Business

Category: Business (page 1 of 2)

Is your business covered for loss of income?

August 12, 2022 / My Lawyer / Comments Off

It’s all well and good being paid out for your assets, but what about the foregone earnings in the meantime?

Small business owners who have a short-term commercial insurance policy are often not aware that they may not be covered for the loss of income, under a standard commercial policy.

Although a standard short-term insurance policy can assist SMEs to replace, repair or reinstate various assets following a loss, it does not provide cover against the loss of income as a result of a business being non-operational or not being able to provide a service following a covered loss.

Business Interruption cover is offered by insurers as optional cover to protect a business against the loss of income following an insured event. For this cover to come into effect following a loss, there needs to be a financial loss to the business as a result of the unforeseen incident caused by a peril that is insured in terms of the underlying commercial short-term insurance policy.

For instance, should a fire occur at business premises, the short-term insurance policy would cover costs related to repairing the building and replacing equipment or any other insured assets destroyed during the fire. Thereafter, Business Interruption cover would come into effect to cover the business against loss of income for the period it can’t operate.

Business Interruption cover can be extended to also protect businesses against losses due to incidents or disasters that occur at the premises of a third party, such as a supplier or customer. However, not all risks that occur outside the premises will be covered, if not specified.

A common question that SMEs usually ask about Business Interruption insurance cover is the amount of cover that is needed for their businesses. There isn’t a straightforward response to this question, as every business is unique and may not be impacted the same.

The ideal approach is working together with your broker to undertake a risk assessment exercise to identify potential risks that may impact the business, as well as the amount of time needed to recover. This will determine the amount of Business Interruption cover that a business should take out.

The impact of shutting down business premises and not being able to run operations will not only lead to financial losses and cash flow disruptions but could also threaten the survival of the business if it cannot fulfil its contractual obligations to customers and suppliers.

What Business Interruption insurance covers

Most business interruption insurance covers the following items:

Profits: Based on prior months’ performance, a policy will provide reimbursement for profits that would have been earned had the event not occurred.
Fixed costs: These can include operating expenses and other incurred costs of doing business.
Temporary relocation: Some policies cover the costs involved with moving to and operating from a temporary business location.
Commission and training costs: In the wake of a business interruption event, a company will often need to replace machinery and retrain personnel on how to use the new machinery. Business interruption insurance may cover these costs.
Extra expenses: Business interruption insurance will provide reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the business gets back on solid footing.
Civil authority ingress / egress: A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event.
Employee wages: Coverage of wages is essential if a business does not want to lose employees while shut down. This coverage can help a business owner make payroll when they cannot operate.
Taxes: Businesses are still required to pay taxes, even when disaster hits. Tax coverage will ensure that a business can pay its taxes on time and avoid penalties.
Loan payments: Business Interruption coverage can help a business make their loan payments even when they are not generating income.

Source: Investopedia (www.investopedia.com)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

How a data-driven culture can transform your business

June 17, 2022 / My Lawyer / Comments Off

In today’s digital era, data has become an essential resource for businesses to grow and thrive in a competitive market. But not all companies are taking advantage of this opportunity. In fact, many organisations are still struggling to understand how they can benefit from their data assets and use them effectively to improve their performance.

Data-driven culture: what does it mean?

A data-driven culture refers to an organisational culture where all employees are encouraged to use data to make decisions that will help improve their performance, as well as their company’s performance as a whole. It’s about using data analytics tools to gather valuable information about your website traffic, customer engagement, and product or service sales. In other words, a data-driven culture values analytics, metrics, and evidence-based decision-making over gut instinct or intuition.

Data has always been an integral part of any business strategy, but with the recent advancements in technology, analytics, and artificial intelligence, we are able to access more information than ever before. The question is: How do you get started? How do you make sure that your organisation embraces a data-driven culture?

Define your data strategy

Collecting data is only useful if you have defined what you want from it and why it matters. This can be achieved by developing a clear strategy on how you will use data within your organisation’s decision-making processes. A good starting point is understanding what kind of questions you want answered by using data, and then identifying what type of information would help answer these questions most effectively. Once these have been identified, decide how often you need new information, as this will inform how frequently you need to collect data from various sources such as systems or surveys.

What are the benefits of a data-driven culture?

Increased agility: Agility is important for any business that wants to keep up with the rapid pace of change in the digital world. A data-driven culture helps businesses be more agile because it gives them access to more information about their customers and competitors. This information is then used to respond quickly to market changes and adapt their strategies accordingly.

