Once this happens, the contract may only be terminated by the employee's resignation, death, or by dismissal. A few remarks on this much misused and abused form of contract. A fixed-term employment is valid only under certain circumstances. Therefore, employers are obliged to indeed conclude a written agreement setting out the structure and particulars of the fixed term contract; The nature of the work must of course be for a limited duration. After it took over responsibilities for employees employed in the courts, the OCJ commenced an investigation into the possibility of appointing all employees who were employed on fixed-term contracts of employment for a period exceeding three … I contend that if management cannot make such a simple decision after deliberating the matter for 8 years, they are either stupid or just plain dumb – and have no right to be in business exploiting employees in that way. If the contract has to be rolled over more than that, then it is either plain bad management, or the position must be declared permanent. The danger in fixed term contracts comes when the employer continues to renew the contract every time it expires – commonly known as "rolling over" the contract. If you do, you are playing with fire. Usually, a fixed term contract of employment can be for any period of time. Labour Guide. Some employers even deduct P.A.Y.E. Don't rob employees of their just entitlement. Employers who employ people on fixed-term contracts to work exclusively on specific project with a limited or defined duration exceeding 24 months must subject to the terms of any applicable collective agreement, pay the employee, on expiry of the contract, one week’s remuneration for each completed year of the contract, calculated in accordance with section … A fixed term contract is exactly what the name implies. contributions for the employee, with the subsequent reduction of admin work for the employer. An independent contractor is the electrician that you phone when your lights fail. This does not appear to be the case in terms of contract law. Section 198B prohibits an employer from employing an employee on a fixed term contract for longer than three months unless certain exceptions apply, or the employer can provide a justifiable reason for so doing. South African labour laws are largely premised on the regulation of typical or standard employment relationships. (a) the occurrence of a specified event; (b) the completion of a specified task or project; or. Severance is calculated at one week’s compensation for every year worked. Before proceeding further, it is pointed out that the changes do not affect an employee’s right to challenge a fixed term contract based on a reasonable expectation of further renewal. Employers refer to these people as "independent contractors", but they do not even come within 100 miles of that classification. Employers must clearly understand that to disguise what is actually permanent employment in the form of a fixed term or temporary contract is not only illegal, it is a despicable practice and amounts to nothing more than fraud and exploitation of the hapless employee. Fixed term 3.1 The Employer undertakes to hire the Employee as a _____ for a fixed period as follows: Reason for employment: _____ Unfortunately, like with so many other industries, Covid-19 has had a detrimental impact on the real estate... Themis Commercial Legal Advisors (Pty) Ltd. If that does not create an expectation of renewal in the employee, then please tell me what does???? However, after the contract has been rolled over for the third or fourth time, the employee now has what is known as "the right of expectation." Take note that details will obviously change according to one's place of employment. And when the employer suddenly fails to roll over the contract for the umpteenth time, the employee is dismissed and takes the employer to the CCMA for unfair dismissal – and what is more, the CCMA will find in favour of the applicant!! The employer may not, after having failed to renew a fixed term contract, suddenly come along and renew the contract in arrear. Fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. By Venolan Naidoo (Senior Associate at Themis Law Chambers). It amount to nothing less than outright fraud at the expense of the employee. In other words, if the contract expired a year ago and this fact is suddenly realized by the employer, he cannot come along with a renewal dated a year ago on the date which the contract expired. The practice is reprehensible and employers who exploit employees in this way should hang their heads in shame and should be put out of business. Importantly, the contract must specify or indicate a justifiable reason in respect of the fixed term period. Copyright © 2021. Fixed term; atypical employment; employment contracts; automatic termination; fixed period; section 186(1)(b); Labour Relations Act; section 198B; 2014 legislative amendments. This is not to say that it is forbidden for an employer to ever roll over a fixed term contract. The employee says nothing because he/she needs the job, and the employer KNOWS that the employee needs the job. The legislative changes are found under section 198B of the Labour Relations Act (LRA). A fixed term contract is exactly what the name implies. The relationship cannot now be on grounds of expiry of contract because the contract, having now become permanent, no longer has an expiry date. Fixed term contracts serve a different purpose. A fixed term contract can run from one specific date to another specific date. The fixed term contract must be in writing. Specific fixed term contracts permitted by statute, sectoral determination or collective agreement. However, if an employee is compensated under the legal threshold (currently being R205 433.30 per year), labour law limits such a period to 3 months. End of story. Many employers utilize the Fixed Term Contract purely as a means of evading their statutory obligations in terms of the BCEA and the LRA and the EEA, and also to save money by denying the employee the opportunity of pension/provident fund benefits and also medical aid benefits. South African employers often lose at CCMA and bargaining councils in cases relating to fixed-term contracts. 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If the employer fails to renew a fixed term contract, but allows the employment relationship to continue, then the employee has every right to expect that the relationship is now permanent and they have the right to claim any benefits such as pension, medical aid and so on. 2.1 This contract is subject to the Basic Conditions of Employment Act, No 75 of 1997, as amended, as well as any terms and conditions contained in this contract. if they prematurely terminate a fixed-term employment contract, they will have to pay the employee the remainder of contract; and; they can only retrench employees employed on fixed term contracts if the contract contains a clause specifically allowing them to do so. And of course, remember that for 6 years these employees have been denied benefits under the BCEA, have been denied pension benefits and have been denied medical aid benefits. And they blithely make this statement after the contract has been continually rolled over for the past 8 years! Furthermore, the Labour Court has jurisdiction, in terms of section 77(3) of the