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Labour Relations Act (LRA)

Fixed-Term Contracts and the amended LRA – What to do?

By Gavin Mulvenna - Kusile Consulting Services

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Labour Relations Act (LRA)

Fixed-Term Contracts and the amended LRA – What to do?

By Gavin Mulvenna - Kusile Consulting Services

, |

With the inception of the Labour Relations Amendment Act 65 of 2014 on 1 January 2015, new protection is afforded to employees on fixed-term contracts.

The amendment Act’s provisions, which now regulate fixed-term contracts of employment, are provided for in the new section 198B. This section does not apply to employers who employ fewer than 10 employees, or to employers who employ more than 50 employees during the first two years of the employer’s business, or to employees earning more than the statutory remuneration threshold of R 205 433.30. It also does not apply to employees employed in terms of a fixed contract which is permitted by any statute, sectoral determination or collective agreement.

An employer is permitted to employ an employee to whom the new section applies on a fixed-term contract or successive fixed-term contracts for up to three months. (The meaning given to the word “successive” will be critical – there is no specific explanation or provision to the effect that fixed-term contracts may or may not be interrupted by a certain period of time when calculating the three-month period. The probable interpretation will be that the collective duration of separate fixed-term contracts will be utilised to determine whether the three-month period has been exceeded.)

The employer may employ the employee on a fixed-term contract or successive contracts for longer than three months only if the nature of the work for which the employee is employed is of a limited or definite duration or if the employer can demonstrate any other justifiable reason for fixing the term of the contract. (This should surely read “contract or contracts”). Section 198B(4) sets out a non-exhaustive list of justifiable reasons for fixing the term of the contract.

Employment in terms of a fixed-term contract concluded in contravention of section 198B is deemed to be of indefinite duration, unless the nature of the work is of a limited or definite duration or the employer can demonstrate any other justifiable reason for fixing the term of the contract.

An employee employed on a fixed-term contract (this should no doubt read “contract or contracts”) for longer than three months must not be treated less favourably than an employee employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for different treatment. This provision on treatment applies three months after commencement of the amending Act, i.e. on 1 April 2015, for fixed-term contracts of employment entered into before the commencement of the amendment Act. (One would think that this provision on treatment would only become effective after the employee is deemed to be permanent, or at least after any longer justifiable duration, as is permitted – but that is not the way the relevant subsection is worded.)

Employees employed on fixed-term contracts of employment must now be afforded an equal opportunity to apply for vacancies. Section 198C also introduces new provisions in respect of part-time employees.

There are therefore a number of urgent considerations to be dealt with by employers who utilise fixed-term contracts of employment. These considerations will include assessing what justifiable reasons might exist to extend the duration of fixed-term contracts (for example, temporary increases in the volume of work, employment on a specific, limited project etc.), analysing the terms and conditions of employment of fixed-term employees, determining the possibility of concluding a collective agreement with the trade union, analysing fixed-term contracts of employment entered into prior to the amendment Act (as the amendment Act can hardly be retrospectively effective), and so on.

It should also be borne in mind that the existing provisions on the law of dismissal and the concept of reasonable expectation of renewal of a fixed-term contract of employment remain, and in fact now extends to include an expectation of permanent employment.

Other questions will relate to the right of the employer to employ the employee on a (fixed-term) probationary period and the existing provisions of certain bargaining councils on the utilisation of fixed-term contracts, which may differ, for example, in respect of the permissible duration of fixed-term contracts.

An audit mechanism and strategic approach have been developed to assist you, proactively and before it is too late, in managing the utilisation of fixed-term contracts of employment, at present and in the future.

In relation to the Employment Equity Act, here are some issues to take note of.

Have you submitted an employment equity plan?

It must include the following:

  • Objectives to be achieved for each year of the plan.
  • Affirmative action measures to be taken.
  • Numerical goal to achieve equal representation of under-represented groups.
  • Timetable for each year of the plan.
  • Duration of the plan (not longer than five years or shorter than one year).
  • Procedures used to monitor and evaluate the plan.
  • Internal procedures to resolve any dispute about implementation of the plan.
  • Persons responsible for monitoring the plan.

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