Improved decision-making: Data provides valuable insight into what works and what doesn’t work in your business, allowing you to make better decisions with confidence. For example, if you have been trying out different marketing strategies without any solid results, data can help you identify which ones work best, so that you can stop spending time and resources on those that don’t perform well.

More control over marketing strategies: Marketing strategies are often difficult to implement because they involve multiple stakeholders with different goals. However, with data on hand, you can make sure everyone is working towards one common goal: increasing sales. You can also see which marketing tactics are working best for each segment of your target audience so that you don’t waste time and money on ineffective marketing methods.

Better focus on core processes: When you have access to reliable data on client preferences or employee engagement levels, it allows you to focus on what really matters instead of wasting time on non-essential tasks.

Drives innovation: By using data as an input factor within your organisation, you encourage creativity and innovation amongst employees who have access to it. This helps them come up with new ideas, products or services that solve client problems better than competitors do.

Builds respect & creates stronger employee relationships: Finally, having access to data gives everyone in your business insight into how things are going at any given time. This transparency creates an environment where people feel more connected — regardless of whether they work directly with one another or not — because they understand each other’s roles better than before.

The future is unpredictable, and in this ever-changing business landscape, it is important to know where you stand before you can understand where you’re headed. Observing what is happening in your industry, identifying trends, and collecting and analysing data to generate insights can – and should – be applied to any aspect of your business. By harnessing the power of data and truly embracing a data-driven culture, your company can learn how to perform better and develop efficient strategies for long-term success.

Who is held responsible for payments lost due to cybercrime?

June 17, 2022 / My Lawyer / Comments Off

This is exactly what happened in Fourie v Van der Spuy and De Jongh Inc. and others. The First Respondent was a law firm and the Second and Third Respondents were practising Attorneys. The Applicant claimed payment of R1 744 599.45 from the Respondents. The First Respondent had a mandate to deal with money paid into Trust by the Applicant. The Second Respondent, upon receiving instructions to make payments via email, paid the money into a banking account belonging to an unknown third party who fraudulently hacked the email server of the Applicant and sent emails to the First Respondent containing the wrong instructions and the wrong banking details.

The Court held that the nature of a trust account imposes very strict obligations on the Trust Attorney and a very high degree of care and skill is required from Attorneys dealing with a client’s Trust account. The Attorneys could have easily avoided the situation if they acted diligently and verified the banking details before transferring money out of the Trust account. The Court held that they failed to act with the required skill and diligence and were therefore held liable to pay the Applicant.

In another matter, a sales agreement was concluded between the Respondent and a car Dealership. The Respondent transferred the funds for a motor vehicle into a fraudulent account and sent proof of payment to the Dealership. He collected the vehicle soon thereafter. Neither the Applicant nor the Dealership checked that the proof of payment reflected the correct bank account number. The mistake was discovered when the funds did not reflect in the Dealership’s bank account.

The Respondent raised the defence of estoppel. He held that the Dealership’s normal procedure was to release the motor vehicle after receipt of money and not just receipt of the proof of payment. He further held that the Dealership was negligent in that they failed to check that the proof of payment contained the correct banking details, which resulted in a delay that would otherwise have been flagged by the bank and the transaction blocked. Again, the Court decided in favour of the Dealership and held that a Debtor (The Respondent in this case) always bears the duty and risk when payment is due to the creditor.

The new Cybercrimes Act (the Act) might bring some relief to the parties involved. The Act aims to criminalise unlawful access, use and distribution of data and data messages. It will also regulate the power to investigate and adjudicate cybercrimes. Section 8 in particular relates to the above-mentioned cases, where it aims to create statutory offences of Unlawful Access (hacking) and Cyber Fraud. It reads:

“Any person who unlawfully and with the intention to defraud makes a misrepresentation by means of a data or computer program or interference with a data or computer program is guilty of an offence.”

A fine and/or imprisonment of up to 5 years for a conviction of Unlawful Access is possible, and for “Cyber Fraud” the Courts have the discretion to impose a penalty appropriate for convictions under S 276 of the Criminal Procedure Act 51 of 1977.

From the above cases and the many others not mentioned in this article, it is clear that the courts will not be in favour of a party that was deemed to be negligent. It is of paramount importance, when dealing with invoices and payments from an online source, to be vigilant and always have checks in place to reduce the chances of being a victim of cybercrime.

