The interpretation of a “month’s notice” in a termination clause and whether a qualifier, such as a “calendar month’s notice”, bears any significance, has been the subject of debate in our law for some time.
In 2009, the court in SAMRO v Mphatsoe (SAMRO) considered whether this phrase meant:
1. Any 30-day period, with the result that notice may be given on any day of the month and the notice period will then terminate in 30 days’ time; or
2. The beginning of any given month to the end of the same month, with the result that notice may be given on the first day of the month and will continue until the last day of the month. Accordingly, where notice is given on any day of the month, the notice period will only commence on the first day of the following month and will continue until the last day of that same month.
The context is critical
In SAMRO, Judge van Niekerk noted that the meaning of a “month’s notice” could not be determined in a vacuum, but had to be interpreted in the context of the entire employment contract.
In this case, the employee’s contract of employment provided that either party can terminate the contract on “one calendar month’s notice”. The employee gave notice of termination on 8 January 2008 and ceased working on 7 February 2008, the date on which he contended the calendar month’s notice period expired.
SAMRO held a different view. It argued that the contractual notice period meant that the employee’s notice period had to run from the first day of the month to the last day of the same month. The employee’s notice period accordingly only took effect on 1 February 2008 and ran to 29 February 2008. SAMRO argued that, in the circumstances, the employee was not permitted to cease working on 7 February 2008 but was required to work until 29 February 2008. By leaving his employment on 7 February 2008, SAMRO contended that the employee acted in breach of his employment contract.
In interpreting the meaning of “calendar month” as used in the termination clause, the Court considered the Interpretation Act and the Basic Conditions of Employment Act, which both define a “month” as a “calendar month”. Since these definitions are of limited assistance, the Court held that the term had to be interpreted by looking at the context of the agreement as a whole.
The termination clause clearly qualified the notice period with the word “calendar”. However, throughout the rest of the contract, the term “monthly” or “month” was used without the “calendar” qualifier. For example, remuneration was to be paid “monthly” and pension and medical aid contributions were to be deducted on a “monthly basis”. The Court therefore held that the use of the qualifier “calendar” in the termination clause was a significant indicator that the parties clearly intended a different meaning to be given to the term “calendar month” than to the term “month” as used elsewhere in the contract. In the context of the contract as a whole, the Court held that this distinctive meaning of “calendar month” indicated that notice would only be effective from the first of the month running to the end of the same month.
Blanket interpretations discouraged
It is important to note that this judgment does not mean that the term “calendar month” always bears this meaning. Judge van Niekerk was at pains to reject a blanket statutory-interpretation principle as to the meaning of “month” and “calendar month” in an employment contract.
Rather, Judge van Niekerk emphasised the importance of the context and background of the terms of the employment contract itself and the intention of the parties. It is therefore conceivable that in different circumstances, a “calendar month” may well mean notice taking effect on a particular day of the month and running to the corresponding day of the following month. Suffice to say, however, that if both “month” and “calendar month” are used in an employment contract, depending on the context in which they are used, they will probably not accord the same meaning, unless, of course, this is the intention of the parties. If so, this intention ought to be reflected in the contract.
Clarity always pays
When drafting employment contracts, it is important for parties to make their intentions as clear as possible by ascribing specific meaning to the words used. In the absence of such clarity, the courts will have to ascertain the intention of the parties by taking into account the nature and language of the contract. Parties who specifically intend that notice should run from the first of the month would be well advised to expressly provide for this in the employment contracts.
Joy Walker is a Candidate Attorney and Talita Laubscher is a Partner in the Employment and Benefits practice at Bowmans.