How does one easily get rid of an employee who does not shape up? The idea of a fixed term contract might seem like a good solution. You merely inform the employee that the fixed term has expired. The flaws of this approach are discussed below.
It is not an uncommon practice for an employer to appoint someone for a fixed term of, say, three months and then to make the appointment permanent if the employee has worked successfully during that first period. If the person does not meet the required standard of performance or does not fit in, the employer would merely inform the employee that the fixed term contract has expired.
From the outset the true intention is usually to appoint the person permanently, but to use the first few months as a probation period. By tying the probation period to a fixed term, so the reasoning goes, it would be easy to get rid of an under-performing employee without having to follow the laborious route of performance counseling. This is because our common states that a fixed-term contract lapses automatically at the expiry of the fixed term. As this does not constitute a dismissal in terms of the Labour Relations Act, the employee would not be able to challenge the ending of the contract as an unfair dismissal at the CCMA.
Unfortunately, this strategy creates more problems than it resolves. Like tax evasion, it provides a short-term way out but inevitably results in long term grief. It is risky because arbitrators will ask the employer to explain why it was necessary to appoint the person on a fixed term if the position is not inherently of a fixed term nature. (This, of course, being demonstrated by the employer’s past practice or the terms of the employee’s letter of appointment.) If a satisfactory answer is not forthcoming, the arbitrator will see it as a ruse designed to deprive the employee of protection against unfair dismissal. The fixed term will then be treated as a hidden probation period and the non-appointment of the employee will be regarded as a dismissal. If the arbitrator views it in this way, the next question will be whether the employer has complied with the provisions of clause 8(1) of the Code of Good Practice (Dismissal) which requires counseling, assistance and training for persons appointed on probation who do not perform as required during the probation period. If it did not, the termination of the employee’s services will be regarded as an unfair dismissal and not simply as the automatic termination of a fixed-term contract.
Probation periods are not only permissible in our law but offer a very useful way of determining the suitability for permanent appointment of a new recruit or of someone who is being promoted. Clause 8(1) of the Code of Good Practice offers guidelines in this regard. It requires the period of the probation to be “reasonable” and states that while an employer must still counsel, coach and train the probationer, it is allowed a greater degree of discretion to determine the employee’s suitability for continued employment than would normally be the case with people no longer on probation. In other words, the employer must still comply with fair procedures but is given some latitude when it comes to deciding on the reasons for letting the employee go.
Using a fixed-term contract as a hidden probation period might therefore lull the employer into a false sense of security about the ease with which the appointment can be terminated. If the intention is to appoint someone on probation, the safest option is to be up-front about it. The letter of appointment should state this clearly and indicate how long the probation period will be. It should also allow for an extension by the employer if the employee’s performance is marginally poor and a further period is needed to try to correct it. Where the performance is unacceptably poor from the employer’s point of view, the employee’s services should be terminated at the end of the period, provided the guidelines of the Code of Good Practice have been followed.
Barney Jordaan for Labourwise