References:

Fourie v Van der Spuy and De Jongh Inc and Others (2019) JOL458L8 (GP)
Galactic Auto (Pty) Ltd v Venter (4052/2017) (2019) ZALMPPHC 27
Cybercrimes Act 19 of 2020

How to avoid exhausting your human resources

April 26, 2022 / My Lawyer / Comments Off

Everyone handles life’s pressures differently, which is no exception at the workplace. Some job-related stress may be unavoidable, such as leading a meeting for the first time, pitching new ideas to a client, or handling a difficult customer. However, as an employer, you might unintentionally contribute to your employees’ stress by overworking them, resulting in low staff morale, poor performances, fatigue, and more serious health issues.

Unfortunately, many companies overlook these telling signs and act surprised when workers perform poorly due to exhaustion. If you want to avoid burnout among your staff and create an overall happier work environment, here are some causes of employee burnout, how it will affect your business, as well as solutions to prevent or fix these problems.

What causes overworking?

There can be many causes of overworking, but here are some of the most common practices that burn out your human resources:

1. Expecting employees to exceed the 9 to 5

Having an overtime payment policy in place could ease your conscience, but when your employees work long, irregular hours for an excessive period, it will damage their health and the business.

2. Creating a hostile work environment

Being underpaid, having to endure long commutes, annoying co-workers, unapproachable managers, and unreasonable workloads can cause employee stress levels to rise.

3. Lacking growth opportunities

When you’re not implementing career-advancement opportunities, incentives, performance bonuses or promotions at your company, your staff will become increasingly worried and stressed about their current positions and their future at the company.

4. Tipping the scales of the work-life balance

Overloading your staff’s plates with work will force them to work overtime, leaving little or no time for family, holidays, or hobbies. Your employees will quickly notice that their lives are unbalanced, which will increase their unhappiness.

How does overworked staff affect your business? 

Exhausting your staff can cause several serious issues for your company, such as:

1. Productivity and work quality will decrease

When your staff is overworked, their concentration isn’t what it’s supposed to be, which can lead to costly mistakes. Common examples are packing or shipping incorrect orders, deleting important files, frequent accidents while operating machinery, or an inability to serve clients professionally.

2. Employee morale will plummet

It’s no surprise that your staff’s morale will take a hit when they have to carry excessive workloads in a stressful environment. When the mood in the office is down, it will cause the tension to rise even higher.

3. The company image will be diminished

By rewarding overwork, you’ll likely create a culture of overwork. Personnel will feel inclined to put in more hours to cope with their workload, enabling them to earn more money. The overworking culture will become synonymous with your company and might cause issues when you’re recruiting new staff.

4. Staff turnover will skyrocket 

A rise in your employee turnover rate, especially among your most talented and experienced members, is one of the most telling signs that your staff is unhappy, likely because they’re overworked, underpaid, and undervalued.

5. Health issues will arise

Stress is the root cause of many health issues. When your staff is stressed due to long work hours and unreasonable deadlines, their health will deteriorate. The most common symptoms are insomnia, anxiety, panic attacks, fatigue, excessive weight loss or gain, high blood pressure, or even heart diseases. You’ll start to notice this in an increased number of leave days taken, as well as in your staff’s appearance.

Tried and tested solutions to combat overworking

It’s vital to have proven strategies in place to avoid overworking your staff or to fixthe damage already done.

1. Lead by example

When you’re in a leading role and burn the midnight oil every week, your staff will feel pressured to follow suit. By creating an environment based on trust, transparency, and open communication, your staff will feel more comfortable approaching you when they feel overworked or need more time to complete tasks. As an empathetic and involved leader, you’ll also get a better understanding of staff morale and learn more about your employees’ daily struggles.

2. Encourage a balanced lifestyle

An unhealthy work-life balance negatively affects the overall wellbeing of your employees and your company’s growth. It’s crucial to spend enough time away from work, and as an employer, you can help improve your staff’s lifestyle, whether it be by implementing regular coffee breaks throughout the day and flexible hours to accommodate those commuting from different towns or encouraging them to take a day off or a long weekend now and then, and plan a proper holiday at least once a year. By respecting your employees’ need to have a work-life balance, they’ll automatically start respecting it themselves.

