishonesty
• CV fraud may constitute a criminal offence under the National Qualifications Framework Act
• Employers may recover salaries paid under fraudulent circumstances

Risk Management

Employers should implement:

• Qualification verification
• Employment history checks
• Criminal background screening
• Reference validation

Vetting must comply with data protection legislation and informed consent requirements.

Prevention is significantly less costly than remediation.

PART III
CASE LAW DEVELOPMENTS

1. Trade Union Constitutions and Representation

In AFGRI Animal Feeds v NUMSA, the Constitutional Court confirmed that a trade union is bound by its constitution.

If employees fall outside the union’s registered scope, membership is invalid and representation unlawful.

Implication

Employers may challenge union representation where constitutional scope is exceeded.

Union authority is not unlimited. Constitutional boundaries matter.

2. Parental Leave: South Africa and Comparative Developments

South Africa awaits Constitutional Court judgment in Van Wyk v Minister of Employment and Labour, challenging the fairness of the current parental leave regime.

At issue:

• Gender differentiation
• Allocation between parents
• Equality and dignity rights

In Spain, a recent ruling doubled leave for single mothers by recognising entitlement to the leave that would have accrued to a partner.

The trajectory internationally and domestically suggests movement towards shared and more equitable parental leave structures.

Employers should anticipate reform rather than react to it.

CONCLUSION

The regulatory environment is becoming more structured, more scrutinised and more aligned with constitutional principles.

For employers, this means:

• Greater documentation discipline
• More precise drafting
• Proactive compliance planning
• Strategic risk management

Labour law risk is no longer confined to HR. It is operational, financial and reputational.

DISCLAIMER

This publication provides general information on developments in South African employment and labour law. It does not constitute legal advice. Specific advice should be obtained in relation to particular circumstances.

For further guidance, please contact Deneys.