Stricter Regulation of A – typical forms of Employment

A–typical employment is any form of employment that is not permanent and that is covered by a fixed term contract, a part term contract or temporary employment services.

In particular this article will focus on the introduction of the stricter regulations that the Labour Relations Act 66 of 1995 (LRA) places on A–typical forms of employment and specifically with reference to the fixed term contract.

A fixed term contract is exactly what the name implies. It is a contract of employment which runs from one specified date to another specified date. Upon the second date being realized the employment contract and thus the employment relation between the employee and the employer will cease. Put differently, it is a contract, the duration of which is agreed in advance between the employer and employer. The fixed term element can also be not a specified date or dates but can be specified as the completion of a specific project.

The danger in fixed term contracts comes in when the employer continues to renew the contract every time it expires. This is known as “rolling over” the contract. It is not forbidden for an employer to roll over a fixed term contract. Once or at the most twice is acceptable. However, if a contract has been rolled over for a third or fourth time, the employee now has what is known as “the right of expectation”.

This means that because the employer has introduced the practice of “rolling over” the employment contract every time it expires, the employer has the right to expect that such situation will continue. When the employer suddenly fails to roll over the contract for the umpteenth time and the employee is dismissed the employee now has strong grounds to take his or her employer to the CCMA on the grounds of unfair dismissal.

Many employers were utilizing the fixed–term contract purely as a means of evading their statutory obligations in terms of the Basic Conditions of Employment Act 75 of 1997 and LRA and also to save money by denying their employees the opportunity of pension or provident funds and medical aid benefits. This practice is reprehensible as it amounts to nothing less than exploitation of the helpless employee.

Due to the fact that fixed term contracts were being misused and abused by employers, stricter regulations were introduced to A-typical forms of employment in January 2015. In particular section 186(1)(b) of the LRA specifically states that an employee, irrespective of their level of remuneration or seniority, may not only have an expectation of being employed for anther limited duration but that expectation may be for an indefinite term. In other words an employee bringing a claim that the employers reliance on the agreed end date to terminate the fixed term contract amounts to a “unfair dismissal” must prove that he subjectively had the expectation of continued employment (either for another fixed term or indefinitely). As mentioned earlier if the fixed term contract is rolled over more than twice it will be accepted that the employee has a right of expectation of continued employment. The employment relationship becomes more permanent each time the employment contract is renewed. Section 186(1)(b) endeavors to protect employees from employers who seem to believe that they can employee a person on a fixed term contract and continue to roll over or renew the contract each time it expires without placing the employee onto permanent staff.

Section 198B of the LRA now specifically provides for formal requirements of the fixed term contract. An offer to employ an employee on a fixed term contract must be reduced to writing and must state the reason for fixing the term. The employer must also have a justifiable reason for fixing the term of the contract and the employee must also agree to the fixed term. Furthermore, if the employee is employed on a fixed term contract the nature of the work for which the employee is employed must be of a limited nature, otherwise the employer must again show justifiable reasons for fixing the contract. If the employer cannot provide a justifiable reason for fixing the term of the contract of employment, the employee will be deemed to be employed indefinitely.

Another amendment of note from section 198B of the LRA is the right to equal treatment. This section ensures equal treatment between permanent and temporary staff. The section states that an employee on a fixed term contract for more than three months must not be treated less fairly than an employee on a permanent basis performing the same or similar work unless there is a justifiable reason for the different treatment. A justifiable reason could include seniority, experience, length of service etc.

Section 198B also ensures that employers must provide employees on fixed term contracts and permanent contracts with equal access to opportunities to apply for vacancies at the employer.

In summary section 186(1)(b) of the LRA prevents employers form disguising what is actually permanent employment in the form of a fixed term contract whilst section 198B ensures equality and democracy between permanent and temporary employees.

by Pariksha Moodley