3. Create a caring culture

If it has become normal for your staff to work after hours, on public holidays and during the festive season, something needs to change. Start by introducing one-on-one meetings with each staff member to understand their needs, goals, and expectations. These meetings can be held at least twice a year. You can also introduce a suggestion box in which staff can leave anonymous suggestions that can be implemented.

Encourage your staff to give their inputs and show them that they’re taken seriously. Even though changing your company culture from overworked to caring is a long-term project, you’ll also reap long-term rewards, as the work environment will become healthier, and your staff will feel valued and heard.

4. Offer incentives

Most companies with a culture of overworking don’t offer any perks apart from monthly salaries and leave days required by law, despite their employees overworking themselves constantly. A happy employee has high morale and is motivated to deliver high-quality work. You can boost your employees’ moods by offering benefits, like performance bonuses, travel and cell phone allowances, medical aid, and free health snacks (fruit) and quality coffee. If done strategically, the money spent will be recuperated through the efficiency and performance of your staff.

Is a happy work environment possible?

Meeting deadlines and keeping customers satisfied is as important as your employees’ well-being. Take a moment ─ assess your company’s current workplace culture and the workload your staff has to manage and weigh it up against your aimed culture and your business goals. If these don’t match, you need to make some changes to prevent your human resources from burning out and your business from suffering.

Keeping things fair in the business race

April 26, 2022 / My Lawyer / Comments Off

The purpose of the Competition Act 89 of 1998(“the Act”) is to promote the efficiency, adaptability, and development of the economy, and to ensure that small and medium-sized enterprises have equitable opportunities. Certain practices, including restrictive horizontal practices, restrictive vertical practices, and abuse of dominance, are prohibited in terms of the Competition Act.

The Competition Act 89 of 1998 (“the Act”) was enacted to promote and maintain competition in South Africa, to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy and to promote a greater spread of ownership, particularly amongst historically disadvantaged persons. This article will outline some of the prohibited practices/agreements in terms of the Act.

RESTRICTIVE HORIZONTAL PRACTICES

Section 4(1) (b) of the Act prohibits any agreement, concerted practice, or decision that involves restrictive horizontal practices. These are agreements that would have the effect of substantially preventing or lessening competition in the market, by:

Directly or indirectly fixing a purchase or selling price (or any other trading condition);
Dividing the markets by allocating customers, suppliers, territories or specific types of goods and services, or
By collusive tenders.

The Act provides that parties who conclude such an agreement must prove that there is a technological efficiency or any other gain that favours competition that results from the agreement.

RESTRICTIVE VERTICAL PRACTICES

Section 5 of the Act prohibits any other agreement if it is between parties in a vertical relationship (between a firm and its suppliers and/or customers), which has the effect of substantially preventing or lessening competition in a market. These agreements are prohibited unless a party to the agreement can prove that the technological efficiency or other pro-competitive gains resulting from it outweighs the negative impact on competition. An example of a vertically restrictive act would be the exclusive supply agreement between a supplier of key inputs and selected customers, as well as the practice of suppliers or producers prescribing minimum resale prices to its customers.

ABUSE OF DOMINANCE

The Act further prohibits abuse of dominance, which refers to anti-competitive practices perpetrated by dominant firms and may include the following:

Excessive pricing of goods or services to the detriment of customers;
Denying competitors access to an essential facility;
Price discrimination (such as unjustifiably charging customers different prices for the same goods or services; and
Exclusionary acts (such as refusing to supply scarce goods to a competitor, inducing suppliers not to deal with a competitor and buying up a scarce input required by competitors).

EXEMPTIONS

The prohibition of restrictive practices and the abuse of dominant positions may affect the manner in which business is conducted, negatively affecting economic development. The Act gives the Competition Commission the power to grant exemption from such prohibition on the application of an interested party. An exemption may be granted only if the agreement or practice is required to attain a certain objective, including any of the following:

Maintenance of promotion of exports;
Assistance of small firms controlled by historically disadvantaged persons to become competitive;
The change in productive capacity to stop a decline in an industry or promote economic stability of a designated industry; and
Exercise of intellectual property rights.

This Act makes it an offence for any person who is a director of a firm or has management authority to cause a firm to enter into agreements or practices that are competitively restrictive or perpetrate abuse of dominance. Parties found to have contravened provisions of this Act are subject to an administrative penalty.

REFERENCE

VISSER, An Overview of the Competition Act (Part 2) volume 2.

Who takes the fall for spillage incidents in shopping centres?

