An Overview of Fixed-Term Contracts of Employment

E HUYSAMEN PER / PELJ 2019 (22) 1

as a Form of A-typical Employment in South Africa

E Huysamen*
Online ISSN
1727-3781

Abstract
Pioneer in peer-reviewed,
open access online law publications A fixed-term employment contract is an example of atypical or
non-standard employment. Fixed-term appointments can have
Author many benefits when utilised for proper and lawful reasons.
These contracts are frequently abused, however, by
Elsabé Huysamen
unscrupulous employers and are generally regarded as
providing less security to employees than permanent
Affiliation employment. The article considers the general use of fixed-term
contracts and addresses selected issues pertaining to the 2014
University of Western Cape amendments to the Labour Relations Act 66 of 1995 in as far as
South Africa these contracts are concerned. The article also considers the
potential effect these amendments might have on common
Email ehuysamen@[Link] historic problems associated with fixed-term contracts and
highlights certain unresolved problem areas and uncertainties.
Date Submission

1 March 2018

Date Revised
Keywords
Fixed term; atypical employment; employment contracts; automatic
18 April 2019 termination; fixed period; section 186(1)(b); Labour Relations Act;
section 198B; 2014 legislative amendments .
Date Accepted
……………………………………………………….
11 July 2019

Date published

11 October 2019

Editor Prof K Beiter

How to cite this article

Huysamen E "An Overview of
Fixed-Term Contracts of
Employment as a Form of a Typical
Employment in South Africa" PER /
PELJ 2019(22) - DOI
[Link]
3781/2019/v22i0a4605

Copyright

DOI
[Link]
3781/2019/v22i0a4605
E HUYSAMEN PER / PELJ 2019 (22) 2

1 Introduction

South African labour laws are largely premised on the regulation of typical
or standard employment relationships.1 Typical or standard work is
generally regarded as being the norm and representative of the type of work
and work relationships over which labour laws have maximum coverage.2
Though no definition has been formulated to date, typical or standard
employment can broadly be defined as the employment of an individual (the
employee) by another person (natural or juristic – the employer) on an
ongoing basis (an indefinite basis), at an agreed rate of pay, and for agreed
fixed hours of work per day or week. Consequently, key elements of a typical
employment relationship appear to be continuity and certainty. Employment
arrangements deviating from the above in any substantive manner are
regarded as deviating from the norm, and are referred to as atypical or non-
standard employment. Atypical employment arrangements commonly
include casual labour, independent contractors, part-time employees and
fixed-term appointments (fixed-term contracts of employment).3

While statistics internationally suggest a steady decline in typical

employment arrangements and a rise in atypical arrangements, the former
remains the benchmark against which different forms of work are measured
and ultimately classified.4 Atypical employment arrangements are attractive
alternatives to parties for the flexibility they offer.5 However, despite the
appeal of atypical employment, these arrangements create less certainty for
employees than typical employment. Atypical employment is often
associated with increased employee vulnerability.

As a result of the rise in atypical employment, the argument has been made
that a regulatory legal system which largely caters for typical forms of
employment is increasingly ill-suited to the SA labour market.6 While typical

* Elsabé Huysamen. LLB LLM (SU). Lecturer, Mercantile and Labour Law, University
of the Western Cape, South Africa. E-mail: ehuysamen@[Link].
1 For a detailed and insightful explanation of the unitary nature of the contract of
employment and eventual reception of typical employment in South Africa, see Le
Roux World of Work.
2 Le Roux World of Work 8.
3 Van Niekerk et al Law@work 70.
4 See the discussion in this regard in Benjamin 2010 ILJ 845; also see Le Roux World
of Work 12.
5 As seen from the Labour Appeal Court’s finding in the case of Enforce Security
Group v Fikile 2017 38 ILJ 1041 (LAC) (discussed in paras 4.2.1 and 4.2.2 below),
South African courts seem to be appreciative of the increased need by both
employers and employees for flexibility in work arrangements.
6 Cheadle 2006 ILJ 664.
E HUYSAMEN PER / PELJ 2019 (22) 3

employment remains (for the time being at least) the model of work which
largely underpins existing legislative structures in employment, this model
fails to reflect the true nature of work arrangements in which many workers
are engaged.7 Whether typical employment therefore still remains reflective
of most work arrangements is open to debate. Consequently, the practical
reach of a regulatory regime which was drafted largely with typical
employment in mind is brought into question.8 Could it perhaps be said that
atypical employment has become the new typical? 9 Addressing this
question falls beyond the scope of this article, however.

The focus of the article will be on fixed-term contracts specifically as an

example of atypical employment. Fixed-term appointments can have many
benefits when utilised for proper and lawful reasons (such as the completion
of a temporary project).10 These contracts are unfortunately frequently
abused by unscrupulous employers. Examples of such abuse include where
certain opportunities and benefits are reserved for permanent employees
only, such as promotion and training opportunities11 and access to
employer-supported pension funds; employers can readily rid themselves
of unwanted employees as they are (generally) not required to provide

7 Le Roux World of Work 12-13. This is particularly true in the context of the Fourth
Industrial Revolution (4IR). It is widely accepted that the 4IR is changing the world
of work. While no singular definition of the 4IR exists, it could be described as
"the fourth major industrial era since the initial Industrial Revolution of the 18th
century. It is characterized by a fusion of technologies that is blurring the lines
between the physical, digital, and biological spheres, collectively referred to as
cyber-physical systems. It is marked by emerging technology breakthroughs in a
number of fields…" (Wikipedia date unknown [Link]
wiki/Fourth_Industrial_Revolution). Consequently, labour laws and labour
institutions must change to accommodate the 4IR. See in general the work done by
the Labour Law 4.0: Labour Law in the Fourth Industrial Revolution niche area at the
Department of Mercantile and Labour Law, University of the Western Cape (Labour
Law 4.0 date unknown [Link]
8 Le Roux World of Work 12.
9 At the 31st Annual Labour Law Conference, The Fourth Industrial Revolution:
Challenges and Opportunities (held in Johannesburg from 16 to 17 August 2018),
the Director of the ILO’s Pretoria Office, Mr Joni Musabayana, also expressed the
view that the informal economy was entering the realm of the formal economy, and
consequently what has traditionally been viewed as being the exception was
increasingly becoming the rule – see Ramotsho 2018 De Rebus 12.
10 Refer to the discussion under para 2 below on the lawful use of fixed-term contracts.
Also see Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 42, where the
Labour Appeal Court (LAC) held that "[i]t does not follow that the inclusion in a
contract of employment of a clause similar to the one in this case should
automatically render a termination of that contract based solely on its legitimate
terms, a dismissal. That would in my view defeat the whole purpose of concluding
fixed-term contracts concluded for legitimate reasons" [own emphasis added].
11 Gericke 2011 PELJ 106-107.
E HUYSAMEN PER / PELJ 2019 (22) 4

reasons for the non-renewal of fixed-term contracts;12 and the abuse of

fixed-term contracts for probationary purposes.13

The article will commence with a brief discussion of the concept of fixed-
term employment and the rationale behind the existence and usage of such
contracts. Thereafter the discussion will turn to the pre- and post-2014
legislative protection available to fixed-term employees14 under the Labour
Relations Act 66 of 1995 (the LRA). Subsequently, some notoriously difficult
issues surrounding the use of fixed-term contracts and the labour courts'
approaches to these issues to date will be discussed. In conclusion, the
article will argue that although some progress has been made towards
providing better protection to fixed-term employees as a result of the 2014
legislative amendments to the LRA, some uncertainties over the use of
these forms of contracts and some opportunities for abuse still exist.

2 An introduction to fixed-term contracts of employment

Permanent (or indefinite) contracts of employment are contracts which

continue for an unspecified period and may be terminated for a lawful
reason only. Such lawful reasons include fair dismissal of the employee, 15
resignation by the employee, mutual termination of the employment contract
by the contracting parties, the employee reaching the agreed or normal
retirement age, and the death of the employee.

Fixed-term contracts of employment on the other hand should, as the name

suggests, be entered into for a fixed, determinable, period of time only. In
terms of common law, in the absence of any lawful reason for early
termination, fixed-term contracts terminate automatically at the end of the
agreed period. The contract is generally a once-off agreement with a limited
duration which automatically terminates upon the occurrence of a clearly

12 Geldenhuys 2008 SA Merc LJ 268.

13 See the discussion on the abuse of fixed-term contracts for probationary purposes
under para 4.3 below.
14 Significant amendments were effected to labour legislation through the Labour
Relations Amendment Act 6 of 2014, the Employment Equity Amendment Act 47 of
2013, and the Basic Conditions of Employment Amendment Act 20 of 2013. In terms
of the Memorandum of Objects: Labour Relations Amendment Bill, 2012 (available
at DOL date unknown [Link]
legislation/bills/proposed-amendment-bills/[Link]), the proposed
amendments (as they then were) served to respond to the increased informalisation
of labour so as to ensure that vulnerable categories of workers received adequate
protection and were employed in conditions of decent work and to ensure
compliance with both fundamental constitutional rights and South Africa’s obligations
in terms of international labour standards.
15 In terms of s 188(1) of the Labour Relations Act 66 of 1995 (LRA).
E HUYSAMEN PER / PELJ 2019 (22) 5

specified date or event,16 or the completion of a specified task or project. 17

Lawful reasons for early termination of the contract will include fair dismissal
in terms of the LRA18 or termination through mutual agreement by the
parties.19 In terms of common law, termination of the contract at the expiry
of the fixed period does not take place at the behest of any of the contracting
parties, and therefore no dismissal presents itself.20 Consequently, under
common law the employee cannot aver that the employer's failure to renew
the contract, or renewing it on less favourable terms, constitutes unfair and
actionable conduct.21

Section 186(1)(b) of the LRA, however, provides an exception to the general

common law position described above. Section 186(1)(b) must be
understood in the light of the constitutional imperative to fair labour practices
in terms of section 23(1) of the Constitution of the Republic of South Africa,
1996. Section 23(1) of the Constitution provides that "[e]veryone has the
right to fair labour practices". Everyone for purposes of section 23 is
afforded a broad interpretation, and includes all employees, whether
engaged in terms of a fixed term or an indefinite contract of employment.22

