Section 198B (3) of the Labour Relations Act provides that an employer may employ an employee on a fixed-term contract or successive fixed-term contracts for longer than three (3) months of employment only if –
- The nature of the work for which the employee is employed is of limited or definite duration; or
- The employer can demonstrate any other justifiable reason for fixing the contract term.
Section 198B (5) further provides that employment in terms of a fixed-term contract concluded or renewed in contravention of subsection (3) is deemed to be of an indefinite duration.
Should an employee’s fixed-term contract be viewed as an indefinite duration in terms of the above Section, the termination thereof would amount to a dismissal in terms of Section 186 (1) (b) of the Act. In terms thereof, it would amount to a dismissal where an employee employed in terms of a fixed-term contract of employment reasonably expected the employer –
- to renew a fixed-term contract of employment on the same or similar terms, but the employer offered to renew it on less favourable terms, or did not renew it: or
- to retain the employee in employment on an indefinite basis but otherwise on the same or similar terms as the fixed-term contract, but the employer offered to retain the employee on less favourable terms or did not offer to retain the employee.
As a general rule, employers are advised to approach fixed-term contracts with the necessary caution and to not use this type of contract as an easy alternative to permanent employment. Fixed-term contracts are logistically tasking and require the correct legal approach in the drafting and administering thereof.
Further to the above, the continuous renewal or “rolling” of fixed-term contracts is usually advised against as, besides the need for proper justification, it is a very delicate balancing act to ensure that such a renewal creates no expectation of another renewal or permanent employment.
The judgement in the matter of SABC Soc Ltd v CCMA and Others JR 2638/19, handed down in April 2022, is therefore quite interesting to note. The employee was initially employed as a freelancer between 2006 and 2013. Thereafter, she was employed as a coordinator on a fixed-term contract from 1 March 2013 to 1 March 2015. This contract was extended further from 1 March 2015 to 28 February 2018. During this time, the employee was advised of the SABC’s weak financial position and was aware that her line manager’s requests to HR to convert her position to a permanent one were unsuccessful.
The employee subsequently approached the CCMA when her contract was not renewed again, claiming she was dismissed as she had a reasonable expectation that her contract would be renewed or converted to a permanent contract of employment. After conciliation of the matter, the employee was offered and accepted a new fixed-term contract from 4 April 2018 to 30 September 2018. The employee was advised that they would recoup a special allowance which was erroneously paid to her since 2013 during this period. This contract was again extended to December 2018, after which it was not renewed.
The matter was then referred to the CCMA yet again. In the latter matter, the Commissioner, in his award, found that the employee was dismissed by the Respondent and ordered that the Respondent retain her on a permanent basis and ordered compensation to be paid to the Applicant. The Commissioner noted that the employment relationship between the parties had been extended through several renewals and extensions of the Applicant’s fixed-term contract.
On review, however, the award was set aside and substituted with an order that the dismissal dispute by the Applicant is dismissed as the CCMA has no jurisdiction due to no dismissal that had taken place. As the Commissioner had found that the employee had been appointed on an indefinite contract, Mabaso J, in his judgement, referred to the Labour Appeal Court Judgement of Gauteng Provincial Legislature v CCMA and Others (2022) 43. The Labour Appeal Court held that the fact that an employee continues to work in the same position with the same employer even after the fixed-term contract is terminated does not mean that the contract has automatically converted into permanent employment. The Court held that the employee may still be employed on a fixed-term contract, albeit tacitly.
The Court set out the requirements for the existence of a tacit employment contract and held, “The synthesis, essentially, requires the Court to embark on a 3 (three) – stage, as opposed to a 2 (two) – stage process. The first stage would be to decide on a balance of probabilities what facts have been established. The second stage would be to decide, also on a balance of probabilities, what conclusion, consistent with those established facts, is correct. A third stage would be interposed between those two, in terms of which the Court must decide how the proved facts, that is including the conduct of each party and the relevant circumstances, that were probably interpreted by each of the parties.” During the third stage, the Court is essentially looking at the matter through the eyes of the parties.
In the matter at hand, Mabaso J held that the Applicant was aware of the SABC’s weak financial position and further that the requests by her line manager to have her position converted to a permanent one were unsuccessful. Mabaso J further held that the Commissioner failed to consider the fact that the SABC did not employ the Applicant for the entire month of March 2018. It was therefore found that on a balance of probabilities, the 6 (six) month contract was offered to the employee to repay the money erroneously paid to her.
The above case does not only illustrate that the non-renewal of a previously renewed fixed-term contract does not always give rise to a legitimate unfair dismissal claim, but it also goes further and shows just how intricate and technical claims of this nature may become.
Disputes of this nature will, in most cases, not be as cut and dry as one might expect and to this end, to mitigate any possible future liability, it is advisable to not only use such contracts where a justifiable need exists but furthermore ensure the correctness in the drafting and implementation thereof.
Article by: Ilze Erasmus
Dispute Resolution Official – CEO Gqeberha