March 22, 2022 / My Lawyer / Comments Off

This question of liability amid spillage cases has never been fully settled in our law until recently when the case of Holtzhausen v Cenprop Real Estate (Pty) Ltd and Another [2021] 2 All SA 457 (WCC) created some doubts on the legal position of an owner or manager of a shopping mall in “spillage cases”. Spillage cases refer to instances where a floor becomes unsafe when something is accidentally spilt onto it. These cases help determine who is responsible if an injury is sustained as a result of the spillage, who should pay for the consequent medical costs, and who will be liable in a potential civil claim for additional patrimonial damages.

In the Cenprop case, the plaintiff had instituted a legal action against the defendants: the mall owner and the management company. The plaintiff sustained injuries after she had taken a fall in the Goodwood Mall (which is owned by the first defendant and managed by the second defendant) due to slippery floors in the mall. The slippery floors were caused by rainfall on the day of the incident and the patrons of the mall tracking water into the mall as they entered. The plaintiff argued that the defendants were negligent in that they knew, or ought to have known, that the area on which the plaintiff had taken a fall was slippery when it became wet and therefore should have taken steps to prevent injuries to patrons.

The first defendant, the mall’s owner, denied these allegations by pointing out that it had discharged its legal duty by appointing a competent and professional contractor (the second defendant) to maintain, clean and check the mall to ensure that the mall was kept clean and would not be a danger to patrons. In turn, the second defendant, the management company, had acquired the services of a cleaning company and a security company to ensure that the mall was safe for its patrons.

Applicable law in regard to spillage cases

In the case of Probst v Pick ’n Pay Retailers (Pty) Ltd [1998] 2 All SA 186 (W), the court made it clear that the owner or the entity in control of a shopping mall has a legal duty to take reasonable steps to ensure that the mall is reasonably safe for its patrons. Such a person or entity could be held liable where steps were not taken to ensure the safety of its patrons. The court further held that, although the owners or management of a mall may obtain the services of a cleaning company, the former still remains liable for any negligence on the part of the cleaning company to perform its duties with due care and in the event of a failure of its cleaning system.

Furthermore, in the case of Chartaprops 16 (Pty) Ltd and Another v Silberman [2009] (1) SA 265 (SCA), the Supreme Court of Appeal held and confirmed that a mall owner could conceivably be held liable for the wrongs committed by an independent contractor if the owner failed to take reasonable steps to prevent the risk of harm. In this case, the mall owner had acquired the services of a cleaning company and the owner had no knowledge of the services of the cleaning company being defective. The court held that the mall owner had taken all steps a reasonable person should have taken to ensure that the mall was safe for its patrons.

Thus, considering the above cases, the owner, person, or entity in control of a mall would only be liable for harm or danger that was foreseeable to the hypothetical reasonable man in its position, and is obliged to take no more than reasonable steps to guard against such harm occurring.

Court a quo

The court a quo in the Cenprop case held that the mall owner was exempt from liability as he had appointed a duly qualified management company to attend to the daily running and maintenance of the mall. In turn, the management company had appointed a competent cleaning contractor to keep the premises clean and free of spillages and, in addition, security guards were tasked to be on the lookout for potential risks and to call the cleaners if they were needed. Therefore, the court was of the opinion that the first and second defendants had done all they could reasonably be expected to do.

The court further held that if any party had to be held accountable for the injuries sustained by the plaintiff, it would be the cleaning company as it bore the ultimate responsibility of ensuring that the mall was safe for its patrons.

Appeal court

The court a quo’s judgment was taken on appeal to the full bench of the Western Cape High Court (Appeal Court), which overturned the finding of the court a quo. First of all, the Appeal Court held that the court a quo erred in holding that the cleaning company bore the ultimate responsibility. The Appeal Court, while referring to case law, made it clear that the mall owner, or the person or entity who may be in control of the mall, bears the ultimate responsibility of taking reasonable steps to safeguard patrons to a mall and to ensure that the floors are safe.

Spillage cases refer to instances where a floor that would in the ordinary course of normal everyday use be safe, becomes unsafe when something is accidentally spilt onto it. The Appeal Court came to the conclusion that this case did not fall within the ambit of so-called spillage cases as the rainwater brought into the mall by its patrons could not be considered a spillage and, secondly, the type of tile that was used on the floor was slippery when wet, and such risk could not be passed on to the cleaning company.

