Traditionally, the view is followed that, in the mentioned instance, such a fixed-term contract will automatically evolve into a permanent contract of employment. The Labour Appeal Court (LAC) did, however, follow a different route in the recent case of Ukweza Holdings (Pty) Ltd v Nyondo and Others (LAC).
The respondent was employed on a fixed-term contract by the appellant, starting on 01/12/14 with the termination date on 31/12/14. The respondent was further employed as a project manager. The appellant had an initial 3 (three) month probationary contract with its client, Life St George’s Hospital, after which a more permanent service level agreement could be considered. During this time, however, the appellant’s project manager resigned, which necessitated this fixed term contract with the respondent in this matter.
During the second week of January 2015, the respondent’s fixed-term contract was extended to terminate on 31/01/15, to which the respondent consented to, but only after the respondent continued to tender services up until the second week of January 2015, without any communication from the appellant in this regard.
In January 2015, the position that the respondent was employed in was advertised, and the respondent was assured by the appellant that he would also be considered for this position, together with all the other applicants.
The appellant, being under the impression that they complied with the BCEA regarding notice periods, informed the respondent on 03/02/15 that his fixed-term contract will terminate on 13/02/15, giving the appellant 2 (two) weeks’ notice, as he was further also unsuccessful in his application for the employment position he then occupied.
The respondent referred a case of unfair dismissal to the CCMA, citing that an expectation has been created by the appellant that he’d be permanently employed, as the respondent continued to tender his services after the initial termination date of 31/01/15.
In turn, the appellant argued that the CCMA lacked jurisdiction. It was argued that the respondent’s contract simply came to an end and dismissal was subsequently disputed.
The arbitrator found that dismissal did indeed occur, affording the CCMA the necessary jurisdiction to adjudicate the matter. Further, as to be expected, the arbitrator found that, when the respondent tendered his services again on 03/02/15 after the extended period lapsed, his employment status evolved into a permanent one, rendering the dismissal as unfair and compensation was awarded to the respondent.
The Labour Court concurred with the decision of the CCMA arbitrator. The appellant then lodged an appeal to the LAC, who was tasked to adjudicate the question of whether the decision of the arbitrator to find that the respondent was dismissed was the correct decision or not.
The LAC found that a more simplistic approach should be observed, rather than the over technical approach as used by the Labour Court in which the court did not take the practical way in which the parties dealt with one another into account. The LAC further found that should the CCMA and the Labour Court’s view be followed, then the respondent’s fixed-term contract evolved into a permanent one when he reported for duty in January 2015 after the respondent’s first fixed-term contract expired on 31/12/14 before the parties agreed to an extension of the respondent’s fixed-term contract to 31/01/15, but which was never relied upon by the respondent, of which both arguments are mutually exclusive.
The LAC is further quoted when they said:
“On 3 February, after being informed that he was unsuccessful, the employee raised the issue that he had a legitimate expectation to be permanently appointed to the post and as such the notice to say that his fixed-term contract came to an end, constituted a dismissal. This argument is misconceived. The facts are that the employee was or became aware that the appellant advertised to fill the post the employee occupied and that he made himself available to be considered for the post. In the circumstances, there could be no legitimate expectation to the post he occupied. Furthermore, that he rendered services to the appellant after the end of January when his fixed-term contract came to an end does not mean that the fixed-term contract morphed into permanent employment. Also, the appellant’s mistaken belief that it was obliged to pay two weeks’ notice pay, during which time the employee did not nor was he required to render any services meant that the relationship had gone beyond the fixed-term relationship.
In my view, the fixed-term contract ended on 31 January 2015. The fact that the appellant did not inform the employee prior to the expiry of the contract that the contract will not be renewed or extended or that it will be coming to an end does not mean that it is either automatically extended or that the employment has become permanent, unless provisions of the law specifically provided for that.”
Like a breath of fresh of air, the LAC found that the “CCMA has no jurisdiction to arbitrate the dispute in the absence of a dismissal.”
Above mentioned case, quite interestingly, supports employers in the sense that it is not set in stone that an employee’s services is automatically regarded as permanent even if he works only 1 (one) day after the initial termination date of a fixed-term contract at that there are other factors, e.g. the way in which the parties engage one another, that should be taken into account.
This case might however only be the exception to the rule, so it will be advisable that standard rules, regulations, legislation and case law be adhered with when employing an employee on a fixed-term basis to avoid any possible risk of being faced with an unfair dismissal case, specifically referring to the creation of an expectation of permanent employment.
Article by: Johan van Dyk
Dispute Resolution Official – Cape Town