RULES OF THE GAME – RENEWING FIXED-TERM SERVICE CONTRACTS by Adv. Michelle Smuts

South African labour law imposes strict requirements on all employers. The agricultural sector is regulated primarily by sectoral determination 13. The appointment of employees in the agricultural sector is unique on account of the widely divergent seasonal demands in agriculture. Employers must therefore proceed judiciously when appointing employees.

TIME

“Effluxion of time” is one of the reasons why a service contract may come to an end. “Time” in this context means either the fixed term agreed upon for the duration of the service contract, or that the specific task or reason for which the employee was employed has been completed. In the agricultural sector this principle is typically applicable in the case of seasonal workers.

The common problem with the termination of fixed-term service contracts through effluxion of time arises as a result of the expanded definition of dismissal in the Labour Relations Act (66 of 1995). The general rule upon expiry of a period of service with a fixed term is that no dismissal takes place. Termination could be seen as unfair dismissal when a “reasonable expectation” has been created with the employee that the fixed-term service contract would be renewed.

REASONABLE EXPECTION

The Labour Relations Act (66 of 1995) does not, however, define “reasonable expectation”. The most usual understanding of “reasonable expectation” is that a fixed-term service contract will be repeatedly renewed on the same or similar conditions. Unfair dismissal is considered to have taken place when the employer offers to renew the fixed-term service contract, but on less favourable terms, or otherwise does not renew the contract at all.

The use of a fixed-term service contract as a probationary period for a new employee to determine whether the employee will fit in at the workplace is seen as an unfair labour practice and even as unfair dismissal when the service contract is terminated.

Employers need to exercise care with the wording of terms and conditions in the service contract. Enlist specialised assistance from the Agricultural Employers Organisation (LWO). We recommend that employers ensure that their service contracts comply with the relevant labour legislation and that the termination of fixed-term service contracts is handled with the necessary care.

Read October 2021 issue of The Dairy Mail where this article first appeared in Afrikaans here.