16 Cohen 2007 SA Merc LJ 26.

17 This is in terms of the definition of a fixed-term contract in s 198B(1) of the amended
LRA. Section 198B(1) states that: "For the purpose of this section, a fixed-term
contract means a contract of employment that terminates on - (a) the occurrence of
a specified event; (b) the completion of a specified task or project; or (c) a fixed date,
other than an employee‘s normal or agreed retirement age, subject to subsection
(3)".
18 Section 186(1) of the LRA defines what constitutes a dismissal for the purposes of
the Act. In the matter of Buthelezi v Municipal Demarcation Board 2005 2 BLLR 115
(LAC) the Labour Appeal Court held that the retrenchment of fixed-term employees
(that is, dismissal for operational requirements in terms of s 189, and where
applicable s 189A of the LRA) prior to the expiry of the fixed-term contract is possible
only where there is a clause in the contract specifically providing for such early
termination.
19 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 18.
20 Air Traffic and Navigation Services Company v Esterhuizen (SCA) (unreported) case
number 668/2013 of 25 September 2014 para 17, as discussed in Enforce Security
Group v Fikile 2017 38 ILJ 1041 (LAC) para 18, where the LAC in the latter matter
confirmed that "[i]t has been the position in common law that the expiry of the fixed
term-contract of employment does not constitute termination of the contract by any
of the parties. It constituted an automatic termination of the contract by operation of
law and not a dismissal".
21 Van der Bank 2008 IJLMA 158.
22 Gericke 2011 PELJ 107; also see Nape v INTCS Corporate Solutions (Pty) Ltd 2010
31 ILJ 2120 (LC) para 63, where the court held "[t]he Constitution provides that
everyone and not just employees have a right to fair labour practices. Consequently,
even though a person may not be regarded by the law as an employee of the client
but of the labour broker, the client still has a legal duty to do nothing to undermine
an employee’s right to fair labour practices unless the limitation is justified by national
legislation"; also see Halton Cheadle’s interpretation of everyone and fair labour
practices in Cheadle and Davis South African Constitutional Law ch 18.
E HUYSAMEN PER / PELJ 2019 (22) 6

The definition of employee contained in section 213 of the LRA23 similarly

does not distinguish between fixed-term and permanent employees.24 Fair
labour practices as referred to in section 23(1) of the Constitution is also
much broader than the limited meaning ascribed to unfair labour practices
under the LRA. It is therefore safe to say that the right to fair labour practices
in terms of the Constitution includes protection against the unfair use (the
abuse) of fixed-term contracts. Consequently, fixed-term employees should
generally receive the same legislative protection as that available to
permanent employees. Whether this occurs in practice is one of the
fundamental questions underpinning this article. Fixed-term employment is
generally regarded as providing less stability, protection and certainty for
employees than indefinite employment.25

Whilst fixed-term employees may often render the same value and standard
of work, they do not always enjoy the same level of employment protection,
status, remuneration and benefits as those afforded to permanent
employees. Promotion and training opportunities are often available to
permanent members of staff only.26 Fixed-term employees often also do not
enjoy trade union protection and are rarely covered by collective
agreements.27 In circumstances where section 186(1)(b) of the LRA does
not find application, by not renewing the fixed-term contract upon automatic
termination thereof an employer can also free itself of an unwanted
employee without having to follow the required process for fair dismissal as
provided for in the LRA.28 Employers are also not required to provide
reasons for the non-renewal of fixed-term contracts.29 The result is that
fixed-term contracts are unfortunately too often abused by unscrupulous
employers in an attempt to circumvent the provisions of the LRA.30

23 Section 213 of the LRA defines an employee as "(a) any person, excluding an
independent contractor, who works for another person or for the State and who
receives, or is entitled to receive, any remuneration; and (b) any other person who
in any manner assists in carrying on or conducting the business of an employer…".
24 Geldenhuys 2008 SA Merc LJ 268.
25 Gericke 2011 PELJ 106-107.
26 Gericke 2011 PELJ 106-107.
27 ILO 2015 [Link]
travail/documents/publication/wcms_436125.pdf.
28 In terms of s 188(1) of the LRA a dismissal will be fair only if there is a valid reason
for the dismissal (subjective fairness) and where a fair procedure has been followed
in dismissing the employee (procedural fairness).
29 Geldenhuys 2008 SA Merc LJ 268.
30 Cohen 2007 SA Merc LJ 26; Collier et al Labour Law in South Africa 189.
E HUYSAMEN PER / PELJ 2019 (22) 7

Nevertheless, there are undeniably genuine operational needs which

require the use of fixed-term contracts under specific circumstances31 or in
particular industries.32 Because of the constitutional right to fair labour
practices, and subsequently the introduction of section 186(1)(b) of the LRA,
an employer is no longer able to employ employees on fixed-term contracts
with the sole intent of placing them beyond the protection of the LRA. Fixed-
term employees, like any other employees, are protected under the
principles of fairness and equity as embodied in the LRA.33

The discussion will now turn to the legislative protection available to fixed-
term employees in terms of the LRA by considering both the pre- and post-
2014 periods.

3 Legislative protection afforded to fixed-term employees

Under common law the employment terms agreed upon between an

employer and an employee were regarded as being reflective of the relative
bargaining strengths of the parties. Many employees, particularly low-skilled
individuals, were often left vulnerable, open to exploitation and with very
little job security.34 The only established requirement for the lawful
termination of the contract under common law was that the employer had to
provide the employee with the period of notice of termination of the contract
agreed upon. The reason for termination was of no consequence,
however.35 The enactment of the LRA and the protection that came with it
were as such a necessary and welcome advancement for employees – both
permanent and fixed-term.

In the furtherance of the general right to fair labour practices as provided for
in section 23(1) of the Constitution, the LRA protects employees against
specifically unfair dismissals and unfair labour practices. Section 188(1) of

31 Such as the appointment of a fixed-term employee where another employee is on

maternity leave, or the appointment of an individual to complete a once-off specific
project.
32 Such as those affected by constant economic and seasonal fluctuations, which in
turn require fluctuations in employment numbers.
33 Van der Bank 2008 IJLMA 163. As the focus of this article is on the protection of
fixed-term employees under the LRA, the impact of the Employment Equity Act 55
of 1998’s (EEA) equal pay for work of equal value provisions on fixed-term
employees falls beyond the scope of the discussion (see the discussion under fn 72
below).
34 The most extreme form of worker exploitation was that of slavery, where the worker
in effect became the property of the owner – see the discussion in Collier et al Labour
Law in South Africa 8-12.
35 Cohen 2007 SA Merc LJ 26, 27. For a detailed discussion on relational contract
theory see Cohen 2012 Acta Juridica.
E HUYSAMEN PER / PELJ 2019 (22) 8

the LRA stipulates that a dismissal should be both substantively fair (for a
fair and lawful reason) and procedurally fair (complying with a fair
procedure).36 Section 186 of the LRA provides a comprehensive definition
of what constitutes a dismissal. In terms of section 186(1)(b) dismissal
includes the non-renewal of fixed term contracts by employers, or a renewal
on less favourable terms, where the employee had a reasonable
expectation that the contract would be renewed on the same or similar
terms37 (or, subsequent to the 2014 amendments to the LRA, a reasonable
expectation that the contract would be made permanent).38

South African labour legislation underwent some significant amendments

during 2014. The Labour Relations Amendment Act 6 of 2014 (the LRAA),
amongst other things, amended section 186(1)(b) of the LRA and
introduced section 198B into the LRA.

3.1 Regulation of fixed-term contracts prior to the 2014 LRA

amendments

Prior to the 2014 amendments to the LRA, section 186(1)(b) held that:

"Dismissal" means that –

(b) an employee reasonably expected the employer to renew a fixed term

contract of employment on the same or similar terms but the employer offered
to renew it on less favourable terms, or did not renew it.

With the inclusion of the above into the LRA, employees on fixed-term
contracts were for the first time awarded legislative stature. This was of
particular significance in as far as job security and preventing employers
from bypassing the provisions of the LRA were concerned.39 Section
186(1)(b) served to deter employers from terminating the employment
relationship in circumstances where a reasonable expectation of renewal of
the contract existed on the part of the employee. An ancillary purpose was
to curb the use of indefinite fixed-term contracts with the same employee

36 Cohen 2007 SA Merc LJ 27.

37 Section 186(1)(b)(i) of the LRA. For further insight into the origin of the concept
reasonable expectation, see the discussion under para 4.1 below.
38 Section 186(1)(b)(ii) LRA.
39 See the majority ruling in Fedlife Assurance Ltd v Wolfaardt 2002 2 All SA 295 (A)
para 18, where Nugent AJA held that "[b]y enacting s 186(b) the legislature intended
to bestow upon an employee whose fixed-term contract has run its course a new
remedy designed to provide, in addition to the full performance pf the employer’s
contractual obligations, compensation (albeit of an arbitrary amount) if the employer
refuses to agree to renew the contract where there was a reasonable expectation
that such would occur."
E HUYSAMEN PER / PELJ 2019 (22) 9

(particularly where the position the employee held was of a permanent

nature) and the unfairness associated therewith.40

In any unfair dismissal dispute, the onus is first on the employee to show
that a dismissal as defined in section 186 of the LRA had occurred. 41 In SA
Rugby (Pty) Ltd v Commission for Conciliation Mediation and Arbitration42
the Labour Court (LC) held that, for the purposes of section 186(1)(b), the
onus was on an employee to establish the existence of a reasonable or
legitimate expectation of the renewal of the employment contract.43 In De
Milander v Member of the Executive Council for the Department of Finance:
Eastern Cape44 the Labour Appeal Court (LAC) summarised the application
of section 186(1)(b) as follows:

The appellant's case is founded upon s 186(1)(b) of the LRA and that being
so, she had to provide facts which, objectively considered, would bring her
case within the ambit of that section… 45

Zondi AJA in De Milander added that:

…it [was] first necessary to determine whether she in fact expected her
contract to be renewed, which [was] the subjective element. Secondly, if she
did have such an expectation, whether taking into account all the facts, that
expectation was reasonable, which is the objective element… 46

Essentially the question is whether a reasonable employee under the same

prevailing circumstances would have expected the employer to renew his
or her fixed-term contract on the same or similar terms and conditions.47 It

