• Section 41(2) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) provides that an employee who is dismissed based on an employer’s operational requirements will be entitled to severance pay.
• Section 41(4) of the BCEA provides that an employee who unreasonably refuses to accept the employer’s offer of alternative employment shall forfeit severance pay.
• Where an employment contract identifies amounts payable upon retrenchment but does not expressly impose an obligation to pay severance upon retrenchment, the obligation to pay continues to arise from section 41(2) of the BCEA, making section 41(4) available as a defence.

Judgment

The SCA confirmed that the High Court enjoys concurrent jurisdiction in terms of section 77(3) of the BCEA to determine disputes concerning contracts of employment, e.g. breach of contract or enforcement of contractual rights.

The High Court had found that section 41(6) of the BCEA mandated referral of the dispute to the Metal and Engineering Industries Bargaining Council, and that since no such referral had been made, the claims fell to be dismissed. The SCA disagreed with this analysis.

The SCA harboured doubt that section 41(6) of the BCEA imposes a mandatory obligation to refer such disputes to arbitration, noting that it states that an employee “may” refer such a dispute, and, second, that the jurisdictional scheme in sections 73A and 77 of the BCEA points strongly to an election by an employee rather than an obligation.

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