Therefore, the Appeal Court did not have to decide whether the cleaning company had an efficient cleaning system in place or whether its failure to mop up the water created liability for the cleaning company.

The Appeal Court found that the defendants were negligent because they had failed to take reasonable steps to ensure that the floors remained safe for its patrons when it rained. The Appeal Court pointed out that the defendants could have contracted the cleaning company to dry the sections of the floor that became wet when it rained, or could have closed the entrances that were exposed to the rain, but because such steps were not taken, the fault could only lie with the defendants.

This case clearly points out that even where a mall owner or management company employs the services of a cleaning company to attend to spillages and the like, the former bears the ultimate responsibility of ensuring the mall is safe for its patrons, be it in spillage cases or otherwise.

Mall owners and management companies need to be extra cautious in protecting patrons so as to avoid liability for patrons falling and injuring themselves when frequenting a mall.

When breaking contract is out of your hands

January 25, 2022 / My Lawyer / Comments Off

Vis major clauses

Many businesses will seek to rely on the enforcement of vis major clauses to relieve their performance of certain obligations resulting from the COVID-19 outbreak. The term vis major refers to an event or occurrence, which renders contractual performance impossible.
These clauses allow a contracting party to escape the normal consequences of non-performance or late performance of contractual obligations because of an unavoidable and unforeseeable event. These may include acts of God, acts of government, natural disasters, epidemics, pandemics and even war and terrorism. These clauses will suspend a party’s obligation to fulfil their performance for the duration of the event occurrence.

COVID-19 and vis major clauses

In Bischofberger v Van Eyk it was stated that the general rule in South African law is that if contractual performance becomes impossible at no fault of the debtor, the contractual performance will be extinguished. However, this rule is not absolute, and consideration will still be given to the particular contract between the parties, the nature of the contract, relationship of the parties, circumstances of the case, as well as the nature of the impossibility. In addition, the possibility of parties relying on the COVID-19 outbreak as a means to suspend their contractual obligations will depend on the interpretation of the contract concerned.

A vis major clause may include a closed list of specific events or cover a broad criterion of events, in that, having a catch-all provision to include those unusual events not specifically listed. If the term pandemic and/or epidemic is expressly incorporated in the vis major clause of a contract, any delay or failure to perform resulting from COVID-19 may excuse the contracting party from their liability.
Moreover, the term ‘act of government’ in these clauses could be applied where the government has closed its borders, imposed quarantine or isolation, banned or restricted travel and/or announced a lockdown.

However, where the term ‘epidemic’ or ‘pandemic’ is not expressly listed, parties will have to interpret the contract to determine whether the parties intended for COVID-19 to be covered by the clause. This involves considering whether the list of events agreed to was intended to be exhaustive or not and whether the pandemic is to be included in any broad catch-all provision. Where a contract incorporates a term such as ‘or any other causes beyond the control of the party’, dependent on the words used, such clause could be interpreted broadly as opposed to being restricted to the scope of events listed.

In the instance where contracts do not have vis major clauses, the common law principle of supervening impossibility of performance will apply. As explained in Dale Hutchison and Chris-James Pretorius (eds) in The Law of Contract in South Africa 2ed (Oxford University Press 2012), this principle requires a party to prove that its contractual performance is objectively impossible.

It is recommended that parties include a sufficiently detailed vis major clause to regulate certain occurrences should such event occur. Vis major clauses should be carefully drafted, considered and reviewed so that the clause can be successfully enforced. The lack of such clause in a contract or the vagueness thereof may result in further damages at the expense of an unforeseeable event that fell beyond the scope of a contracting party’s control. In our current circumstances, courts will most probably be cognisant of the impact thereof and be accommodating in interpreting clauses when faced with a contractual dispute on this basis.

Reference List:

• Interpreting contracts: Determining if COVID-19 is covered by force majeure – De Rebus, Archive, May 2020.

Resigning with immediate effect, or not?

November 25, 2021 / My Lawyer / Comments Off

Employees often consider to immediately terminate their employment relationship due to a new opportunity arising or to avoid responsibility when faced with disciplinary procedures. Employment relationships are governed by an employment agreement or legal statutes, and in most cases both. If an employer and employee do not expressly agree on the notice period needed for either of them to terminate their relationship, section 37 of the Basic Conditions of Employment Act, 75 of 1997 (the Act)  provides for minimum notice periods. But what happens when the employee does not follow the notice period in the employment agreement and resigns with immediate effect?

