Introduction
One of the most frequently misunderstood aspects of South African labour law is the validity and duration of overtime agreements. Many employers incorrectly assume that an overtime clause contained in an employment contract remains valid for the entire duration of employment. This assumption is incorrect and can expose employers to significant risk when disciplining employees for refusing overtime.
Section 10(5) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) does not impose a general requirement that overtime agreements must be renewed annually. Instead, it creates a limited, once-off lapse rule that applies only where an overtime agreement is concluded at the commencement of employment or within the first three months of employment, in which case that agreement lapses after one year.
Overtime Requires a Valid Agreement
Section 10(1) of the BCEA provides that an employer may not require or permit an employee to work overtime unless there is an agreement in place.
In practical terms, overtime is not a unilateral management right. It is a consensual arrangement that must be agreed to by the employee, either in an employment contract or a separate agreement.
The One-Year Lapse Rule (Section 10(5))
Section 10(5) of the BCEA provides a narrow limitation:
An overtime agreement concluded when employment commences, or within the first three months of employment, lapses after one year.
This means:
- An overtime clause signed at the start of employment is not permanent;
- It automatically becomes unenforceable after 12 months; and
- It must be replaced by a new agreement if the employer wishes to continue relying on it.
The purpose of this provision is to prevent employees from being indefinitely bound by overtime consent given at the outset of employment.
Importantly, this is a once-off statutory lapse, not an ongoing or recurring annual requirement.
What Happens After the Agreement Lapses?
Once the initial overtime agreement has lapsed, the employer can no longer rely on it.
A fresh overtime agreement must be concluded.
After this point:
- The new agreement is governed by ordinary contractual principles;
- It remains valid indefinitely unless varied or terminated; and
- There is no statutory requirement for annual renewal.
If the agreement is concluded after the employee’s first three months of employment, section 10(5) does not apply at all, and the agreement remains valid without any lapse.
Can an Employee Be Disciplined for Refusing Overtime?
The enforceability of disciplinary action depends on whether a valid overtime agreement exists at the time of the instruction.
Where no valid agreement exists, for example, where the original agreement has lapsed under section 10(5):
- The instruction to work overtime may be unlawful; and
- Refusal may not constitute insubordination or misconduct.
Where a valid agreement exists, refusal may constitute misconduct depending on operational requirements and the reasonableness of the instruction.
Judicial Interpretation of Section 10(5)
The Labour Court has confirmed the limited scope of section 10(5) of the BCEA.
In AMCU obo Mkhonto and Others v Commission for Conciliation, Mediation and Arbitration and Others (2023) 44 ILJ 1046 (LC), employees were dismissed for refusing overtime. The employer relied on overtime clauses contained in their employment contracts.
However, those clauses had been concluded at the commencement of employment and had not been replaced after one year.
The Court held that, by operation of section 10(5), the overtime agreement had lapsed. The instruction to work overtime was therefore unlawful, and the employees’ refusal did not constitute insubordination. The dismissals were found to be unfair.
The Court relied on Maripane v Glencore Operations South Africa (Pty) Ltd (Lion Ferrochrome), where the Labour Appeal Court confirmed that overtime may only be compelled where a valid agreement exists as required by the BCEA.
In SACWU obo Kagisho and Others v NBCRFLI and Others [2016] ZALCJHB 465, the Labour Court recognised that overtime agreements may be concluded after employment commences and are governed by ordinary contractual principles.
These authorities confirm that section 10(5) is a limited protective mechanism, not a requirement for ongoing annual renewal.
Common Mistakes Employers Make
Employers frequently expose themselves to risk by:
- Assuming overtime clauses must be renewed annually;
- Failing to distinguish between initial and later overtime agreements;
- Disciplining employees without checking whether the agreement has lapsed;
- Treating operational need as a substitute for legal consent; and
- Confusing emergencies with ordinary operational overtime.
Who Does the BCEA Overtime Provisions Apply To?
The BCEA overtime provisions do not apply universally. Exclusions include:
- Senior managerial employees;
- Employees who regulate their own working time; and
- Employees earning above the statutory earnings threshold, where section 10 does not apply in terms of section 6(3).
Employers must first confirm whether the employee falls within the scope of the BCEA before relying on overtime provisions.
Practical Recommendations for Employers
To ensure compliance and reduce disputes, employers should:
- Identify when overtime agreements were concluded;
- Determine whether section 10(5) applies;
- Replace only those agreements that have lapsed;
- Avoid unnecessary annual renewal processes; and
- Ensure disciplinary action is based on valid, enforceable agreements.
Conclusion
Section 10(5) of the BCEA does not impose an annual renewal obligation for overtime agreements. It creates a narrow, once-off lapse rule applicable only to agreements concluded at the commencement of employment or within the first three months.
Once a replacement agreement is concluded, it remains valid under ordinary contractual principles and does not require annual renewal.
Correct interpretation of this provision avoids unnecessary administrative burden while ensuring that disciplinary action for refusal to work overtime is legally sound.
In labour law, accuracy in understanding the source of consent is often the difference between a fair dismissal and an unfair one.