40 Geldenhuys 2008 SA Merc LJ 269.

41 Section 192(1) of the LRA.
42 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27
ILJ 1041 (LC) para 44.
43 Also see SA Rugby Players Association v SA Rugby (Pty) Ltd 2008 29 ILJ 2218
(LAC) para 44, where the LAC held that "[the employees] carried the onus to
establish that they had a ‘reasonable expectation’ that their contracts were to be
renewed."
44 De Milander v Member of the Executive Council for the Department of Finance:
Eastern Cape 2013 34 ILJ 1427 (LAC).
45 De Milander v Member of the Executive Council for the Department of Finance:
Eastern Cape 2013 34 ILJ 1427 (LAC) para 25.
46 De Milander v Member of the Executive Council for the Department of Finance:
Eastern Cape 2013 34 ILJ 1427 (LAC) para 29.
47 See SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006
27 ILJ 1041 (LC) para 11, where the court stated: "For the employee’s expectation
to be 'reasonable', there must be an objective basis for the creation of his
expectation, apart from the subjective say-so or perception…"; also see SA Rugby
Players Association v SA Rugby (Pty) Ltd 2008 29 ILJ 2218 (LAC) para 44, where
the LAC confirmed the above; Dierks v University of South Africa 1999 20 ILJ 1227
(LC) para 132.
E HUYSAMEN PER / PELJ 2019 (22) 10

is only once the employee has been able to establish that s/he has been
dismissed in terms of section 186(1)(b) of the LRA that the onus shifts to
the employer to show that the dismissal was fair (both substantively and
procedurally).48

In summary, to successfully prove that a dismissal in relation to the

termination of a fixed-term contract occurred, the employee had to establish
that:

(1) s/he had an expectation that the employer would renew the fixed-term
contract in question on the same or similar terms;

(2) the expectation by the employee had been reasonable;49 and

(3) the employer did not renew the contract, or offered to renew it on less
favourable terms.50

In considering the first two requirements the questions to ask would be firstly
whether the employee subjectively expected the contract to be renewed (the
subjective element) and secondly whether that expectation was reasonable
given the facts of the matter (the objective element). In short, it must be
determined whether a reasonable employee in the same circumstances as
the employee would have expected the contract to be renewed on the same
or similar terms.51 The expectation must have been created through the
conduct of the employer. An employer's actions prior to the non-renewal of
the fixed-term contract are therefore of paramount importance and trump
any express wording in the employment contract which states that the
employee could not claim any expectation of renewal.52

In conclusion, the effect of the pre-2014 legislative provisions can be

summarised as:

48 Section 192(2) of the LRA. Also see De Milander v Member of the Executive Council
for the Department of Finance: Eastern Cape 2013 34 ILJ 1427 (LAC) para 26.
49 See the discussion under para 4.1 below as to what might constitute a reasonable
expectation.
50 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27
ILJ 1041 (LC) para 9, as referred to in Cash Paymaster Services (Pty) Ltd v Christie
(LC) (unreported) case number C550/2013 of 19 August 2014 4.
51 See SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006
27 ILJ 1041 (LC) paras 9 and 11; also see the earlier discussion of De Milander v
Member of the Executive Council for the Department of Finance: Eastern Cape 2013
34 ILJ 1427 (LAC).
52 See SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006
27 ILJ 1041 (LC) paras 12 and 13.
E HUYSAMEN PER / PELJ 2019 (22) 11

- Employers were not allowed to use fixed-term contracts for improper

reasons, such as prolonged probation periods, or a means through
which to deny factually permanent employees employed on fixed-term
contracts access to benefits typically available only to permanent
employees.

- An employee could claim unfair dismissal where s/he reasonably

expected that the employer would renew the contract on the same or
similar terms, but the employer failed to renew it, or renewed it on less
favourable terms.

3.2 Regulation of fixed-term contracts subsequent to the 2014 LRA

amendments

The LRAA, signed off by former President Jacob Zuma and promulgated in
the Government Gazette during August 2014,53 came into effect on the 1st
of January 2015. The preamble to the LRAA indicates the purpose of the
amendments as providing greater protection to workers engaged in
temporary employment services and better regulation of the employment of
fixed-term and part-time employees who earn below the earnings
threshold.54

3.2.1 Extension of section 186(1)(b)

Section 186(1)(b) as amended now holds that:

‘Dismissal’ means that –

(b) an employee employed in terms of a fixed term contract of employment

reasonably expected the employer-

(i) to renew a fixed term contract of employment on the same or similar terms
but the employer offered to renew it on less favourable terms, or did not renew
it; or

(ii) to retain the employee in employment on an indefinite basis but otherwise

on the same or similar terms as the fixed term contract, but the employer
offered to retain the employee on less favourable terms, or did not offer to
retain the employee.

The amendments to section 186(1)(b) extended the scope of the protection

already available to fixed-term employees. The amended section 186(1)(b)

53 GN 629 in GG 37921 of 18 August 2014.

54 The earnings threshold as determined by the Minister of Labour from time to time.
As at the date of the writing of this article, the threshold was set at R205 433.30 per
annum.
E HUYSAMEN PER / PELJ 2019 (22) 12

no longer provides for protection only in the case where an employee is able
to show that s/he had a reasonable expectation that the fixed-term contract
would be renewed, but now also provides for a dismissal where the
employee is able to show that s/he had a reasonable expectation that the
contract would be made permanent. A reasonable expectation of permanent
employment was not previously explicitly recognised as a ground that could
give rise to a claim of dismissal under the pre-amended section 186(1)(b).

In SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and

Arbitration,55 the LC held that the pre-amended section 186(1)(b) clearly
stated that dismissal could be argued only where the employee reasonably
expected the existing fixed-term contract to be renewed on the same or
similar terms, and not that a new contract would be concluded for a different
period or purpose.56 While not overtly stated as such by the court, from the
aforesaid it can be deduced that an employee could not rely on section
186(1)(b) for protection where a reasonable expectation of a permanent
appointment, that is a different period, was argued. In Dierks v University of
South Africa57 the applicant had been employed on three fixed-term
contracts during the period 1995 to 1997. When the third contract expired
at the end of 1997, the applicant claimed that he had a reasonable
expectation of permanent employment.58 The LC concluded that an
expectation of permanent employment did not satisfy the requirements of
dismissal for the purposes of section 186(1)(b). In short, the court's
reasoning in this regard was as follows:

- As could be gathered from the wording of section 186(1)(b), the

reasoning behind the initial inclusion of the section into the LRA was
to counteract the patent unfairness brought forth by indefinite renewals
of fixed-term contracts by employers without good reason.59

- An employee who claimed an expectation of permanent appointment

had to institute such a claim in terms of the unfair labour practices
provisions of the LRA.60

55 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27

ILJ 1041 (LC).
56 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27
ILJ 1041 (LC) para 22.
57 Dierks v University of South Africa 1999 20 ILJ 1227 (LC).
58 Dierks v University of South Africa 1999 20 ILJ 1227 (LC) para 137.
59 Dierks v University of South Africa 1999 20 ILJ 1227 (LC) para 143.
60 Dierks v University of South Africa 1999 20 ILJ 1227 (LC) para 146.
E HUYSAMEN PER / PELJ 2019 (22) 13

- In order for an employee to successfully claim a dismissal under

section 186(1)(b) where an expectation of permanency was relied on,
"… a specific statutory provision to that effect…" had to be written into
the LRA by the legislature.61

Similarly, in the matter of Auf der Heyde v University of Cape Town62 the LC
concluded that section 186(1)(b) did not apply to instances where an
expectation of indefinite renewal was claimed by an employee.
Consequently, a fixed-term employee could at best argue the existence of
a reasonable expectation of further employment only on a further temporary
basis. This is in contrast to the decision reached in the matter of in McInnes
v Technikon Natal,63 where the LC held that section 186(1)(b) provided for
the situation where an employee was able to prove that the employer had
created a reasonable expectation of indefinite renewal of the contract.

In University of Pretoria v CCMA64 the employee had been employed on

seven fixed-term contracts over a period of just under four years. Prior to
the expiry of the last fixed-term contract the employee unsuccessfully
applied for a permanent position at the employer. While her application was
unsuccessful, the employer did offer the employee an eighth fixed-term
contract on improved terms and conditions of service. The employee
refused to accept employment on yet another fixed-term contract, however,
and claimed dismissal under section 186(1)(b) on the basis of a reasonable
expectation of permanent appointment. In dismissing the employee's claim,
the LAC held that:

These words do not however carry the meaning which is urged by third
respondent, namely that, by being employed on the basis of a series of fixed
terms contracts, an employee has without more a reasonable expectation of
a permanent appointment.65

Uncertainties around the applicability of section 186(1)(b) in cases where

employees claim a reasonable expectation of permanent employment have
now been settled through the addition of section 186(1)(b)(ii) to the LRA.
The amended section explicitly provides for a claim of dismissal where
employees had a reasonable expectation of permanent employment. This
is of particular importance to employees who have historically experienced
continued renewal (or so-called "rolling over") of their fixed-term contracts,

61 Dierks v University of South Africa 1999 20 ILJ 1227 (LC) para 148.
62 Auf der Heyde v University of Cape Town 2000 8 BLLR 877 (LC).
63 McInnes v Technikon Natal 2000 21 ILJ 1138 (LC).
64 University of Pretoria v CCMA 2012 25 ILJ 183 (LAC).
65 University of Pretoria v CCMA 2012 25 ILJ 183 (LAC) para 18.
E HUYSAMEN PER / PELJ 2019 (22) 14

who would now be able to argue a dismissal based on a reasonable

expectation of permanent appointment.

Under the amended section 186(1)(b) employees will now have a choice
whether to argue dismissal based on the expectation of renewal of the fixed-
term contract, or to claim a reasonable expectation of permanent
employment. Employees are likely to claim the aforesaid in the alternative.

To be successful with a claim of reasonable expectation of permanency the

employee would have to show that: (a) the employer is in a position to
provide indefinite employment; (b) the employer is responsible for creating
an expectation that indefinite employment would be offered; and (iii) such
an expectation held by the employee is reasonable.66 The test for
reasonableness remains the same as that applicable to claims of a
reasonable expectation of the renewal of a fixed-term contract, as discussed
under 3.1 above.

3.2.2 Introduction to section 198B

Apart from an increase in the protection now provided for under section
186(1)(b), section 198B of the amended LRA was a completely new addition
to the Act pursuant to the 2014 amendments to the Act. Section 198B is
explicitly focussed on the protection of fixed-term employees.

Section 198B(1) defines a fixed-term contract as:

…a contract of employment that terminates on —

(a) the occurrence of a specified event;

(b) the completion of a specified task or project; or

(c) a fixed date, other than an employee's normal or agreed retirement age,
subject to subsection (3).

The above essentially confirms what has historically already been

understood and applied as the definition and lawful use of fixed-term
contracts. Consequently, not much has been gained through the inclusion
of the specific provision.

