FIXED TERM TO PERMANENT: Does employment automatically become permanent if the work continues after a fixed-term contract expires?
No – the employee would still have to show that he or she had a reasonable expectation that employment would become permanent after the fixed term contract (FTC) expires.
So said the Labour Appeal Court in a decision made in March 2020[1]. When a project manager resigned, the employer appointed him on a short fixed-term contract for 20 days until 31 December 2014. He continued to work after the FTC expired. In mid-January 2015, the employer offered to extend the FTC until to 31 January 2015. The employee agreed.
The employer advertised his position and said the employee would be considered for the position. The employee received an email on 02 February to inform him that his application was unsuccessful. On the next day 03 February, the employer issued him with a notice of termination. The notice said his FTC would end on 13 February 2015. (The employer mistakenly believed that it had to give two weeks’ notice of termination even though the FTC had ended.)
The employee claimed the termination of his contract was a dismissal and referred a dispute to the CCMA. The employer submitted that the contract had terminated by effluxion of time and that there was no dismissal. However, the arbitrator ruled that the employee was dismissed and that the employer had to prove the fairness of the dismissal.
The Labour Court dismissed the employer’s application for review. The court agreed with the arbitrator’s reasoning that the FTC had already expired at the time the employer issued the notice of termination.
The Labour Appeal Court disagreed with the Labour Court and the arbitrator. It found that the CCMA had no jurisdiction to entertain the dispute because there was no dismissal. It found that the employee’s fixed-term contract ended on 31 January 2015 for the following reasons
1. The CCMA lacks jurisdiction where there is no dismissal because a contract has terminated by the effluxion of time.
2. If an employee renders services to the employer after a fixed-term contract comes to an end, this does not mean that that the fixed-term contract automatically ‘morphs’ into permanent employment.
3. The fact that an employer does not inform the employee prior to the expiry of a fixed-term contract that the contract will not be renewed or extended or that it will be coming to an end does not mean that it is either automatically extended or that the employment has become permanent, unless provisions of the law specifically provide for that.
TIP: Employers should keep track of FTC expiry dates. This will enable them to issue notice of termination on the end date by effluxion of time. In the case of an employee on a 3-month FTC who earns less than the BCEA threshold, the employer should be able to justify why the employee should not be entitled to continue on the principle of deemed employment.
[1] Ukweza Holdings (Pty) Ltd v Nyondo and Others (PA2/19) [2020] ZALAC 7 (4 March 2020)
Source: Worklaw Newsletter March 2020
PATRICK DEALE
labour lawyer & mediator Deale Attorneys
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