The Labour Appeal Court address this matter in Standard Bank of South Africa Limited v Nombulelo Cynthia Chiloane (2021) 4 BLLR 400 (LAC). In this matter, the employee was said to have cashed a cheque without following proper procedures. It later transpired that the cashed cheque was fraudulent, which caused the employer a loss of just under R30 000. The employee was given notice to attend a disciplinary hearing. On the day that the employee received the notice to attend the disciplinary hearing, she handed her superior her letter of resignation, stating that she was tendering her “resignation with immediate effect”.

Standard Bank proceeded with the employee’s disciplinary hearing during her contractual notice period, but the employee argued that her resignation immediately terminated the employment relationship, and that Standard Bank was therefore not entitled to proceed with her disciplinary hearing. The chairperson of the disciplinary hearing rejected this argument and proceeded with the hearing. The employee and her attorney then left the disciplinary hearing, which proceeded in her absence.

The employee was ultimately found guilty of the misconduct and dismissed. After becoming aware of the dismissal, the employee launched an urgent application in the Labour Court to challenge the validity of the dismissal.

The Labour Court held that a resignation with immediate effect terminates the employment relationship immediately and Standard Bank was not permitted to hold the employee to her notice period. Accordingly, the Labour Court declared that the employee’s dismissal was null and void. Standard Bank, however, appealed the decision to the Labour Appeal Court.

The Labour Appeal Court held that if the contract provides for a notice period, the party that seeks to terminate the contract must give or serve the prescribed notice. A party’s failure to abide by their notice period thus amounts to a repudiation of the employment agreement. The Labour Appeal Court found that the employee’s reliance on her resignation being with immediate effect was not valid. Standard Bank was therefore within its rights to hold the employee to her notice period as prescribed in her employment agreement, and to proceed with her disciplinary hearing during that period.

What is important to note from this judgement is the fact that unless the employer releases the employee from his/her obligation in terms of the employment agreement, the employee will commit a breach of agreement. Accordingly, the employee can also be held liable for damages suffered by the employer.

Employees will also expose themselves to a poor reference for future opportunities.

Should the employer, however, decide to accept the short notice, even when it contradicts the prescribed notice period, there will be no obligation on the employer to pay the employee beyond the last day on which they worked.

Accordingly, it will be best for employees to revisit their employment agreements prior to tendering their resignation or committing to any other opportunity. However, should the need arise for short notice, employees will have to engage with their employers to see if a mutual agreement can be reached to accept the notice.

Reference List:

Standard Bank of South Africa Limited v Nombulelo Cynthia Chiloane (2021) 4 BLLR 400 (LAC)2021) 4 BLLR 400 (LAC).
Steenkamp & others v Edcon Ltd (National Union of Metalworkers of SA intervening (2016) 37 ILJ 564 (CC).
Basic Conditions of Employment Act, 75 of 1997.

It’s Time to Ramp Up the Way You Protect Personal Information

October 14, 2020 / My Lawyer / Comments Off

Data is everywhere. In fact, because of the nifty autosave setting on the word processer used for writing this sentence, new information is being added to the Internet as it is typed. Every day we are engaging in hundreds or even thousands of little data exchanges. When we take stock of these minute transactions, it’s alarming how much of the information being collected, sent, and stored on the internet is personal information.

Whenever you give out personal information (whether in written, oral, digital, or any other form), you’re essentially giving over information about yourself in the hope that whoever is on the receiving end will use your information responsibly, ethically, and lawfully. Without protection for the personal information we use, we would put ourselves at great risk.

While data protection policies had been in place all over the world for a while, South Africa came a little late to the proverbial party. Having passed the Protection of Personal Information Act (POPIA) in November 2013, it has taken almost seven years for it to be put into effect. On the 1st of July 2020, the Act was finally put into effect with a year’s grace period for data-collectors to become compliant.

This means that the information you process regarding data subjects (people whose personal data is being collected and processed) will soon be subject to very strict data protection regulations in order to uphold privacy standards mandated by the Constitution.