Section 198B is not available to all employees and employers. The following
categories of employees and employers are excluded from the provisions
of section 198B:

66 Gericke 2011 PELJ 106.

E HUYSAMEN PER / PELJ 2019 (22) 15

- Employees earning in excess of the earnings threshold as prescribed

by the Minister of Labour in terms of the Basic Conditions of
Employment Act 75 of 1997 (hereafter the BCEA). At the time of writing
this article the threshold was set at R205 433.30 per annum;67

- Employers who employ less than 10 employees; 68

- Where an employer employs between 10 and 50 employees, the

business has been in operation for less than two years (subject to
certain exceptions as listed in section 198B(2)(b)); 69

- Employees employed in terms of a fixed term contract permitted by any

statute, sectoral determination or collective agreement.70

[Link] Justification for and the allowed periods of fixed-term contracts

(sections 198B(3), (4), (5), (6) and (7))

The above provisions hold that:

(3) An employer may employ an employee on a fixed term contract or

successive fixed term contracts for longer than three months of
employment only if –

(a) the nature of the work for which the employee is employed is of a limited
or definite duration; or

(b) the employer can demonstrate any other justifiable reason for fixing the
term of the contract.

(4) Without limiting the generality of subsection (3), the conclusion of a

fixed term contract will be justified if the employee—

(a) is replacing another employee who is temporarily absent from work;

(b) is employed on account of a temporary increase in the volume of work

which is not expected to endure beyond 12 months;

(c) is a student or recent graduate who is employed for the purpose of

being trained or gaining work experience in order to enter a job or
profession;

(d) is employed to work exclusively on a specific project that has a limited

or defined duration;

(e) is a non-citizen who has been granted a work permit for a defined
period;

(f) is employed to perform seasonal work;

67 Section 198B(2)(a) of the LRA.

68 Section 198B(2)(b) of the LRA.
69 Section 198B(2)(b) of the LRA.
70 Section 198B(2)(c) of the LRA.
E HUYSAMEN PER / PELJ 2019 (22) 16

(g) is employed for the purpose of an official public works scheme or similar
public job creation scheme;

(h) is employed in a position which is funded by an external source for a

limited period; or

(i) has reached the normal or agreed retirement age applicable in the
employer's business.

(5) Employment in terms of a fixed term contract concluded or renewed in

contravention of subsection (3) is deemed to be of indefinite duration.

(6) An offer to employ an employee on a fixed term contract or to renew or

extend a fixed term contract, must-

(a) be in writing; and

(b) state the reasons contemplated in subsection (3)(a) or (b).

(7) If it is relevant in any proceedings, an employer must prove that there

was a justifiable reason for fixing the term of the contract as
contemplated in subsection (3) and that the term was agreed.

While there was no maximum period of fixed-term employment provided for

in the pre-amended LRA, section 198B(3) might be understood to suggest
that fixed-term contracts are generally appropriate only where the period of
employment is less than three months. In accordance with section 198B(3),
where an employee is employed for a period exceeding three months, the
employer is required to show that the work the employee is employed to do
is of a limited/definite duration, or to provide any other justifiable reason for
the continued use of a fixed-term contract. While the list it contains is not a
closed, section 198B(4) provides for instances where employers may justify
using fixed-term contracts which exceed the legislated three-month period.
Again, not much has been gained through the inclusion of section 198B(4),
as it merely confirms the already accepted understanding and
implementation of the lawful use of fixed-term contracts.

Section 198B(3)(b) contains a fairly broadly worded failsafe provision

available to employers to justify the use of fixed-term contracts in excess of
three months. Consequently, it seems as if it would be rather easy for
employers to justify the use of fixed-term contracts. It is argued that this view
is also supported by the wording itself of section 198B(4), which includes
the qualification "[w]ithout limiting the generality of subsection (3)…" Of little
comfort perhaps is the fact that section 198B(7) places the onus on
employers in legal proceedings to justify the use of fixed-term contracts.
Such justifications will consequently form the subject of legal scrutiny before
the CCMA and labour courts. Justifying the use of fixed-term contracts is
E HUYSAMEN PER / PELJ 2019 (22) 17

also provided for in section 198B(6), which stipulates that any offer to
employ an employee on a fixed-term contract, or to renew or extend such a
contract, must be in writing and must indicate the reasons for entering into
a fixed-term contract specifically. While the legislature might be commended
for its attempt to compel employers to show the existence of justifiable
reasons for utilising fixed-term contracts in excess of three months, given
the reservations highlighted above it remains to be seen to what extent
sections 198B(3) and (4) will curb the misuse of these contracts.

Where an employer employs an employee on a fixed-term contract in

excess of three months and fails to show that the nature of the work is of a
limited nature, or fails to establish a justifiable reason for exceeding the
three-month period, the employee's employment will automatically be
deemed to be of indefinite duration.71 Under the amended LRA the potential
claims faced by employers engaged in fixed-term contracts are therefore
two-fold: first, a possible unfair dismissal claim under the extended section
186(1)(b), and second, claims for the automatic conversion of fixed-term
contracts into permanent/indefinite contracts of employment. These claims
might pose significant financial and/or structural risks for employers,
particularly where employers are faced with a sudden (and unexpected)
increase in staff cost and composition where contracts are declared to be
of an indefinite nature.

[Link] Equal treatment (sections 198B(8), (9), (10) and (11))

Sections 198B(8), (9), (10) and (11) hold that:

(8) (a) An employee employed in terms of a fixed term contract for longer
than three months must not be treated less favourably than an
employee employed on a permanent basis performing the same or
similar work, unless there is a justifiable reason for different treatment.

(b) Paragraph (a) applies, three months after the commencement of the
Labour Relations Amendment Act, 2014, to fixed term contracts of
employment entered into before the commencement of the Labour
Relations Amendment Act, 2014.

(9) As from the commencement of the Labour Relations Amendment Act,

2014, an employer must provide an employee employed in terms of a
fixed term contract and an employee employed on a permanent basis
with equal access to opportunities to apply for vacancies.

(10) (a) An employer who employs an employee in terms of a fixed term

contract for a reason contemplated in subsection (4)(d) for a period

71 Section 198B(5) of the LRA; also see ELRC date unknown

[Link]
E HUYSAMEN PER / PELJ 2019 (22) 18

exceeding 24 months must, subject to the terms of any applicable

collective agreement, pay the employee on expiry of the contract one
week's remuneration for each completed year of the contract calculated
in accordance with section 35 of the Basic Conditions of Employment
Act.

(b) An employee employed in terms of a fixed-term contract, as

contemplated in paragraph (a), before the commencement of the
Labour Relations Amendment Act, 2014, is entitled to the remuneration
contemplated in paragraph (a) in respect of any period worked after the
commencement of the said Act.

(11) An employee is not entitled to payment in terms of subsection (10) if,

prior to the expiry of the fixed term contract, the employer offers the
employee employment or procures employment for the employee with
a different employer, which commences at the expiry of the contract
and on the same or similar terms.

Section 198B(8) provides for the equal treatment of fixed-term and

permanent employees.72 Section 198B(8)(a) provides for differential
treatment only where there is a justifiable reason for such differentiation.
Section 198B(8), read with section 198D(2) provides examples of what
could constitute such justifiable reasons. These include seniority,
experience, length of service, merit, the quality or quantity of work
performed, or any other criteria of a similar nature. It remains to be seen
whether employers will view the list as being too restrictive. It must be
remembered, however, that section 198D(2)(d) provides that "…any other
criteria of a similar nature" may also be considered.

It also remains to be seen exactly how the courts and other dispute
resolution forums will interpret section 198B(8). The phrase "not treated less
favourably" could arguably have a far wider meaning than simply providing
equal terms and conditions of employment in a narrow sense. Such a
progressive approach seems to be in line with the provisions of sections
198B(9) and (10). The former holds that fixed-term contract employees must
be provided with equal opportunities to apply for vacancies within the
business (i.e. equal to the opportunities provided to permanent

72 Equal pay for work of equal value provisions were introduced into the EEA during
2015 through the Employment Equity Amendment Act 47 of 2013. Section 6(4) of
the EEA now provides that "[a] difference in terms and conditions of employment
between employees of the same employer performing the same or substantially the
same work or work of equal value that is directly or indirectly based on any one or
more of the grounds listed in subsection (1), is unfair discrimination". Section 6(5)
stipulates that "[t]he Minister, after consultation with the Commission, may prescribe
the criteria and prescribe the methodology for assessing work of equal value
contemplated in subsection (4)". Subsequently, the Minister of Labour published the
Code of Good Practice on Equal Pay / Remuneration for Work of Equal Value on the
1st of June 2015.
E HUYSAMEN PER / PELJ 2019 (22) 19

employees).73 Section 198B(10)(a) in turn provides that where an employee

is employed on a fixed term in excess of 24 months to work on a project
with a limited duration, the employee is entitled to one week's remuneration
for each completed year of the contract once the contract expires as agreed.
Essentially this section provides for the payment of severance pay under
circumstances similar to those pertaining to the retrenchment of employees
under section 189 of the LRA. In terms of section 198B(11), however, an
employee is not entitled to such severance pay if prior to the expiry of the
fixed-term contract the employer offered the employee alternative
employment on the same or similar terms, or procured employment for the
employee with a different employer.74

4 Legislative protection afforded to fixed-term

appointments: selected issues from case law

What follows below is a discussion of selected issues courts have been

called on to determine arising from the legislative protection afforded to
fixed-term contract employees. These include issues which were either not
sufficiently addressed, or not addressed at all, prior to the 2014
amendments to the LRA.

4.1 What constitutes a reasonable expectation?

To be successful with a claim of dismissal under section 186(1)(b) of the

LRA as amended, an employee has to show that s/he had a reasonable
expectation that the fixed-term contract would either be renewed on the
same or similar terms, or that the contract would be made permanent. The
concept reasonable expectation can be traced back to the equality
jurisprudence of the former Industrial Courts and the latter's approach to the
notion of a legitimate expectation as understood within unfair labour
practices disputes argued under the 1956 LRA.75

Prior to the 2014 amendments to the LRA there were opposing views as to
whether a reasonable expectation of permanent employment (as opposed
to simply the renewal of a fixed-term contract) was protected under the
dismissal provisions of the former section 186(1)(b). While the labour courts
reached conflicting outcomes in this regard, the issue has now been settled
through the inclusion of section 186(1)(b)(ii) into the LRA. The section

73 Section 198B(9) of the LRA.

74 Section 198B(11) of the LRA.
75 See Dierks v University of South Africa 1999 20 ILJ 1227 (LC) para 119 and
Administrator of the Transvaal v Traub 1989 10 ILJ 823 (A) 833-837.
E HUYSAMEN PER / PELJ 2019 (22) 20

specifically provides for a reasonable expectation of permanent

employment. The explanatory memorandum that accompanied the Labour
Relations Amendment Bill 16D of 2012 highlighted that the amended
section 186(1)(b) would remove the anomaly that existed, in terms of which
fixed-term employees could claim dismissal only where they reasonably
expected the employer to renew the fixed-term contract, and not where they
reasonably expected to be retained on an indefinite basis.

