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QUO VADIS FIXED TERM CONTRACTS?
Just as we think that the law pertaining to fixed term contracts has settled, something changes. While the latest development regarding the expectation of renewal of a fixed term contract may be welcomed by employers, there is no reason to celebrate.
There are certain aspects pertaining to fixed term contracts that are well established: It is acceptable practice to appoint a person on a fixed term contract if there is a good operational reason to do so. A fixed term contract terminates on the expiry date without the obligation to give notice. We also know that one cannot use a fixed term contract as a substitute for probation – termination in these circumstances often leads to employers being held liable for unfair dismissal. Another principle that has become well established is where an employee works beyond the expiry of the contract without signing a new agreement; the employee would then be regarded as being indefinitely or permanently employed.
The latest development relates to the expectation of renewal of a fixed term contract. Section 186(1)(b) of the Labour Relations Act makes provision for a situation where an employee has a reasonable expectation of renewal of a fixed term contract “on the same or similar terms but the employer offered to renew it on less favourable terms or did not renew it”. If the employee can prove that he or she had such an expectation and that the expectation was reasonable, the non-renewal could be regarded as an unfair dismissal. But can an employee who has been employed on successive fixed term contracts (i.e. the “rolling over” of contracts) claim expectation of permanent employment?
The Labour Court has on occasion held that, where a contract has been rolled over several times, the interpretation of Section 186(1)(b) could be extended to an expectation of indefinite or permanent employment. However, in the recent case of University of Pretoria vs CCMA & others the Labour Appeal Court came to a different conclusion. The employee, Ms Geldenhuys, had been employed by the university on seven successive fixed term contracts. At the end of the last contract she was interviewed for a possible permanent position. She was not permanently appointed, but was instead offered another fixed term contract for a shorter period. Ms Geldenhuys declined the offer and claimed that after all these years she reasonably expected to be appointed on a permanent basis and that the university’s failure to so appoint her constituted a dismissal. The court found that Section 186(1)(b) did not contemplate an expectation of indefinite employment, but that it was limited to an expectation of renewal on same a similar terms (i.e. for another fixed term). This means that an employee has no remedy based on an expectation of indefinite or permanent employment.
While the outcome of this case may come as good news for employers, the effect is likely to be short lived. The proposed changes to the Labour Relations Act envisage that a failure to renew a fixed term contract for an indefinite period could also be regarded as a dismissal if the employee can prove that he or she had a reasonable expectation of indefinite employment.
The proposed amendments to labour legislation also envisage the protection of temporary employees in other respects, for example an employee will be deemed to be permanently employed unless the employer can show a justification for fixed term employment. Employers will also be required to contribute benefits of similar or equal value to employees employed on a fixed term contract. It is therefore important for employers to be mindful of the forthcoming changes when entering into temporary contracts of employment.
Jan Truter of www.labourwise.co.za
Comments
Is a person on a fixed term contract (3 months) entitled to paid sick leave?
Reply to Helena: For the first 6 months of employment (permanent or fixed term), an employee is entitled to one day’s paid sick leave for every 26 days of work.
If an employees were employed on a fixed term contract towards the end of contract a female employee goes to a maternity leave while on maternity leave the employee extends the employment contracts of other employees but her contract is not extended does that amounts to unfair labour practices and does it create a reasonable expectation that the employee was going to give her extension.
Response to Thomas: The fact that the fixed term contracts of the others we extended, does not necessarily mean that a reasonable expectation was created in her case. She would still have to prove it with reference to all the circumstances.
Hi,does this apply to temp workers as well? I’ve been a temp through an agency for a major telecoms company for 5 years now. The contract stipulated it is an ‘open ended assignment’
Was the permanent job position the same or similiar position as what she was doing in terms of her fixed term contract or was it a totally different position? If it was the same position it would seem to me to be unreasonable to appoint a new employee on a permanent basis to do the same work as her and then keep her temporary, unless there is a very good reason to do that. what are your thoughts?
Response to Michael’s question: I understand your sentiments, but we don’t know what these permanent positions wer for or what the interview process entailed. It is unfortunate that these background facts are not dealt with in the judgement. The LAC’s focus was very narrow and technical. Ms Geldenhuys’s problem was that she had “put her hat in the ring” for a permanent position. She had been offered a further extension of her fixed term contract on more favourable terms. The court did not seem impressed that she had declined this offer.
Response to Ilse’s question: It does apply to temp workers. However, an “open ended assigment” has a ring of permanence to it.
Can an employee claim unfair dismissal if he is to appear in a disciplinary hearing after his contract end date but his contract is not renewed before the hearing date and the hearing is then not held because his contract was not renewed.
Response to Faud’s query: If the employee’s contract was validly terminated due to his fixed term of employment having come to an end, he would not be able to claim to have been unfairly dismissed for misconduct.