The nitty-gritty at the end of fixed-term contracts
OVER the last couple of months, temporary employment services (TES) – which are a significant user of fixed-term contracts – have been in the news. It is necessary to delve into the nitty-gritty of what are the requirements that this area of law brings with it. The case below provides clarity.
In the National Union of Metalworkers of South Africa obo Phakathi and others / Sisonke Budpol Construction – (2018) 27 CCMA 7.1.8 also reported at [2018] 2 BALR 194 (CCMA):
Twenty employees were employed with a client through a TES, at an employer, for the duration of a repair and maintenance contract. This contract was extended for various periods.
When the maintenance contract ended, the employees’ services were terminated as their work was no longer required.
The employer later concluded another construction contract with the client. None of the employees were employed on this contract. They claimed they had been unfairly dismissed as they had become permanent employees.
The Commissioner at the Commission for Conciliation, Mediation and Arbitration (CCMA) noted that the employees’ cases were based on section 198B (5) of the Labour Relations Act (LRA), which provides that any person employed on a fixed-term contract for longer than three months are deemed permanently employed. The Act does provide several exceptions, including where the employee is employed “to work exclusively on a specific project with a limited or defined duration”.
The Labour Appeal Court recently held that where a contract ends in these circumstances, the employment of those employed ends automatically. In this case, the employees were employed for a specified contract and each time it was extended, the employees’ new contracts contained clauses expressly indicating that they remained of limited duration. Their contracts had not become of indefinite duration. The applicants had contended they were at least entitled to severance pay but no such dispute had been lodged. The application was dismissed.
At the end of a legitimate fixedterm contract, there is no need for notice as. The contract it comes to an end automatically. The debate will likely be whether there was justifiable reason for having the fixed-term contract.