Courts and other dispute resolution forums have traditionally applied

principles of fairness or reasonableness in ascertaining whether a
reasonable expectation existed in fixed-term contract termination
disputes.76 Notions of fairness and reasonableness are notoriously wide,
however, and open to different interpretations. South African courts are
therefore turned to for guidance on the application of section 186(1)(b).

In the matter of SA Rugby (Pty) Ltd v Commission of Conciliation Mediation

and Arbitration77 the applicants claimed unfair dismissal on the ground of a
reasonable expectation they had that their contracts would be renewed. The
employer argued that the employees' fixed term contracts expressly stated
that there could be no expectation of renewal upon the expiry of the
contracts. The LC held that the test to establish a reasonable expectation
included both a subjective and an objective element. The employee's
subjective perception that the contract would be renewed had to be based
on facts which objectively supported the employee's perception. In short,
the question was thus whether a reasonable employee in the position of the
employee would have had a similar expectation that the contract would be
renewed under the circumstances.78 In the court's opinion a reasonable
expectation could be argued despite the fact that the contract included an
express provision to the contrary. The latter view of the court is to be
applauded and is in keeping with the general willingness by labour courts to
consider substance over form, which supports the view that labour law is a
law of fairness.

According to the LC in the SA Rugby case a number of factors were

instructive in determining whether a reasonable expectation had indeed
been formed. Without constituting a closed list,79 these included: the written

76 Vettori 2008 Stell LR 203.

77 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27
ILJ 1041 (LC).
78 SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration 2006 27
ILJ 1041 (LC) paras 9-11; Cohen 2007 SA Merc LJ 35.
79 Also see Joseph v University of Limpopo 2011 32 ILJ 2085 (LAC) para 35.
E HUYSAMEN PER / PELJ 2019 (22) 21

terms of the contract; the practice of past renewals; the reason(s) for having
entered into a fixed term contract; and any assurances given by the
employer to the employee that the contract would be renewed. An employee
might therefore have a strong claim of reasonable expectation where
assurances were given by the employer that continued employment would
be offered, or past practices of renewal and the conduct of the employer
had led the employee to believe that there was prospect of a renewal. 80

In Yebe v University of KZN81 the fixed-term contract of the employee had

been renewed twenty times over a period of four-and-a-half years. The
employee also rendered the same services as that rendered by two
colleagues who had already been appointed on a permanent basis. The
Commission for Conciliation, Mediation and Arbitration (CCMA) held that
this was a clear example of where a practice of past renewals, together with
the factual nature of the job, created a reasonable expectation of the
renewal of the contract.

In Ekurhuleni West College v Education Labour Relations Council82 the

employee was initially appointed on a three-month fixed-term lecturing
contract. The post was subsequently advertised as a permanent one. The
employee's application to be appointed in the permanent position was
unsuccessful. Whilst the permanent position remained vacant the
employee's contract was renewed twice for a period of three months at a
time. Shortly after the second renewal the employee informed her manager
that she was pregnant. The manager did not indicate to the employee that
her contract would not be renewed for a next term and in fact advised her
to apply for maternity leave. The maternity leave period would have fallen
outside of the employee's last contractual period. Both the Education
Labour Relations Council (hereafter the ELRC) and the LC concluded that
based on the employer's advice, the employee's expectation that her
contract would again be renewed on termination had been reasonable and
accordingly found that she had been unfairly dismissed.

The LAC concurred with the findings of the ELRC and the LC that a
reasonable expectation of renewal had been created and that the
employee's dismissal had been procedurally and substantively unfair.
Whilst not explicitly commenting on the issue, the LAC's judgment could be
understood to mean that employers are bound by the expectations created

80 Mediterranean Woollen Mills (Pty) Ltd v SACTWU 1998 19 ILJ 731 (LAC) 735.
81 Yebe v University of KZN 2007 28 ILJ 490 (CCMA).
82 Ekurhuleni West College v Education Labour Relations Council (LAC) (unreported)
case number JA55/2016 of 30 November 2017.
E HUYSAMEN PER / PELJ 2019 (22) 22

by those in positions of authority, such as managers, despite how negligent

or misplaced the conduct of a manager might be in creating any
expectations. In the present matter the manager's advice to the employee
to apply for maternity leave where such a period of leave would have fallen
outside of the employee's last contractual period was instrumental in the
creation of a reasonable expectation of continued employment.

Further factors highlighted in case law on the question whether a

reasonable expectation had been created include the terms of the contract
and the nature of business;83 the importance of the work done by the
employee; whether money was available to continue to pay the employee;
and the employee's overall work performance.84 While not often argued, it
has also been suggested that affirmative action policies could play a role in
determining whether or not a reasonable expectation had been created for
continued employment.85

Determining whether an employee would be successful with a claim of

dismissal under section 186(1)(b) of the LRA will ultimately depend on the
employee's ability to prove that s/he had a reasonable expectation of the
renewal of the contract or an expectation of permanent appointment. This
subjective expectation must be objectively justifiable. It is only once the
employee has been able to show that a dismissal had occurred that the
question of the fairness of such a dismissal becomes relevant. Since
employees might not have kept records of any verbal communications
which supported the belief that a contract would be renewed or made
permanent, proving a claim of reasonable expectation under section
186(1)(b) might turn out to be rather tricky. Adding to the difficulty of proving
such a claim is the fact that employers are not obliged to provide employees
with written reasons for the non-renewal of the fixed-term contract on expiry
thereof. It is for this reason that the LC's approach in the SA Rugby case to
consider a bundle of factors, as opposed to a single factor, in determining
the existence of a reasonable expectation is to be further commended.

83 De Milander v Member of the Executive Council for the Department of Finance:

Eastern Cape 2013 34 ILJ 1427 (LAC) para 16; Joseph v University of Limpopo 2011
32 ILJ 2085 (LAC) para 35.
84 Vettori 2008 Stell LR 203, 204.
85 Geldenhuys 2008 SA Merc LJ 277.
E HUYSAMEN PER / PELJ 2019 (22) 23

4.2 Automatic termination clauses and fixed-term contracts of

employment

The forms of dismissal in terms of section 186 of the LRA requires that there
has to be some form of action on the part of the employer that resulted in
the termination of the employee's contract of employment.86 The inherent
nature of a fixed-term contract of employment is such, however, that the
contract terminates automatically upon an agreed and identified date, or the
occurrence of an agreed upon event (such as the completion of a specific
project). Under these normal circumstances the fixed-term employment
contract simply terminates by operation of law and there is no termination
of the contract at the behest of the employer and as such no dismissal for
the purposes of section 186(1)(a) of the LRA.

Automatic termination clauses are typically found in tripartite relationships

where the existence of the employment contract is dependent on the
existence of a separate contract, generally a commercial contract, between
the employer and a client. On the termination of the commercial contract,
employees in tripartite work relationships as described above might be
faced with an unexpected termination of the employment contract, often
without any fault on their part or warning by the employer. 87 In the light of
the uncertainty they create particularly over job security, the lawfulness of
such automatic termination clauses in employment contracts has plagued
the labour courts for years. Yet the approach taken by South African labour
courts to automatic termination clauses has been far from consistent.

The discussion below will be guided by two questions. First, is the

termination of an employment contract pursuant to an automatic termination
clause a dismissal or merely an automatic termination of a fixed term
contract? Secondly, are automatic termination clauses lawful?

86 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 21. The only exceptions
to the general rule that it is the employer’s termination of the employee’s contract
which results in a dismissal claim under s 186 of the LRA is a resignation by an
employee in terms of s 186(1)(e) or 186(1)(f) of the LRA. In these exceptional
circumstances, even though the employment relationship is terminated through the
resignation of the employee, a possible dismissal might still be argued.
87 See the Labour Court’s view in Nape v INTCS Corporate Solutions (Pty) Ltd 2010
31 ILJ 2120 (LC) para 59, where the court held that "[i]n this tripartite arrangement,
employees are the weakest and most vulnerable."
E HUYSAMEN PER / PELJ 2019 (22) 24

4.2.1 Automatic termination clauses: automatic termination of the fixed-

term contract or dismissal?

Section 186(1)(a) of the LRA provides that:

"Dismissal" means that –

(a) an employer has terminated employment with or without notice;

The LAC has previously held that:

[t]he key issue in the interpretation of the phrase 'an employer has terminated
the contract with or without notice' is whether the employer has engaged in an
act which brings the contract of employment to an end… 88

In this context, there are conflicting views on whether automatic termination

clauses give rise to fixed-term contracts which automatically terminate on
the termination of the commercial contract, with no dismissal thus taking
place.

In the matter of SA Post Office Ltd v Mampeule89 the LC had to consider

whether the termination of the employee's employment contract had
resulted in a dismissal for the purposes of section 186 of the LRA. The
employee had been removed from the employer's board of directors,
consequent to which the employer claimed the employee's contract of
employment terminated automatically. The employer's argument was
founded in a term in the employee's contract of employment which, when
read in conjunction with the employer's articles of association, suggested
that the employee's employment would terminate automatically should the
employee be removed from the board of directors. The LC did not agree
with the employer's claim that the employment contract terminated
automatically.

The court held that since it was an act by the employer which resulted,
whether directly or indirectly, in the termination of the employee's contract
of employment, a dismissal for the purposes of section 186(1)(a) of the LRA
had occurred. In the court's opinion it had been the removal by the employer
of the employee from the board of directors which triggered, proximately or
effectively, the termination of the employee's employment contract.

88 National Union of Leather Workers v Barnard 2001 22 ILJ 2290 (LAC) paras 22-23.
89 SA Post Office Ltd v Mampeule 2009 30 ILJ 664 (LC). The LAC in the matter of SA
Post Office Ltd v Mampeule 2010 31 ILJ 2051 (LAC) upheld the LC’s ruling that the
employee had been dismissed by the employer.
E HUYSAMEN PER / PELJ 2019 (22) 25

In Sindane v Prestige Cleaning Services90 the employee was employed on

what was termed a fixed term eventuality contract. The employer, a provider
of cleaning services, placed the employee as a cleaner at the premises of
one of its clients. The employer and employee agreed that the employment
contract would be on a fixed term basis and that it would automatically
terminate upon the termination of, or a reduction in, the commercial contract
between the employer and the client. After having been employed for just
under five years, the employee's contract was terminated when the client
downscaled its commercial contract with the employer. The LC had to
determine whether a dismissal for the purposes of section 186(1)(b) of the
LRA had occurred, or whether the employee's contract of employment had
simply terminated automatically upon the client's downscaling of the
commercial contract.

