08 May
2017

MISUSE OF FIXED TERM CONTRACTS CAN RUIN EMPLOYERS


fixed term contracts

The main purpose of South Africa’s labour legislation is to protect employees rather than to deal with unemployment or to support employers

According to sections 193 and 194 of the LRA, the CCMA and the courts may make awards and orders to reinstate unfairly dismissed employees or to pay compensation up to a maximum of 24 months’ remuneration calculated at the employee’s newest rate of remuneration.

More and more lawyers and consultants are therefore advising employers to offer reinstatement to dismissed employees where the employee disputes the dismissal procedure. That is, the employer’s legal experts are advising employers to reinstate the employee before the matter gets as far as court or arbitration so as to avoid these heavy penalties being imposed by the CCMA or Labour Court.

For some time this reinstatement tactic has been effective. The employer, after realising it has made a mistake in the dismissal procedure, takes the employee back, or declares the dismissal null and void, so cancelling out the procedural error. Then the employer fires the employee again, but this time uses the correct procedure.

However, it is not always a safe option to implement retrenchments inexpertly and then hope to correct the error using the reinstatement tactic. This is because it is difficult to prove that the consultations held during the second retrenchment exercise were conducted in good faith.

In many cases, the employer cannot take the employee back because there is no place for them. Or the employer does not want the employee back because the employee is an under performer, breaks rules or is disliked by management.

Therefore, in an attempt to circumvent the laws protecting employees employers hire workers on fixed-term contracts. Then, if the employee is seen as unsuitable, the employer merely allows the contract to lapse at its expiry date and says goodbye to the employee. However, this is a dangerous tactic because labour law has closed this loophole. In the case of King Sabata Dalindyebo Municipality vs CCMA and Others (2005, 7 BLLR 696) the employer made a habit of regularly renewing fixed-term contracts. But then it allowed the last contracts to lapse even though there was still available work for the terminated employees. The Labour Court found that the employees had a reasonable expectation of having their contracts renewed again and forced the employer to renew the contracts.

The only route to follow is to obtain expert advice before dismissing employees for any reason and to make sure that you are getting the advice from a genuine and reputable labour law expert.

To buy our e-book WALKING THE NEW LABOUR LAW TIGHTROPE please contact Ivan via ivan@labourlawadvice.co.za or 011-888-7944.

 

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