Many Employers, especially in the Private Security Sector ,make use of fixed-term contracts. But are these Employers are aware of the legislation that applies to fixed-term contracts, especially section 198B of the Labour Relations Act?
This series of articles aims to provide an in-depth summary of section 198B with relevant Case law applicable, and the different aspects Employers should be aware of before entering into a fixed-term contract and to have an informed understanding of section 198B in its entirety and will be completed in multiple parts to have an informed easily readable summary of section 198B.
This week we will only be discussing a broad overview of section 198B and in the coming parts of this series go into more detail regarding each sub-section of section 198B as well as other matters related to section 198B.
Section 198B does not apply to:
- An Employer that employs less than 10 Employees.
- An Employer that employs less than 50 Employees and whose business has been in operation for less than 2 years, unless the Employer conducts more than one business, or the business was formed by the division or dissolution for any reason of an existing business.
- An Employee employed in terms of a fixed-term contract which is permitted by any statute, sectoral determination, or collective agreement.
A fixed-term contractas per section 198B (1) means a contract of employment that terminates on:
- The occurrence of a specified event.
- The completion of a specified task or project.
- A fixed date, other than an Employee’s normal or agreed retirement age.
Where an Employee is employed in terms of a fixed-term contract (once off or successive contracts) without the existence of a justifiable reason for fixing the term or where the nature of the work is not of limited or definite duration (section 198B (3)), the employment is deemed to be indefinite as per section 198B (5), such an offer or extension of the employment must be in writing and state the reasons for fixing the term as per section 198B (6).
Fixed-term contract Employees earning below the BCEA threshold may be deemed to be employed indefinitely if there is no justifiable reason for fixing the term and the exclusions in section 198B (2) are not applicable. The onus to prove that there was a justifiable reason rests on the Employer.
A justifiable reason includes that the different treatment is a result of the application of a system that takes into account:
- Seniority, experience or length of service.
- Merit.
- The quality or quantity of work performed.
- Any other criteria of a similar nature and such reason is not prohibited by section 6(1) of the EEA.
In Enforce Security Group v Fikile and others (DA 24/15); [2017] ZALAZ 9; (2017) 38 ILJ 1041 (LAC) [2017] 8 BLLR 745 (LAC)(handed down on 25 January 2017) it was held that a valid fixed-term contract entered into for a specific period or upon the happening of a particular event would not constitute a dismissal for purposes of section 186(1).
The above case emphasises that when a valid fix-term contract comes to an end it does not constitute a dismissal.
The LAC in NUMSA obo Members v Transnet SOC Limited and others (PA16/2016) [2018] ZALAC 3; [2018] 5 BLLR 488 (LAC)(handed down on 25 January 2018) stated that the mere fact that section 198B applies to an Employee does not mean that their contracts were, or are, automatically invalid, nor does it mean that their duration was, or is, of indefinite duration.
In terms of section 198B (5):
“Employment in terms of a fixed-term contract concluded or renewed in contravention of subsection (3) is deemed to be of indefinite duration.”
Therefore, to find that the contracts are of indefinite duration, it must be shown that they were, at least, in contravention of section 198B (3).
This means that Employers should ensure that their fixed-term contracts comply with Section 198B (3). If any Employer is unsure how to manage and navigate fixed-term contracts are more than welcome to contact our office for assistance.
