This newsletter takes a similar direction from a paper drawn up by Dr Lukas Du Preez.  In essence there is much written about fixed term contracts and their illegality.  The reality is that fixed term contracts are not illegal but have to be properly managed.  An employee who earns less than two hundred and six thousand rand per annum and who is employed beyond three months at one place could be deemed to be permanent employees.  There are many exceptions to this and many employees are excluded.  For instance an employer that employs less than ten people or an employer who employs less than fifty employees and whose business has been in operation for less than two years would be exempted. (the employer should not have more than one business and the business should not have been formed by the division or dissolution for any reason of an existing business).

If however the work is of a limited duration and there is a justifiable reason for fixing the duration then it could be argued that the fixed term contract is acceptable and defensible.  Any employee who is deemed to be a permanent employee and is on a fixed term contract longer than three months, that person should not be treated less favourably than a permanent employee doing similar work.

Renewal of contracts must be in writing and must state the reason relating to the nature of work (or a justifiable reason).  These reasons could include the replacement of another employee, a temporary increase in the volume of work for a period of less than twelve months or a student.  It could also be argued that the work was for a specific project of a limited duration or that it is the employment of a non citizen with a work permit for a specific period.  It is a relief to know that seasonal work, public work schemes and a position funded by an external source can be justifiable reasons.  It is also common knowledge that an employee employed on a fixed term contract after retirement age would be a justifiable reason.

Obviously employment in terms of a fixed term contract beyond the three months and without the exemptions would have to be employed in terms of the same conditions as those in permanent employment.  It should be specifically noted that part-time employees will enjoy similar protection and should be comparably treated.

It is pointed out that there is no prohibition on fixed term contracts for employees earning above the legally accepted threshold of two hundred and six thousand rand but it must be understood that if the fixed term contract is renewed then the employer would need to be able to show that the work is of a limited duration.

There is scope for employers to use fixed term contracts legally.  The renewal of contracts needs to be treated carefully and there must be a very good objective reason as to why it has been renewed.

The Commission for Conciliation Mediation and Arbitration has said that if a temporary employment service places someone with the employer for more than three months and they fall within the scope of the definition, the client will become the employer.  This ruling is on review to the Labour Court but that is the current situation.

MICHAEL BAGRAIM
BAGRAIMS ATTORNEYS
28 July 2015