POPIA outlines eight general conditions under which personal information may be processed and used as of the 1st of July 2020. These conditions are as follows:

Accountability
For private information to be adequately protected, there must be someone who takes responsibility for the handling thereof. For this reason, POPIA requires someone to be appointed as responsible party for the collection and processing of information of data subjects. The appointed party must ensure that the conditions outlined in POPIA are complied with as it relates to the purpose and means of collecting, processing, storing, and disposing of personal data.
Processing Limitation
This condition requires personal information to be processed lawfully and without infringing on the privacy of the data subject. The data may only be processed for the purpose for which it was required. There are also a wide range of other limitations on the protection of data that relate to consent, withdrawals of, and objections to the processing of the data subject’s personal information. Further limitations are given regarding how, and from whom, the data may be collected.
Purpose Specific
According to POPIA, compliance requires that all data be collected for a specific purpose that is clearly defined and lawful. Not only should the purpose for data collection be specific, the data subject must be made aware of what this purpose is prior to the processing of their data. Additionally, data records may only be kept as long as it is used for achieving its specific purpose, after which the data must be destroyed.
Further Processing Limitation
Any further processing of the personal information of the data subject must be similar to, or compatible with, the original purpose for which it was collected.
Information Quality
The party responsible for the protection of personal information must ensure, by all reasonable means, that the data is complete, accurate, not misleading, and up to date. Any changes must be related to the original purpose for which the data was collected.
Openness
All processing operations must be documented and maintained by the party responsible for the processing of personal information. The data subject also reserves the right to be notified of any information collected as well as the particulars of the information and those collecting and keeping it.
Security Safeguards
Personal information must be kept safe from damage or loss as well as unlawful access. The responsible party must inform the data subject of all reasonably foreseeable risks to the collection of information, and must take measures to safeguard the information and maintain and update these measures as is necessary. Further measures must be put in place when the personal information is used by a third-party entity. Furthermore, the data subject must be made aware of any possible security breaches in which their information may have become compromised.
Data Subject Participation
The data subject reserves the right to request access to any information collected about them and have the right to know who has access to the information. They may also request that the responsible party correct or dispose of information under their control that is inaccurate, irrelevant, excessive, out of date, incomplete, misleading, obtained unlawfully, or that no longer serves its intended purpose. The data subject must be notified of any changes made.

Please note, however, that these conditions outlined above pertain to the most general cases of data collection, processing, storing and disposal. There are a multitude of exceptions to the conditions outlined above that may be relevant to your situation and purpose for processing personal information. So, in order to ensure compliance, it is highly advisable to speak to your attorney regarding the responsible and lawful processing of personal information.

The onus now falls on you to keep your data subjects’ information safe by becoming compliant with POPIA and avoid unnecessary trouble due to the mismanagement of personal information.

Reference list:

https://businesstech.co.za/news/internet/412029/south-africas-new-personal-information-laws-come-into-effect-from-tomorrow/
Protection of Personal Information Act, No.4 of 2013.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your advisor for specific and detailed advice. Errors and omissions excepted (E&OE).

Important ingredients for the business recipe

May 17, 2019 / My Lawyer / Comments Off

“There are those who make it, those who sell it, and those who look after the money.”

So, you have finally taken the plunge – you have taken your hard-earned savings and decided to invest it in your new start-up. This was a natural decision for you since you have all the right technical skills, have gained valuable experience through years of diligent work at your previous employer, and you finally feel confident enough to carry the flag on your own. You are passionate, have all the necessary resolve, have done your research, and are ready to go… or are you?

Young entrepreneurs are often quickly caught up in the common misconceptions and clichés of business success – all you need is hard work and perseverance, if you are knowledgeable and good at what you do, clients will want to use your services, if you produce quality products, people will buy it, etc.

The fact is, however, that it takes much more than a quality product or service to build a successful business. You need to get the right people interested in what you are offering, to understand why it is important, and how it can positively affect their lives. Passion and resolve combined is a good foundation on which to build, but you need to think about how to establish your business brand, how to protect your intellectual property, how to place your products or services in the right markets, etc.

To facilitate these processes, it is important to understand what costs will be involved, how it will be funded, how the returns will be monitored, what key performance indicators need to be established and monitored to measure performance, and what accounting and reporting systems need to be in place to drive the above.

Although there are many very talented people in the world, there are few who have the mental and physical capacity to master all the ingredients necessary to master business success. No person is an island, and perhaps business success is less about your individual talents, than the unique talents of the team you manage to assemble.

You simply cannot be everything to everyone. So if you are embarking on your journey, let us help you facilitate partnerships to help you place your product and/or service in the right markets, and to assist you in looking after the money, while you focus on the reason you started your venture in the first place… MAKING IT!