Cape Furniture Manufacturers' Association

This is the first of what promises to be regular, and I trust informative, bite- sized labour morsels. If you have any specific queries that you need answered and that you think may be helpful to other employer please send an email with a request for me to deal with that topic and I shall gladly do so if it fits the profile and purpose of Labour compass.

FIXED TERM CONTRACTS:

Fixed Term Contracts are also known as Limited Duration Contracts or Temporary Contracts. Whichever term you prefer to use, the name says it all. It refers to an employment contract which is of a fixed, limited or temporary duration.

Q:           When may I employ someone on a fixed term contract?

Fixed Term Contracts should only be used when there is a genuine need to employ somebody on a temporary basis for a specific period of time. A few examples of when you may require an employee on a temporary basis:

  1. 1.A permanent employee is going on maternity leave and you require a replacement employee for the duration of the permanent employee’s maternity leave.
  2. 2.Your business is fairly seasonal and you require additional employees to assist for a limited period during your busy season only.
  3. 3.There is a temporary increase in your workload and you required additional employees on a temporary basis to help you complete a contract or meet that temporary need.

Q:           If I employ somebody on a fixed term contract and I am unhappy with that person may I simply dismiss that person?

Should you wish to terminate a fixed term contract prior to the end of that contract, you must have a clause in that contract stating that you may terminate the contract prior to its expiration date for reasons relating to misconduct or incapacity or operational requirements. You must however have a valid reason to terminate that contract and follow a fair procedure.

Q:           I have employed somebody on a fixed term contract and I am unhappy with that person. May I let the contract expire and then employ somebody else in that position?

You may not use a fixed term contract as a probation period to determine whether you will be satisfied with that employee’s performance and attitude. Remember that a fixed term contract is only to be used when there is a genuine need for a temporary appointment. If you use a fixed term contract as a probation period to circumvent your obligations towards the employee and labour legislation it may result in an unfair dismissal/labour practice case. There is case law on this and you do not want to be the loser of an arbitration award where compensation or worse, reinstatement, is ordered.

Q:           What should I do if I want to employ somebody but am not sure if that person is right for the job?

You should employ the person on a probation period and if the person is found to be a suitable candidate for the job you may appoint the person permanently thereafter.

Q;           How long may fixed term contract be?

The determining factor will be how long the temporary need is. If you required somebody for a definite period of 1, 2, 3 months or 6 months you may employ them for a specific period equal to that. In some industries you may not employ somebody on a fixed term temporary basis for longer than six months. Make sure which rules apply to your business.

Q:           If I need to extend the period or employ them for another period, may I do so? And how many times can I renew or extend that contract or how many times may I employ them on a new fixed term contract?

In limited circumstances you may employ a person on a new fixed term contract once the existing fixed term contract has expired. It is generally not good practice to roll contracts or continue to renew fixed term contracts. By doing so you may create an expectation of permanent employment or expectation of further temporary contracts. Should you do this and then suddenly decide not to renew a contract, this may be deemed to be a dismissal. I recommend you seek advice from me personally if you find are in such a situation already or are contemplating such action.

Conclusion:

I trust that these few questions will get you thinking and hopefully raise more questions in your mind. I shall gladly answer any questions that may arise out of the reading of this first edition of Labour compass.


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