Blog

Fixed Term Contracts - Playing with Fire

Fixed Term Contracts - Playing with Fire

Labour Direct

A fixed term contract is a contract that runs from one specific date to another specific date. It can also be based on the completion of a project. This period is determined before employment and reduced to writing.

Upon the date of completion of a project or the specified end date of the contract, the employment relationship is terminated and the employee is unemployed.

The benefits of fixed term contracts are the following:

  1. There is no obligation for the employer to pay pension and provident fund contributions.
  2. The employer saves money as other benefits such as medical aid is unnecessary.
  3. It is easier to rid the workplace of the “non performers”.
  4. The employer escapes liability of certain provisions of the Basic Conditions of Employment Act.

However, this form of contract is often greatly misunderstood by the employer. One such example is that employers often renew an employee’s fixed term contract a number of times. The danger is that the employee now has the expectation that the contract will again be renewed and when this does not occur, the employee refers an unfair dismissal matter to the relevant forum.

Experience and current case law has shown that the employee generally wins this fight at the CCMA or bargaining council.

The defence often utilised is that the fixed term contract contains a clause that “no expectation of continued employment may be expected by the employee”. This defence is generally not accepted as a result of the practice created by the employer that once the contract reaches finality, it is renewed. No such clause will trump a practice created by the employer.

A further danger is when the employer forgets to renew the fixed term contract after its expiry and the employee continues to render his/her services. In this scenario, the legal position is that the employee’s status changes from that as fixed term to permanent. The employee is now entitled to claim benefits under the Basic Conditions of Employment Act.

Employers must ensure that proper administration is kept and that should the
employer decide not to renew a fixed term contract, a letter informing the employee of the non renewal of the fixed term contract, is provided to the employee at least a week prior to his/her termination.

In conclusion, we urge employers to use fixed term contracts for its purpose intended.

Should you not be able to justify the use of a fixed term contract and do not have the proper administration in place to deal with same, you are playing fire and will get burnt.

Fixed Term Contracts - Playing with Fire

Xplorio

Labour Direct is an industrial relations and human resources specialist company with a national footprint, committed to bring first class labour solutions through HR and IR services. Labour Direct strives to ensure effective compliance with legislation and endeavours to build long-term relationships...

View Profile

What is Xplorio?

Xplorio is your local connection allowing you to find anything and everything about a town.

WATCH THE VIDEO: Welcome to Pringle Bay & Rooi Els!
Read More

Other Articles

#FastTipTuesday: Wet the Colour Swatch

#FastTipTuesday: Wet the Colour Swatch

 To visualise what a colour will look like in a Prominent Paints eggshell or semi-gloss paint, wet the colour swatch with water.

Prominent Paints: Moody Blues

Prominent Paints: Moody Blues

This moody blue palette - paired with pink - is a soothing colour combination that will elevate your look this spring.

Prominent Paints: Raspberry Cocktail Colour

Prominent Paints: Raspberry Cocktail Colour

Refresh your look this Spring with Raspberry Cocktail.

Unresolved Trauma - Mental and Physical Well-being. How Your Biography

Unresolved Trauma - Mental and Physical Well-being. How Your Biography

We believe that our trauma is part of the suffering we must experience. Your unresolved trauma eventually leads to illnesses.

Plant a Tree. Leave a Legacy

Plant a Tree. Leave a Legacy

Overstrand Municipality has committed to plant 160 trees during Arbour Month at schools, sport fields and public open spaces across the Overstrand.

Prominent Paints: Fresh Whites and Soft Greys

Prominent Paints: Fresh Whites and Soft Greys

If you’re drawn to gentle tones that soothe and soften - you’ll love this look.

See All Articles