In referring to the LC's judgment in the Mampeule matter, the court

considered the proximate cause test for dismissal. The court held that:

[i]n the first instance, if the fixed term employment contract is, for example,
entered into for a period of six months with a contractual stipulation that the
contract will automatically terminate on the expiry date, the fixed term
employment contract will naturally terminate on such expiry date, and the
termination thereof will not (necessarily) … constitute a "dismissal", as the
termination thereof has not been occasioned by an act of the employer. In
other words, the proximate cause of the termination of employment is not an
act by the employer.91

Contrary to the finding by the LC in Mampeule, the LC in Sindane ruled that

the employer's conduct had not been the proximate cause for the
termination of the employment contract and thus no dismissal had
occurred.92

Not long after the LC's ruling in Sindane, the LC yet again reached a
different conclusion in the matter of Mahlamu v Commission for Conciliation,
Mediation and Arbitration.93 In Mahlamu the employee had been placed by
the employer as a security officer at the premises of one of the employer's
clients. The employee's contract with the employer stated that the contract
would terminate automatically upon the termination of the commercial
contract between the employer and the client, or where the client no longer
required the services of the employee for whatsoever reason. Some five

90 Sindane v Prestige Cleaning Services 2010 31 ILJ 733 (LC).

91 Sindane v Prestige Cleaning Services 2010 31 ILJ 733 (LC) para 16.
92 The court in Sindane was of the view that the LC’s decision in Mampeule was
distinguishable from the present matter for various reasons – see discussion at para
17.
93 Mahlamu v CCMA 2011 32 ILJ 1122 (LC).
E HUYSAMEN PER / PELJ 2019 (22) 26

months into the employment contract the employer informed the employee
that as a result of the client's cancellation of the commercial contract, the
employee's services were no longer required. The employee was informed
that in accordance with the terms of his contract, his contract had terminated
automatically.94

The court in Mahlamu confirmed that the LRA had to be purposively

construed so as to give effect to the Constitution, and in this case, the right
to fair labour practices as provided for in section 23(1). The right not to be
unfairly dismissed formed an essential part of the right to fair labour
practices95 and accordingly the LRA had to be interpreted in favour of
protecting employees against unfair dismissals.96 The court held that parties
to an employment contract could not contract out of the LRA's protection
against unfair dismissal provided to employees.97 Consequently, the court
held that the employee had been dismissed by the employer. The court
concluded that:

…a contractual device that renders a termination of a contract of employment

to be something other than a dismissal, with the result that the employee is
denied the right to challenge the fairness thereof in terms of section 188 of the
LRA, is precisely the mischief that section 5 of the Act prohibits. Secondly, a
contractual term to this effect does not fall within the exclusion in section 5(4),
because contracting out of the right not to be unfairly dismissed is not
permitted by the Act.98

In the SATAWU obo Dube v Fidelity Supercare Cleaning Services Group

(Pty) Ltd matter (the facts of which were similar to that of the Sindane case)
the court in considering the question whether a dismissal had occurred held
that:99

[t]o the extent that this termination is triggered by the "occurrence of an event"
and is not based on an employer's own decision, there is no dismissal and the
employee is not entitled to a hearing…

94 Mahlamu v CCMA 2011 32 ILJ 1122 (LC) para 12.

95 Mahlamu v CCMA 2011 32 ILJ 1122 (LC) para 11.
96 Mahlamu v CCMA 2011 32 ILJ 1122 (LC) para 12; also see SA Post Office Ltd v
Mampeule 2010 31 ILJ 2051 (LAC) para 23, where the court held that "parties to an
employment contract cannot contract out of the protection against unfair dismissal
afforded to an employee whether through the device of 'automatic termination'
provisions or otherwise because the Act had been promulgated not only to cater for
an individual's interest but the public's interest".
97 Also see the comments in this regard in SA Post Office Ltd v Mampeule 2009 30 ILJ
664 (LC) para 46.
98 Mahlamu v CCMA 2011 32 ILJ 1122 (LC) para 22.
99 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 30.
E HUYSAMEN PER / PELJ 2019 (22) 27

In referring to the proximate cause test the court held that:100

[t]his proximate cause theory, as I understand, holds that the act that directly
or indirectly actuates termination, is the one determining whether or not there
was a dismissal. An act by a third party, as for instance a decision by the Vice
Principal of Wits, terminating a service level contract with the labour broker,
cannot be a proximate cause, and therefore cannot result in a dismissal of the
employee of the labour broker.

On the facts of the matter, the court concluded that a dismissal for the
purposes of section 186(1)(a) of the LRA had occurred and that it had been
based on the employer's operational requirements.101

In the more recent matter of Enforce Security Group v Fikile,102 the LAC was
called upon to revisit the proximate cause test. The LAC, amongst other
things, had to consider whether the termination of the employees'
employment contracts with the employer subsequent to the termination of a
commercial contract between the employer and a client had resulted in the
employees' being dismissed for the purposes of the LRA.

The employer operated as a provider of private security services to various

clients. To honour a commercial contract it had with one of its clients, the
employer employed the employees with the express view of placing them
as security officers at the premises of the client. The employment contracts
contained a provision which stipulated that the nature of the employees'
employment with the employer and the duration thereof would be totally
dependent on the duration of the commercial contract with the client. The
commercial contract was subsequently terminated by the client. As a result
the employer offered the employees alternative employment, albeit at a
different workplace. The employees were informed that if they did not accept
such alternative employment their contracts of employment would
automatically terminate. At arbitration the commissioner held that no
dismissal had taken place, which award was thereafter overturned by the
LC. The matter was subsequently referred to the LAC.

In determining whether a dismissal had occurred, the LAC held that, based
on the facts of the matter, it was clear that the cancellation of the commercial
contract by the client had been the proximate cause for the termination of
the employees' contracts of employment. The court found no reason to

100 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 33.
101 For a more expansive discussion of the court's finding and reasons in the matter of
SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC), refer to para 4.2.2 below.
102 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC).
E HUYSAMEN PER / PELJ 2019 (22) 28

believe that the cancellation of the commercial contract had been done with
any intention to assist the employer in ridding itself of the employees. Nor
could the LAC find any evidence that there had been a clandestine move
on the part of the employer to dismiss the employees.103 The LAC
concluded that:104

[i]t is Boardwalk that cancelled the contract and not the appellant. There was
no direct or indirect act by the appellant to cancel the contracts…. On the facts
of this case the cancellation of the service contract by Boardwalk is the
proximate cause for the termination of the employees' contracts of
employment.

The LAC therefore ruled that no dismissal for the purposes of the LRA had
taken place.

From the discussion above it is clear that there still remains uncertainty as
to whether the termination of an employment contract by virtue of an
automatic termination clause gives rise to a dismissal, or whether it is simply
an automatic termination of a fixed-term contract.

4.2.2 Lawfulness of automatic termination clauses linked to the termination

of a commercial contract105

The lawfulness or otherwise of automatic termination clauses has long been

a contentious issue in SA labour law, and courts have taken different
approaches to the issue. Questions around lawfulness arise in the context
of section 5 of the LRA, specifically sections 5(2)(b) and 5(4). These
sections, in short, provide that no person may prevent an employee from
exercising any rights s/he has in terms of the LRA, nor may any contractual
provision infringe upon the protection afforded to employees under the LRA.
Parties can therefore not contract out of the legal obligations and rights
provided by the LRA, including the unfair dismissal protection afforded to
employees.

In SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty)

Ltd106 the employer placed the employee at a client to render cleaning

103 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 23.
104 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 23.
105 The discussion under para 4.3 does not address situations which fall within the scope
of s 198A of the LRA (most notably the employment of employees earning in excess
of the prevailing earnings threshold, and the placement of employees at a client for
a period shorter than 3 months). The content and scope of s 198A falls beyond the
scope of this paper.
106 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC).
E HUYSAMEN PER / PELJ 2019 (22) 29

services. The employment contract between the parties stated that the
employee's employment would terminate automatically on termination of the
commercial contract between the employer and the client. Subsequent to
the termination of the commercial contract by the client, the employer
informed the employee that her employment contract had automatically
terminated. The employee argued that she had been unfairly dismissed
since the employer failed to engage in retrenchment proceedings in terms
of section 189 of the LRA.107 The employer argued that no dismissal had
taken place and that section 189 had therefore not been applicable, as the
employee's contract terminated automatically as per the automatic
termination clause agreed upon.

In addressing the question of the lawfulness of automatic termination

clauses, the LC held that such clauses trumped both section 5 of the LRA
and the fundamental rights of employees as embedded in section 185 of the
LRA.108 The court agreed with the LC's finding in the matter of Nape v
INTCS Corporate Solutions (Pty) Ltd109 that such automatic termination
clauses were against public policy.110 The court furthermore confirmed that
practices of contracting, or attempting to do so, out of the obligations of the
LRA are now addressed through section 198(4C) of the LRA, which holds
that:111

An employee may not be employed by a temporary employment service on

terms and conditions of employment which are not permitted by this Act, any
employment law, sectoral determination or collective agreement concluded in
a bargaining council applicable to a client to whom the employee renders
services.

In the court's view automatic termination clauses which provided for the
automatic termination of an employee's contract at the behest of an outside
third party, such as a client of the employer, undermined an employee's right

107 In terms of s 189 of the LRA an employer is required to consult with employees on
certain issues (listed in s 198(2) and (3)) when the employer contemplates
dismissals for operational requirements, i.e. retrenchment(s).
108 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) paras 49 and 51. Section 185 of the LRA provides that "[e]very
employee has the right not to be – (a) unfairly dismissed; and (b) subjected to unfair
labour practice".
109 Nape v INTCS Corporate Solutions (Pty) Ltd 2010 31 ILJ 2120 (LC).
110 See the discussion of Nape in SATAWU Obo Dube v Fidelity Supercare Cleaning
Services Group (Pty) Ltd 2015 36 ILJ 1923 (LC) paras 53-55. Cohen is of the view
that the willingness of the court in Nape to move beyond its legislative mandate by
implying that public policy considerations existed in a contract was to be applauded
– see Cohen 2013 ELRC Labour Bulletin 4-5.
111 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 59.
E HUYSAMEN PER / PELJ 2019 (22) 30

to fair labour practices and were disallowed by labour market policies. 112
Having declared that the automatic termination clause in the employee's
employment contract was unfair and invalid,113 the court concluded that a
dismissal based on the employer's operational requirements had taken
place.114 The court found the dismissal to have been procedurally fair,
however, as the employer had discussed possible alternatives for
employment with the employee, which alternatives the employee had
rejected.115 Whilst not specifically saying so, it seems from the court's ruling
that the dismissal was also found to have been substantively fair. In the
court's opinion the employer had truly attempted to find alternative
employment for the employee, which alternatives the employee had chosen
not to accept.116

Unfortunately, the LC in Fidelity Supercare did not indicate whether its

finding on the unlawfulness of automatic termination clauses was applicable
across the board to all such clauses, or whether such clauses had to be
considered on a case-by-case basis, as was held in the Enforce Security117
case discussed next.

