Employers' rocky road to justice
IN MANY cases, employment contracts are breached by employers, giving rise to litigation by employees. In response to such breaches of contract, employees will seek a remedy of either reinstatement or compensation.
The quantum of damages claimed for by an employee is relatively easy to determine as it will usually be based on an employee's salary.
But can an employer sue an employee for damages resulting from a breach of contract by an employee?
If so, how is the quantum of damages determined by an employer in its favour?
On two instances, the Labour Court was asked to determine these two issues. In one of its judgments, the court referred to an observation made by the Labour Appeal Court that employers rarely use the legal rights they have against employees in cases of breach of contracts.
The Labour Appeal Court further remarked that employers have legal recourse both in terms of [South African] common law and statutory law.
In the first case adjudicated by the Labour Court, an employer claimed a certain sum of money from an employee, alleging that it had suffered damages arising from the employee's breach of his employment contract by ending his services prematurely.
The court held that there was no reason for the employer not to sue the employee for any damages incurred as a result of the breach of [service agreement] of employment by the employee.
In another judgment, the Labour Court confirmed [employers'] right to sue employees for breach of contract for premature termination of their services.
How does the employer quantify damages emanating from a breach of contract? The court developed a two-pronged approach. Firstly, there must be a factual causation to prove that had it not been for the breach by an employee, an employer would not have suffered the loss.
The second criterion is for an employer to demonstrate that the factual causation is also linked to the legal causation.
This may not be easy unless an employer is able to illustrate an employee's worth to the company on a month-to-month basis and is further able to link the breach to the loss of revenue by the company, whether by way of an actuarial determination or any other mechanism.
Be that as it may, none of the employers in the cases referred to above succeeded in claiming damages against their employees, although the breach of employment contract was actually proved.
- Modise is chairman and Monnakgotla, a senior associate at Eversheds