Yes – No – Maybe? This is the second part of our series for employers on the various types of employee contracts. In the previous article we spoke about three types of employment contracts that are often used incorrectly. These are part-time, temporary and fixed-term contracts. Employers were cautioned not to use fixed-term contracts to evade the responsibilities of permanent employment.
Section 198B(1) of the Labour Relations Amendment Act, 2014 (Act No. 6 of 2014) (LRA) specifies that a fixed-term contract would terminate on the occurrence of a specific event, the completion of a specific task or on a fixed date (other than normal agreed retirement age), subject to Subsection (3) of the LRA.* It seems then that when a fixed date has lapsed, the contract may be terminated.
This is partly true; however, as Subsection 198B(1)(c) of the LRA stipulates, Subsection 198B(3) should also be borne in mind.
When looking at the nature of the work, it will be easy enough to determine whether the work is of limited or definite duration.
Determining whether the reasons for fixing the term of the contract are justifiable would be a more subjective test. Subsection 198B(4) is not intended to limit the generality of Subsection 198B(3), but it partly eliminates subjectivity by prescribing the justifiable reasons for fixing contracts.
The reasons for concluding a fixed-term contract will be justified if the employee:
When entering into a fixed-term contract with an employee, make sure that both the fixed date and the reason for fixing the contract are stipulated in the contract. This will serve to indicate that the contract is for a limited or definite period, such as in the case of a specific building project, or that the term is fixed for a justifiable reason as stipulated in Section 198B(4) of the LRA. If the exact time when the contract would be terminated is unknown, the specific date may be left out. The reason for fixing the contract, however, should never be omitted. If the employer wishes to make a temporary appointment, he/she is advised to consider whether a temporary contract would not be more appropriate.
SERR Synergy deals with all types of employment contracts on behalf of our clients. Labour Pro for Business is an integrated labour relations programme where we guide and assist businesses in a practical and supportive way with regard to the required processes and procedures to minimise the risks to which a business is exposed to when employing staff.
About our author: Audrey Cloete obtained her LLB degree from the North-West University Potchefstroom in 2003. She completed her articles with the main focus on Criminal Law and is also an admitted Conveyancer. Audrey joined SERR Synergy in 2015 where she currently works as a Legal Compliance Advisor.
*See the Exclusions of Subsection 198B(2) of the LRA
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