In the more recent matter of Enforce Security Group v Fikile118 the LAC was
again tasked with considering the lawfulness of automatic termination
clauses linked to the existence of a commercial contact. The employer, a
private security services provider, entered into a commercial contract with a
client, Boardwalk, to supply on-site security officers to the latter. The
employment contracts with the employees specifically linked the
continuance of the employment contracts with the continuance of the
commercial contract between the employer and Boardwalk.

In response to Boardwalk’s having terminated the commercial contract with

the employer, the employer issued the employees with a month's notice of
termination of their employment contracts. The CCMA took the view that the
employment contracts had simply terminated automatically by operation of

112 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 51.
113 See the discussion of Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) case
below, however, where the court reached a different conclusion.
114 A similar conclusion was subsequently reached by the LC in the matter of AMCU v
Piet Wes Civils CC 2017 38 ILJ 1128 (LC).
115 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 60.
116 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) paras 63-64.
117 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC)
118 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC).
E HUYSAMEN PER / PELJ 2019 (22) 31

law and that no dismissal had occurred. On review the LC overturned the
CCMA's ruling and held that the employees had been dismissed, and that
the dismissals had been both procedurally and substantively unfair.

Before the LAC the employer argued that the termination of the employees'
contracts of employment did not constitute a dismissal for the purposes of
the LRA. The employer argued that the proximate cause for the termination
of the employment contracts had not been consequent upon any conduct
on the part of the employer. The employer argued that it had been the
client's actions in terminating the commercial contract which had resulted in
the termination of the employees' employment contracts.

In explaining the general effect of automatic termination clauses on the

employment contract the LAC held that:119

the nature of the Employee's employment with the company and its duration
is totally dependent upon the duration of the Company's contract with the
Client/s and that the Employee's contract of employment shall automatically
terminate. Such termination shall not be construed as a retrenchment but a
completion of contract…

On the issue of the lawfulness of automatic termination clauses, the LAC

held that not all such clauses could automatically be regarded as invalid.
The lawfulness of such clauses had to be considered on a case-by-case
basis.120 What would be decisive in deciding upon the issue of lawfulness
was whether, in the circumstances of a particular case, the clause was
intended to circumvent the fair dismissal obligations imposed on employers
in terms of the LRA and the Constitution.121 The court held that the enquiry
into the lawfulness of automatic termination clauses included:122

the precise wording of the automatic termination clause and the context of the
entire agreement; the relationship between the fixed-term event and the
purpose of the contract with the client; whether it is left to the client to choose
and pick who is to render the services under the service agreement; whether
the clause is used to unfairly target a particular employee by either the client
or the employer; whether the event is based on proper economic and

119 Clause 3.2.1 of the employees’ contracts of employment, as quoted by the court in
Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 4.
120 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 41.
121 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 41.
122 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 41; also see SA Post
Office Ltd v Mampeule 2010 31 ILJ 2051 (LAC) para 12, where the court remarked
that "[t]he subsection defines 'dismissal' as follows: '…an employer has terminated
a contract of employment with or without notice…' I am in agreement with the court
a quo that 'dismissal' means any act by an employer which results, directly or
indirectly, in the termination of an employment contract…"
E HUYSAMEN PER / PELJ 2019 (22) 32

commercial considerations; the list is not exhaustive. Each case must be

decided on its circumstances.

Having considered the facts of the matter, the court held that the automatic
termination clauses in the present matter were lawful and that the parties
had consequently entered into fixed-term employment contracts. When
Boardwalk terminated the commercial contract with the employer, the fixed-
term contracts of the employees terminated automatically, and accordingly
no dismissals had occurred. The court could find no evidence to suggest
that the cancellation by Boardwalk of the commercial contract was a device
to aid the employer to rid itself of any employees. Nor was there evidence
to suggest that the implementation of the automatic termination clauses was
a clandestine move by the employer to dismiss the employees.123

The difference in the approaches adopted by the courts in Fidelity

Supercare and Enforce Security are worth noting for various reasons. First,
the LAC in Enforce Security was seemingly alive to the current labour
market reality and the associated increased need for flexibility in work
arrangements.124 This must be compared to the finding in Fidelity
Supercare, where the LC seems to have been mostly persuaded by
arguments around the abuse suffered by labour broking employees at the
hands of labour brokers. The court declared that labour brokers could no
longer hide behind the shield of commercial contracts in attempts to
circumvent the legislative protection available to employees against unfair
dismissals.125

Secondly, the court in Fidelity Supercare did not clearly indicate whether its
finding on the unlawfulness of the automatic termination clause in that
matter was applicable to all automatic termination clauses in general, or
whether the lawfulness of such clauses should be considered on a case-by-
case basis. In Enforce Security the LAC held that such clauses did not
automatically fall foul of lawfulness and that the lawfulness or otherwise of
such clauses would have to be answered in the light of the specific
circumstances of each case. From the LAC's finding in Enforce Security it
might therefore be deduced that an event which gives rise to the termination
of a fixed-term contract as provided for in section 198B(1)(a) of the LRA
could include the termination of a commercial contract by a client of the
employer, provided that the automatic termination clause linked to that

123 Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 23.
124 This, again, is of particular importance as far as the 4IR is concerned – see the
discussion under fn 7 above.
125 SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty) Ltd 2015
36 ILJ 1923 (LC) para 59.
E HUYSAMEN PER / PELJ 2019 (22) 33

commercial contract is regarded as lawful, as described by the LAC in

Enforce Security.

Finally, the employee's reliance in Fidelity Supercare on the applicability of

section 189 of the LRA is interesting and worth noting. Including an
automatic termination clause in an employment contract, which renders the
continuation of the employment contract dependent on the existence of a
commercial contract, is one means through which employers can protect
the business where the economic circumstances of the business change.
An example would be where the cancellation of a commercial contract with
a client results in a reduction of income for the employer. Where the affected
employees' services are not required at another client, the employer will
receive no financial benefit in keeping the redundant employees on its
payroll. On termination of the commercial contract with the client, the
employer can simply rid itself of the excess employees through relying on
the automatic termination of their employment contracts, without having to
implement any dismissal proceedings.

The above approach is in stark contrast with the rather stringent

requirements to retrench as provided for in section 189 of the LRA. Under
section 189 employers are obliged to embark on consultations with
employees where the employer "contemplates dismissing one or more
employees for reasons based on the employer's operational
requirements…". Operational requirements are defined in terms of the LRA
as requirements based on the employer's economic, technological,
structural or similar needs.126 Economic reasons typically include the need
to downscale the workforce in the light of dwindling client contracts/projects
and resultant reduction in business income.

When considering the true reason for no longer requiring the services of
employees in the examples provided above, that is economic reasons
related to a decline in business, it becomes difficult to justify the adoption of
different approaches by the employers in an attempt to reach essentially the
same outcome. Both instances of termination of the employment contract
are linked to the employer's operational requirements. Generally such
termination is required to be effected through a section 189 retrenchment
process. Yet where an automatic termination clause is present in the
employment contract, in line with the judgment in Enforce Security, the
employer would simply be able to argue that the contract was a fixed-term

126 Section 213 of the LRA.

E HUYSAMEN PER / PELJ 2019 (22) 34

contract which terminated automatically without the employer’s having to

embark on a section 189 process.

The above analogy, and it would seem superficial distinction, raises several
questions. Could employment contracts simply contain automatic
termination clauses which stipulate that the contract will automatically
terminate on a reduction in business for the employer? How broadly can
such a reduction in business be defined? Would this not be at odds with the
unfair dismissal protection currently provided to employees through section
189 of the LRA? Would this essentially mean that employers would be able
to circumvent the provisions of section 189 (a practice which is exactly what
the court in Nape and Fidelity Supercare sought to denounce)? While the
answer to the latter questions was answered in the negative in the matter
of Fidelity Supercare, it does seem as if the door to such an approach might
have been opened through the more recent finding in Enforce Security.

4.3 Misuse of fixed-term contracts for probation purposes

A probation period is an agreed fixed period between an employer and an

employee during which the employer has the opportunity to determine a
newly appointed employee's ability to perform as expected. Employers
benefit from such periods in that they are effectively protected against
"being saddled indefinitely with employees who fail to perform
satisfactorily…"127 On the successful completion of a probationary period
the employer will confirm the employee's appointment.128 If an employer is
not satisfied with an employee's performance during the probation period,
however, the employer has the option of dismissing the employee for poor
performance on expiry of the probation period. Such a dismissal for poor
performance must, however, still satisfy both substantive and procedural
fairness elements in order to be declared fair.129

Some employers subject newly appointed employees to probation periods

by means of fixed-term contracts of employment. In such instances, new
employees are appointed for a fixed period of three months, for instance.

127 Van Niekerk et al Law@work 208.

128 Van Niekerk et al Law@work 208.
129 Clause 8(1)(f) of Schedule 8 to the LRA, Code of Good Practice: Dismissal holds
that "(f) [i]f the employer determines that the employee's performance is below
standard, the employer should advise the employee of any aspects in which the
employer considers the employee to be failing to meet the required performance
standards. If the employer believes that the employee is incompetent, the employer
should advise the employee of the respects in which the employee is not competent.
The employer may either extend the probationary period or dismiss the employee
after complying with subitems (g) or (h), as the case may be".
E HUYSAMEN PER / PELJ 2019 (22) 35

On expiration of the so-called fixed-term contract, employers simply do not

renew the contracts of employees with whom the employer experienced
performance issues. This practice circumvents the protection against unfair
dismissal provided by the LRA and an employee's right to respond to issues
before being dismissed. Employees are often not provided with reasons as
to why their fixed-term contracts were not renewed or made permanent.
While employers have obligations towards employees under a period of
probation,130 the fulfilling or otherwise of such obligations will become
relevant only where a dismissal pursuant to a probationary period occurred.
Should the employee have been appointed on a fixed term contract,
however, steps taken by the employer during a period of factual probation
would remain irrelevant. In the latter scenario, the employee would first have
to prove that the fixed-term contract had essentially been a sham in that the
employee had in practice served a probation period and that a dismissal
under section 186(1)(a) of the LRA had thus occurred. It is only once the
employee is successful in showing the existence of a dismissal that the
employer's conduct during the factual probation period comes into question.

