Career move

ARTICLES OF LAW WITH BHAG SINGH

The law provides for security of tenure but when it comes to fixed-term contracts, there may be limitations.

SOMETIMES an opportunity comes along for a well-paying job that appears too good to give a miss. One may already be holding a job that pays a fair salary with an assurance of security of tenure until retirement. Yet the job now being offered may have remuneration and benefits that are almost irresistible.

However, the new job is offered on a three-year term with an option for renewal. One reader who is faced with such a situation wants to know how he can protect himself from being arbitrarily terminated in his new employment and losing out on the security of tenure he now enjoys.

He wants to know whether he would have recourse to the Industrial Courts in the event that he is arbitrarily terminated, and whether he can be assured of the same security of tenure.

In earlier times, a contract of employment was regarded as an ordinary contract to be governed by the terms to which the parties had agreed to. However, developments over the years have created laws for security of tenure so that an employee has an assurance of lifetime employment in the absence of just cause.

The Industrial Relations Act 1967 adopts this approach and in its preamble describes itself as “An Act to provide for the regulation of the relations between employers and workmen ... and the prevention and settlement of any differences or disputes arising from their relationship.”

The Act provides security of tenure by prohibiting employers from dismissing employees arbitrarily. This is made possible by section 20(1) which reads as follows:

“Where a workman ... considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director-General to be reinstated in his former employment.”

The law in this regard requires an employer who has wrongfully terminated the employment to reinstate the employee. This, on the basis of existing principles, would be what is otherwise called specific performance, a subject on which the common law takes a somewhat different view.

Law of contract

As said in Anson’s Law of Contract, the courts will not as a general rule compel the performance of a contract of employment or of those which involve personal services. This exception of sorts is based on public policy in that it would be improper to make one man serve another another against his will.

As such, the common law courts will not usually order re-engagement or reinstatement by invoking the remedy of specific performance. This is because the remedy would require supervision by the court and is deemed impractical.

In the case of a person who is employed in circumstances where he is assured of security of tenure until retirement age, a change of employment could impair the security of tenure presently enjoyed. This would be so especially in the absence of serious misconduct or a fundamental breach on the part of the employee.

This is because what the employee is offered now is a fixed-term contract. In such a scenario, it may not make a substantial difference because if his employment is terminated without just cause, he goes to the Industrial Court or the common law courts.

In such a situation, it is obvious that the employment commitment is only for a three-year period. Whilst the common law court is unlikely to order specific performance, resorting to an Industrial Court can at best result in being reinstated only for the remaining period of the unexpired term.

An employee in such a situation may want to consider carefully whether he wants to place his grievance before the Industrial Court or the common law courts. Whilst resorting to the common law courts is a right, the Industrial Court is only an option if the minister decides to make a reference based on his complaint.

At the end of the day, the more practical option for an employee in such a situation is to ensure that he is clearly protected by provisions in the contract. Instead of waiting to complete the contractual terms, it would be in the interest of such an employee to ensure that there is no termination clause prior to the completion of the extended term.

In other words, the employee would be better protected if the contract provided for him to be paid for the remaining part of the full term in the event of premature termination. There could also be added an element of damages for such premature termination though this could become a contentious issue.

Risks

Having an option to extend the fixed-term employment on one or more occasions ought to be welcomed by the employee. Repeated extension may dilute the effect of such a contract being a fixed-term one.

However, the criteria on which the option is to be exercised ought to be clearly spelt out. This is to give the employee a tangible right. It would not be in the interest of the employee to have an option on the basis of new terms to be negotiated and agreed.

This is because in such a situation, the inability to agree on new terms could result in no agreement being reached. The effect of this would be that there is no extension and therefore no right for continued employment for the employee.

At the end of the day, it is for the employee to consider and weigh the risks involved in a desire to change jobs and procure increased remuneration against what could be a limited security of tenure.