Following the promulgation of The Labour Relations Amendment Act (Act 6 of 2014) on the 1st of January 2015, various changes occurred within the framework of the Labour Relations Act (Act 66 of 1995, as amended). While many of these amendments became effective immediately on the 1st of January, some of the sections only became active on the 1st of April 2015 [Section 198B(8(b)].
Among these latter amendments were the new regulations surrounding Temporary Contracts of Employment. Specifically the new Sections 198B and 198D govern the manner in which these contracts should be dealt with.
The biggest concern for business has been the much publicized limitation of fixed term contracts to a period of only three (3) months [Section 198B(3)] and the manner in which a fixed term contract that has lasted for more than three (3) months would be deemed to be of an indefinite nature (Permanent) [Section 198B(5)].
While the above is true, moreover, that any fixed term contract that was in place at the time of implementation of the above amendment (1 April 2015) would suffer the same fate and be deemed to be indefinite as well, there are certain exemptions that exist, i.e.:
- Employees earning in excess of the BCEA Section 6(3) threshold do not enjoy this protection. This threshold is currently R 205 433.00* per year (Meaning total earnings excluding overtime) and means that employees earning more than the threshold can still be safely engaged for fixed terms [Section 198B(2)(a)].
- Employers who employ less than 10 employees [Section 198B(2)(b)].**
- Employers who employ less than 50 employees and has been in business for less than two (2) years [Section 198B(2)(b)].**
- The fixed-term contract is permitted by any law, sectoral determination or collective agreement [Section 198(2)(c)], meaning that it would be possible to negotiate with a representative trade union in the workplace to allow for the use of fixed term contracts in excess of three months.
- Where the employer can prove that the nature of the work is of a limited or definite duration, such as specific construction projects or operations that are only for a defined period [Section 198B(3)(a)].
- The employer can justify the reason for the contract to be fixed for a specific term [Section 198B(3)(b) and Section 198B(4)], which would apply to situations where:
- An employer needs to temporarily replace another employee who is absent from work;
- Where there is a temporary increase in the volume of work for a period that will not exceed twelve (12) months;
- The employee is a student or recent graduate who has been employed for the purpose of being trained or gaining work experience;
- The employee is employed for a specific project that has a limited or defined duration (Construction, etc.);
- The employee is a non-citizen who has only been granted a temporary work permit;
- The work is seasonal in nature (Agriculture);
- The employee is employed in a position which is funded by an external source for a limited period; or
- The employee has reached the ordinary agreed retirement age that applies in the employer’s business.
Despite the above, there are still some limitations placed on employment that does affect all employees on fixed term contracts, such as the requirement that all employees on fixed term contracts may not be treated less favorably than employees on permanent contracts [Section 198B(8)(a)], meaning that they must receive the same value in remuneration, the same or similar benefits, access to the same opportunities for promotion, etc. unless there is a justifiable reason to do so, such as [Section 198D(2)]:
- Seniority, experience or length of service;
- The quality of quantity of work performed.
Another important factor to consider is that any employees that are employed on fixed term contracts for a period exceeding 24 months will be entitled to severance pay of one week per year of completed service upon completion of their contract term.
The last truly remarkable aspect of these new amendments with regards to fixed term contracts is the fact that any and all disputes about such contracts now must be referred to the CCMA or the relevant Bargaining Council [Section 198D].
*Subject to increase in the near-future.
**However if the employer conducts more than one business or the business was formed by the division or dissolution of an existing business, these exemptions no longer apply.