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June 20, 2017

Fixed Term Contacts Must be Fixed

Fixed Term contracts have been amongst the most widely abused form of contracting in the South Africa employment sector.  Small wonder that trade unionists have been challenging this issue most vehemently and also clear justification for why non-standard forms of employment, of which a fixed term contract is one, was brought in under the banner of provisions of the Labour Relations Act to either be reviewed or amended in terms of the 2014 labour legislation amendments.

The 2014 labour legislative changes saw a new section being included into the Labour Relations Act dealing with non-standard forms of employment such as fixed term and part-time employment, whilst also dealing with temporary service providers.  The section is located at S198.  This section defines a fixed term contract as one which terminates upon:

  1. Specified event;
  2. Completion of task/project;
  3. Fixed date;

In terms of S198B, which applies to all employees earning below the annual earnings threshold promulgated by the Minister of Labour, a fixed term employee may only be employed for any of the following justifiable reasons:

  1. Replacing another employee who is temporarily absent;
  2. A temporary peak volume of work beyond 12 months;
  • Student or recent graduate employed to get work experience;
  1. Employed for a specific project which has a limited duration;
  2. A non citizen who has a work permit for a defined duration;
  3. Is employed to perform seasonal work;
  • Is employed for an official public works scheme or public job creation scheme;
  • Is employed for work funded by an external source for a limited duration;
  1. Has reached the normal or agreed retirement age;

S198 further states that an employer may only employ an employee on contracts longer than 3 months if the contract is for a limited or definite duration or an employer can justify a reason for fixing the term of the contract for the particular term defined in terms of the contract of employment.

The domain of fixed term contracting has now become an area that must be navigated with care and attention because any use or employment of a fixed term contract which is in contravention to the principles highlighted above, results in the contract being deemed to be of an indefinite nature.  It is also contentious as the burden of proving the term of the appointment rests with the employer.

Employers are cautioned to consider very carefully their use of fixed term employees and contracts given the changes in the legislative provisions.  Fixed term employees may not be used under a guise of a fixed term contract whilst the position is one which, by all accounts and under normal circumstances, is a permanent position.  When an employer attempts to terminate such fixed term contracts they will almost certainly be successfully challenged as unfair dismissals since it is patently clear that employers will be unable to prove that the term of such contracts ended upon a specified event, upon completion of a task or upon a particular date.   My encouragement is that audits should be done by employers of all their fixed term contracts to establish that they do, indeed, serve the legitimate and valid purposes defined in terms of S198B of the Labour Relations Act.

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