What is the definition of a fixed-term contract and what does such a contract entail?
A fixed-term contract is a contract designed to be for a specific period, or until the completion of the project for which the specific contract was entered into.
Contractually speaking, termination of a fixed-term contract does not constitute a dismissal, because this specific contract simply expires, and once it has expired, the parties are released from their duties and obligations. Automatic termination of a fixed-term contract depends on the circumstances off the employers. The contract must be a fixed-term contract, whether the term is fixed for a particular period, or the contract terminates upon conclusion of the project. A contract that can be terminated on notice from either side is not a fixed-term in the true sense of the word, and its premature termination will not constitute a breach if the normal requirements of the notice are satisfied.
A contract can be terminated before the termination date of the specific contract and can be lawfully terminated on the occurrence of the event covered by the contract.
A fixed-term contract can also be converted into a contract of indefinite-duration if the employee can continue employment after the expiry of the fixed-term contract. The employer cannot then rely on the earlier fixed-term contract should the employment relationship be terminated subsequently.
Employees earning below the earnings threshold may now work on fixed-term contracts for no longer than three months, after which they become ‘permanent’ employees. A fixed-term contract can work both ways: If either party prematurely terminates the contract, that party will then commit a breach. Premature termination of a fixed-term contract by an employer also constitutes a dismissal as contemplated in terms of section 186(1)(a) of the Labour Relations Act No 66 of 1995.
However, in terms of section 186(1)(b) of the Act, an employee is deemed to be dismissed if an employer fails to renew a fixed-term contract, or renews it on less favourable terms, even if the employer was under no legal obligation to do so.
The legal obligation arises from the ‘reasonable expectation’ that the contract would be renewed.
Unless employees on a fixed-term contract can prove that they had such an expectation, they have no remedy under the Labour Relations Act.
Lucindi van Zyl