Corporate gym contracts and the Consumer Protection Act
Whether section 14 of the CPA lets an employer cancel a corporate wellness deal with a South African gym, and where the employees who train fit in.
By Achekam · · 5 min read · For Fitness businesses in South Africa
A corporate wellness deal can be the steadiest income a gym or studio has: one employer, one monthly invoice, and a group of staff who train at lunchtime. Then the employer's finance director changes, budgets are cut, and a letter arrives saying the company is cancelling the fixed-term agreement under the Consumer Protection Act, on twenty business days' notice.
Is the employer right? For most corporate deals, the text of the Act points the other way. But the answer depends on who signed, and the employees who actually use the gym raise their own questions. Here is how the pieces fit, so you can write corporate agreements that say what you mean.
What section 14 gives a consumer
Section 14 of the Consumer Protection Act deals with the expiry and renewal of fixed-term agreements, such as gym memberships. Under section 14(2)(b), as the text on Acts Online reads, a consumer may cancel a fixed-term agreement when it expires without any penalty or charge, or at any other time by giving the supplier 20 business days' notice in writing or in another recorded manner, despite anything the agreement says.
That right is why individual gym contracts in South Africa are written the way they are. Members can give notice and leave before the term is up. You can read the section in full on Acts Online's page for section 14.
Why a deal between two companies is different
The same section states that it does not apply to transactions between juristic persons, regardless of their annual turnover or asset value.
A juristic person is, broadly, a legal entity rather than a human being: a company, for example. When a gym that trades through a company signs a wellness agreement with an employer that is also a company, both sides are juristic persons. On the wording of the section, the employer cannot rely on section 14 to walk away on twenty business days' notice. Its rights to end the deal come from the agreement itself and from the general law of contract.
Two caveats before you rely on that:
- Check who actually signed. If the "employer" is a sole proprietor trading in their own name, it is a natural person, and the exclusion for deals between juristic persons may not help you. Take legal advice on unusual structures.
- Section 14 is not the whole Act. The National Consumer Commission says that under section 5 it has jurisdiction over every transaction in South Africa and the promotion and supply of any goods or services, unless exempted. Other parts of the Act may still matter to how you market and deliver the service.
The employees who train
The employees are not party to the corporate agreement, but they are the people on the gym floor. The Act's definition of a consumer, as quoted by the Motor Industry Ombudsman of South Africa, includes a person who transacts with the supplier and also a user or beneficiary of the goods or services, even if that person is not a party to the transaction.
So the employees fall within the Act's idea of a consumer when they use your facilities. That does not turn the employer's agreement into a fixed-term consumer agreement with each of them, but it does mean you should not assume the Act has nothing to say about how you treat them. Where an employee also signs their own membership with you, for instance a discounted personal contract or a family add-on, that is a separate agreement with an individual, and section 14 can apply to it in the ordinary way.
Small employers and the turnover test
The dtic's Consumer Protection Act booklet, dated April 2020, says a business with total annual turnover of less than R2 million is also protected as a consumer under the Act. Gym owners sometimes read this to mean that a small employer can cancel a wellness deal like an individual member.
Section 14 answers that directly. Its exclusion for transactions between juristic persons applies regardless of annual turnover or asset value. A small company is still a juristic person, so the turnover test does not bring section 14 back into a deal between two companies. Other protections in the Act may still reach a small business customer, which is one more reason to take advice when a dispute starts.
Write the terms on purpose
Because section 14 does not fill the gaps in a company-to-company deal, the agreement has to. Make sure it states:
- The term, and whether it renews automatically or ends unless both sides agree to continue.
- Notice to cancel before the end of the term, and any charge for leaving early, worked out in a way both sides can check.
- Who may train: named employees, a headcount, or anyone with a staff card.
- How the fee is calculated: a fixed monthly amount, a rate per active employee, or per visit.
- What happens to employees' access when the corporate deal ends, and whether they can convert to personal memberships.
Signing and invoicing in Achekam
Achekam lets a business send any document for electronic signature, with signature and initials fields placed on it, signers in order or all at once, an expiry and reminders. The signed PDF and a completion certificate are filed back into Documents, so the agreement and the record of who signed it sit together when the renewal comes round.
The employer is then invoiced like any customer. Invoices start as drafts you can change or delete; issuing one takes the next number in the sequence and posts it straight to the ledger as debtors, sales and output VAT, with default terms of 30 days unless you change them. When the employer pays, the payment is recorded against one invoice or spread across several. A part payment leaves an invoice part-paid, and anything paid over is held on the employer's account. Your corporate income and what is still owed are in the books the day each invoice is issued and each payment is recorded.
Before the corporate deal renews
Run through this list a few months before the term ends:
- Confirm the legal names of both parties, and whether each is a company or an individual.
- Read the renewal and cancellation clauses as written, not as remembered.
- Check the employer's payment history on its account.
- Compare the headcount you bill with the employees actually training.
- Decide which terms to change, and send the new agreement for signature in good time.
How the monthly corporate invoice is built is covered in billing a corporate wellness client, and the limits on charging an individual member who leaves early in early cancellation fees.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