BCEA to determine any matter relating to a contract of employment. Furthermore, a fixed term contract, in excess of 3 months, requires that an employer must not treat such an employee less favourably than an employee employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for the differing treatment. Just how long do the need to make this earth-shattering decision?? Moneyweb Insider Gold subscribers receive 12.5% discount!. Again this does not mean that the employer cannot renew a fixed term contract – it does mean that it becomes more likely, with each continued roll-over, that the employment relationship has become more permanent with each renewal of contract. apply, then that person is an employee – there is no argument and it is not negotiable. Multinational employers with employees on fixed-term employment contracts in South Africa should take several steps in light of this new regulation. Labor Law varies in different states and countries and as such you must ensure that none of the conditions stipulated in this contract contravene any labor laws in your area. There seems to be an amazing number of employers out there who still seem to believe that they can employee a person on a fixed term contract and continue to roll over or renew the contract each time it expires, without placing the "contractor" onto permanent staff. When employers want to terminate a fixed-term contract before the expiry date, it would seem to make sense that this could be done, as long as they pay the employee for the full term.However, a recent Labour Court case has highlighted the fact that premature termination of employment may amount to an unfair dismissal. Employers who have a reasonably justifiable basis to conclude fixed term contracts ought not to be affected by the adverse operation of the amendments but must of course comply with the requirements in terms of section 198B of the LRA. Description. Review whether those contracts include employees earning below the annual earnings threshold. I personally know of many employees who have been working on rolled over contracts for as long as 6 years – the employers excuse being that "it is not yet decided whether or not to make that post a permanent one" I know of one employer who has 28 such employees!!! The amendments were principally aimed at giving better protection to employees and, by giving effect to this, furthering the legislative obligations on employers. Employers are accordingly cautioned to comply with their legislative obligations, or seek labour law advice, when it pertains to fixed term employment contracts. The amendments drastically changed the regulation on inter alia employees working via temporary employment services i.e. Any employer who finds themselves "paying up" under these circumstances deserves what they get. Furthermore, the Labour Court has jurisdiction, in terms of section 77(3) of the BCEA to determine any matter relating to a contract of employment. However, in order to mitigate the risks associated with fixed term contracts it is important to conduct regular reviews of those contracts. 2.1 The Employer hereby employs the Employee on a five year fixed term contract and the Employee hereby accepts employment as Municipal Manager and Accounting Officer, subject to the terms and conditions contained in this contract and subject to the Local 1 Introduction. He comes in, quotes you for the job and carries out the work. Employers would be well advised to stay far away from these illegal practices – or face the consequences. Use a fixed term contract by all means. The unscrupulous employers who do this range from small "one-man" operations right up to huge corporate organizations. The employer can do this, say once or at the most twice. On 01 January 2015 significant legislative changes to South African labour law took place when provisions of the Labour Relations Amendment Act of 2014 (LRAA) were effected. In the context of a fixed-term contract, in seeking appropriate relief, an Employee may also refer an unfair dismissal dispute in terms of Section 186 (1)(a) of the LRA if the employee believes that the employer’s trust in the termination of the employment by operation of law was misplaced (like an employee continuing working even after the contract had ended), or … The purpose of the article is to understand what some of the changes entail and the impact thereof on employers when it relates to fixed term contracts or a series of fixed term contracts. The position is that, should any ONE of the conditions stipulated in section 200A of the L.R.A. (3) An employer may employ an employee on a fixed-term contract or successive fixed-term contracts for longer than three months of employment only if— the nature of the work for which the employee is employed is of a limited or definite duration; or; the employer can demonstrate any other justifiable reason for fixing the term of the contract. The LRA defines a fixed term contract that terminates on the occurrence of a specified event, the completion of a specified task or project, or a fixed date other than an employee’s normal or agreed retirement age; and. PART 2 [update to our article: http://themislawchambers.co.za/agreements-agree-parties-obligation-negotiate-good-faith/ due to the legal position following a new case] Agreements to agree (Pacta de Contrahenda) are generally regarded as a kind of contract which has the purpose of creating an agreement in the future. EXPLANATORY NOTES FOR THE FIXED TERM EMPLOYMENT AGREEMENT THAT IS TO BE USED FOR FIXED-TERM EMPLOYEES EARNING ABOVE R205 433, 30 This means that, because the employer has introduced the practice of "rolling over" the contract every time it expires, the employee now has the right to expect that such a situation will continue. Accordingly, fixed term contracts below a period of three months would not be regulated by the changes. Many employers even put in the contract a clause which states that the contract will not be renewed, that the employee has no right of expectation regarding renewal, and yet the employer continues to roll over the contract for the next 5 to 8 years!!!!! On completion of the work, he give you an invoice, you pay him and he goes away to his next job. But use it for its intended purpose. This means that the contract will be deemed to have been tacitly renewed on the same terms, except that the relationship will now be of a permanent duration. Just how "temporary" is "temporary"?? It is a contract which runs from one specified date to another specified date. The fact that the employer then continues to roll over the contract 6 or 7 or more times, negates that clause completely. In the amendments to the Labour Relations Act that came into effect on 1 January 2015, a ‘fixed term contract’ is defined as “a contract of employment that terminates on – a) the occurrence of a specified event; b) the completion of a specified task or project; or Put differently, it is a contract, the duration of which is agreed in advance between the employer and the employee. This is a highly dangerous practice. Therefore, each fixed term contract must be assessed on its own basis whether it is reasonably justifiable for the fixed term period. labour brokers, part time employees, and employees working under fixed term contracts, the latter of which is the topic of discussion. 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