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Fixed Term Contracts

Fixed Term Contracts

Introduction
What is a fixed term contract? The Labour Relations Amendment Bill of 2012 introduced Section 198B into the Labour Relations Act 66 of 1995.

Section 198B defines a fixed term contract as:

(1) For the purpose of this section, a “fixed terms contract” means a contract of employment that terminates on –

(a) the occurrence of a specified event;
(b) the completion of a specified task or project; or
(c) a fixed date, other than an employee’s normal or agreed retirement age, subject to subsection (3).

However, Section 198B further makes provision for when a fixed term contract does not apply. Section 198B (2) reads as follows:

(2) This section does not apply to –

(a) employees earning in excess of the threshold prescribed by the Minister in terms of Sections 6(3) of the Basic Conditions of Employment Act 75 of 1997;
(b) an employer that employs less than 10 employees, or that employs less than 50 employees and whose business has been in operation for less than two years, unless –

(i) the employer conducts more than one business; or
(ii) the business was formed by the division or dissolution for any reason of an existing business; and

(c) an employee employed in terms of a fixed term contract which is permitted by any statute, sectoral determination or collective agreement.

Case study
In an unreported case of IMATU obo Joubert v Modimolle Local Municiplaity (JA9/2017) [2018} ZALAC 14 (8 March 2018) the Labour Appeal Court had to rule whether the Respondents had to comply with the court a quo’s order.

Ms. Joubert (hereinafter the “Applicant”) was employed on a fixed term contract from 6 May 2005 to 15 November 2005, by the Modimolle Municipality (hereinafter the “Respondent”) and then applied for a permanent position. On 7 October 2005 she was informed that her application was unsuccessful for appointment in a permanent position as an Administration Clerk., During this period her fixed term contract ended. She then referred an unfair labour practice claim to the South African Local Government Bargaining Council (hereinafter “SALGBC”) for arbitration.

The Arbitrator found in favour of the Applicant and ordered the Respondent to appoint her retrospectively to the position as Administration Clerk on 15 March 2006. This decision by the Arbitrator was recorded as the position remained vacant. The Respondent then took the Award on review. This was dismissed as it was found that the Respondent failed to prosecute the review timeously.

The Independent Municipal and Allied Trade Union (hereinafter “IMATU”) on behalf of the Applicant made a contempt of Court application against the Respondent and added a Second Respondent, the Municipal Manager, in April 2006. Both parties had to appear before Court on 5 August 2006 and the Respondents had to show cause why they should not be found guilty of contempt. The Respondents filed an affidavit to explain their failure to comply which stated that the position of Administration Clerk no longer existed in the First Respondent’s Organogram.

The contempt application was then heard by Appeal Judge Snyman. (“Snyman AJ”) He found that the Respondents were aware of the Arbitration Award as well as the order by Judge Gush and that there had been no compliance with such order. Snyman AJ had to consider whether this failure had been mala fide and deliberate. He found that the unfair labour practice jurisdiction extended only to employees and Ms. Joubert’s contract of employment had terminated on 15 November 2005. She was therefore not entitled to be promoted to the position of Administration Clerk.

Snyman further held that the above was so at the time of the Arbitration Award, in that the employment contract had expired, and there was no challenge to the expiry of an employment contract, and therefore it was no longer competent for the Applicant to demand reinstatement so that she could be promoted.

Snyman AJ held that the Applicant’s case does not amount to a failure to promote as she was not an employee who could be promoted on the basis of her fixed term contract, which had expired. When the matter was heard for Arbitration she was no longer an employee. In fact, the Applicant applied for a vacant post and had not sought promotion to a vacant post. Therefore, a fixed term contract employee is in the same position as a non-employee who applies for an advertised post and the reliance of the Applicant on an unfair labour practice for lack of promotion was misconceived. Snyman AJ held that there can be no reinstatement in the above matter as reinstatement implies status quo ante and the employment contract had been terminated. Furthermore, should a dispute exist it is not a dispute about promotion.

Snyman AJ order further held that:

“There can, in such circumstances, be no contempt of court for this reason; the award is incapable of implementation, at least due to intervening impossibility. For these reasons the appeal must fail.”

Conclusion
Before Section 198B came into operation, there was no definition to determine when a contract would constitute a fixed term contract and when a contract is no longer based on a fixed term. It should be noted that the employment relationship is terminated once the fixed term contact ends and the employee would once more be unemployed.

Should an employer fail to renew a fixed term contract but allows the employment relationship to exist. The employee has the right to expect that the relationship is now permanent, and an employee will have rights to claim benefits.1

For all your labour related enquiries and drafting of employment contract contact SchoemanLaw Inc.  

© Beata Warnich - Schoemanlaw Inc. - 2018

1 https://www.labourguide.co.za/contracts-of-employments/648-the-fixed-term-contract-of-employment - accessed on 29 July 2018.

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