Paymaster Magazine

Amendments to the LRA – Fixed Term Contracts

The Labour Relations Act – 4 little words that still strike terror into the hearts of employers.  And now there are amendments!  But fear not, it never was that scary anyway and the amendments are pretty straight forward.

So let’s start with the Fixed Term Contract (FTC).  Temporary Employment, Limited Duration, whatever you like to call it – it’s not permanent employment but the individual is still an employee (not an independent contractor).

There has been protection for employees employed on a Fixed Term Contract for some time but only as it related to where the employee had a reasonable expectation that the employment would continue and it didn’t.

Now the whole notion of the Fixed Term Contract has been clearly spelt out in S198B of the Amendments to the LRA.

A FTC has been defined as a contract of employment that terminates on:

  • Occurrence of a specified event
  • Completion of a specific task or project
  • A fixed date, other than the employees normal or agreed retirement date

An employer may engage an employee on a fixed term contract or consecutive contracts for longer than 3 months under the following circumstances:

  • To replace another employee who is temporarily absent from work
  • To cater for a temporary increase in workload that is not expected to last for more than 12 months
  • Student or graduates on learnership or gaining work experience to enter a job or profession
  • Genuine and specific projects that have a limited or defined duration
  • Is a non-citizen (foreign national) with a work permit for a fixed time period
  • Persons hired to perform seasonal work
  • Persons hired for an official public works scheme or similar public job creation programme
  • A position funded by an external source for a limited period
  • Someone who has reached normal or agreed normal retirement age

So what’s with the 3 months?  If the Fixed Term Contract is concluded in terms of the circumstances above, after 3 months, the FTC is deemed to be a normal open-ended contract of employment – a “permanent” employee.  Employees, employed on a FTC for longer than 3 months may not be treated less favourably than a permanent employee doing the same or similar work.

Fixed Term Contractors receive additional benefits under the Amendments to the LRA in that employees will receive additional payment at the end of a FTC that was longer than 24 months equivalent to 1 weeks remuneration for each completed 12 months.  It is NOT severance pay, just an additional payment at the end of the contact.

It is important to note that employees who earn above the BCEA Earnings Threshold (currently R193 805 pa) are excluded from the provisions relating to FTC.

The amendments to the Labour Relations Act have been passed by parliament and signed by the President but haven’t been promulgated yet.  After promulgation, there is usually a 3 month grace period.

In the meantime, I would recommend that you get your Fixed Term Contracts sorted out and ensure that your proverbial ducks are in a row.


Michelle Vernon

Human Resources Consultant

Adrian Baillie-Stewart

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