In Abrahams v Rapitrade (Pty) Ltd131 the CCMA confirmed that employers

could not use fixed-term contracts to avoid their legal obligations during
probation periods. In GUBEVU Security Group (Pty) Ltd v Ruggiero132 the
respondent employee had been employed for a three-month fixed period.
On the expiry of the three-month period the employer had not renewed the
employee's contract. Whilst the issue was not explicitly argued by any of the
parties, the LC on its own accord commented that the three-month period
had, on the facts of the matter, in practice been a period of probation. The
court unfortunately did not further canvass the issue over the lawfulness of
using a fixed-term contract for the purposes of probation. The court
concluded that the employee had successfully shown the existence of a
reasonable expectation of renewal of the contract and that a dismissal had
therefore occurred.

While the outcome for the employee of the LC's ruling in GUBEVU is
welcomed, it is unfortunate that the court did not further canvass the
consequences of the employer's misuse of a fixed-term contract under the
circumstances. The court had an ideal opportunity to clarify the true nature
of the agreement between the parties - that is, a probationary period as part

130 Refer to clause 8(1) of Schedule 8 to the LRA, Code of Good Practice: Dismissal,
which contains the employer's obligations to employees on probation.
131 Abrahams v Rapitrade (Pty) Ltd 2007 6 BALR 501 (CCMA).
132 GUBEVU Security Group (Pty) Ltd v Ruggiero 2012 4 BLLR 354 (LC).
E HUYSAMEN PER / PELJ 2019 (22) 36

of an indefinite employment contract, and the consequences for the

employer of the unlawful use of a fixed-term contract in its stead.

5 Conclusion

Through the introduction of section 198B into the LRA, and particularly the
amendment to section 186(1)(b), fixed-term employees are now provided
with increased job security and better employment conditions. What the
practical impact of section 198B will be on the employment conditions of
those employed in terms of fixed-term contracts remains to be seen.

As highlighted in this article, some shortcomings and uncertainties around

the use of fixed-term contracts of employment still remain in the current
legislative framework. Most notable are the questions raised earlier
pertaining to the lawfulness or otherwise of automatic termination clauses,
in which the termination of employment contracts is linked to the termination
of a commercial contract between the employer and a third party. 133 As
indicated in 4.2.2 above, in the recent matter of Enforce Security the LAC
held that the presence of an automatic termination clause gave rise to the
existence of a fixed-term contract of employment.134 While the exact date of
the termination of the employment contract is undetermined, what is certain
is that the contract will terminate automatically where the commercial
contract between the employer and the client comes to an end. The LAC's
finding is open to questioning, however, particularly around the impact the
finding might have on the applicability of section 189 of the LRA. It is
unfortunate that the legislature did not seize the opportunity during the 2014
amendments to the LRA to address the lawfulness of such automatic
termination clauses.135

Another shortcoming is the relative ease with which employers would be

able to justify the use of a fixed-term contract in excess of three months in
terms of section 198B(3) and (4).136 Theoretically the inclusion of a provision
forcing employers to justify their decisions to use fixed-term contracts is to

133 See the discussion under para 4.2.2 above.

134 See Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC) para 23, where the LAC
unequivocally stated that "[t]he factual matrix in this case supports the view that the
employees’ contracts of employment were fixed term contracts where the end of the
fixed term was defined by the completion of a specified task or project, that is, the
termination of the Boardwalk contract."
135 See the discussion under paras 4.2 and 4.3 above.
136 See the discussion under para [Link] above.
E HUYSAMEN PER / PELJ 2019 (22) 37

be applauded, but the manner in which the legislature attempted to do so in

section 198B remains somewhat unconvincing.

A successful claim of dismissal under section 186(1)(b) requires the

employee to prove both subjective and objective elements. Given the
relative difficulties for employees in claiming a dismissal based on the
reasonable expectation of the renewal of a contract or being given a
permanent appointment as provided for under section 186(1)(b), a provision
which required employers to provide reasons for the non-renewal of the
contract would also have been welcomed.

It will be interesting to see the courts' approaches to the implementation of

the amended section 186(1)(b) and newly introduced section 198B and to
what degree the courts will be willing to extend the protection available to
fixed-term employees. While not the comprehensive protection of the rights
of fixed-term employees one could have hoped for, it is somewhat
reassuring to see the legislature's willingness at least to provide increased
protection for those traditionally engaged in vulnerable work arrangements.

Bibliography

Literature

Benjamin 2010 ILJ

Benjamin P "Decent Work and Non-standard Employees: Options for
Legislative Reform in South Africa: A Discussion Document" 2010 ILJ 845-
871

Cheadle 2006 ILJ

Cheadle H "Regulated Flexibility: Revisiting the LRA and the BCEA" 2006
ILJ 663-702

Cheadle and Davis South African Constitutional Law

Cheadle H and Davis D South African Constitutional Law: The Bill of Rights
(LexisNexis Durban 2005)

Cohen 2007 SA Merc LJ

Cohen T "When Common Law and Labour Law Collide – Some Problems
Arising out of the Termination of Fixed-term Contracts" 2007 SA Merc LJ
26-43
E HUYSAMEN PER / PELJ 2019 (22) 38

Cohen 2012 Acta Juridica

Cohen T "The Relational Contract of Employment" 2012 Acta Juridica 84-
101

Cohen 2013 ELRC Labour Bulletin

Cohen T "The Legality of the Automatic Termination of Contracts of
Employment" 2013 ELRC Labour Bulletin 1-10

Collier et al Labour Law in South Africa

Collier D et al (eds) Labour Law in South Africa: Context and Principles
(Oxford University Press Cape Town 2018)

Geldenhuys 2008 SA Merc LJ

Geldenhuys J "Reasonable Expectations: Real Protection or False Security
for Fixed-term Employees?" 2008 SA Merc LJ 268-279

Gericke 2011 PELJ

Gericke SB "A New Look at the Old Problem of a Reasonable Expectation:
The Reasonableness of Repeated Renewals of Fixed Term Contracts as
Opposed to Indefinite Employment" 2011 PELJ 105-136

Le Roux World of Work

Le Roux R The World of Work: Forms of Engagement in South Africa
(Institute of Development and Labour Law, University of Cape Town
Rondebosch 2009)

Ramotsho 2018 De Rebus

Ramotsho K "The Fourth Industrial Revolution Changing the World of Work"
October 2018 De Rebus 12-14

Van der Bank 2008 IJLMA

Van der Bank CM "Non-renewal of Fixed-term Contracts: Critical Analysis
of Award" 2008 IJLMA 158-167

Van Niekerk et al Law@work

Van Niekerk A et al (eds) Law@work 4th ed (LexisNexis Durban 2018)

Vettori 2008 Stell LR

Vettori S "Fixed Term Employment Contracts: The Permanence of the
Temporary" 2008 Stell LR 189-208
E HUYSAMEN PER / PELJ 2019 (22) 39

Case law

Abrahams v Rapitrade (Pty) Ltd 2007 6 BALR 501 (CCMA)

Administrator of the Transvaal v Traub 1989 10 ILJ 823 (A)

Air Traffic and Navigation Services Company v Esterhuizen (SCA)

(unreported) case number 668/2013 of 25 September 2014

AMCU v Piet Wes Civils CC 2017 38 ILJ 1128 (LC)

Auf der Heyde v University of Cape Town 2000 8 BLLR 877 (LC)

Buthelezi v Municipal Demarcation Board 2005 2 BLLR 115 (LAC)

Cash Paymaster Services (Pty) Ltd v Christie (LC) (unreported) case

number C550/2013 of 19 August 2014

De Milander v Member of the Executive Council for the Department of

Finance: Eastern Cape 2013 34 ILJ 1427 (LAC)

Dierks v University of South Africa 1999 20 ILJ 1227 (LC)

Ekurhuleni West College v Education Labour Relations Council (LAC)

(unreported) case number JA55/2016 of 30 November 2017

Enforce Security Group v Fikile 2017 38 ILJ 1041 (LAC)

Fedlife Assurance Ltd v Wolfaardt 2002 2 All SA 295 (A)

GUBEVU Security Group (Pty) Ltd v Ruggiero 2012 4 BLLR 354 (LC)

Joseph v University of Limpopo 2011 32 ILJ 2085 (LAC)

Mahlamu v CCMA 2011 32 ILJ 1122 (LC)

McInnes v Technikon Natal 2000 21 ILJ 1138 (LC)

Mediterranean Woollen Mills (Pty) Ltd v SACTWU 1998 19 ILJ 731 (LAC)

Nape v INTCS Corporate Solutions (Pty) Ltd 2010 31 ILJ 2120 (LC)

National Union of Leather Workers v Barnard 2001 22 ILJ 2290 (LAC)

SA Rugby (Pty) Ltd v Commission of Conciliation Mediation and Arbitration

2006 27 ILJ 1041 (LC)
E HUYSAMEN PER / PELJ 2019 (22) 40

SA Rugby Players Association v SA Rugby (Pty) Ltd 2008 29 ILJ 2218

(LAC)

SA Post Office Ltd v Mampeule 2009 30 ILJ 664 (LC)

SA Post Office Ltd v Mampeule 2010 31 ILJ 2051 (LAC)

SATAWU Obo Dube v Fidelity Supercare Cleaning Services Group (Pty)

Ltd 2015 36 ILJ 1923 (LC)

Sindane v Prestige Cleaning Services 2010 31 ILJ 733 (LC)

University of Pretoria v CCMA 2012 25 ILJ 183 (LAC)

Yebe v University of KZN 2007 28 ILJ 490 (CCMA)

Legislation

Basic Conditions of Employment Act 75 of 1997

Basic Conditions of Employment Amendment Act 20 of 2013

Code of Good Practice on Equal Pay / Remuneration for Work of Equal

Value, 2015

Constitution of the Republic of South Africa, 1996

Employment Equity Act 55 of 1998

Employment Equity Amendment Act 47 of 2013

Labour Relations Act 66 of 1995

Labour Relations Amendment Act 6 of 2014

Labour Relations Amendment Bill 16D of 2012

Memorandum of Objects: Labour Relations Amendment Bill, 2012

Government publications

GN 629 in GG 37921 of 18 August 2014

E HUYSAMEN PER / PELJ 2019 (22) 41

Internet sources

DOL date unknown [Link]

bills/proposed-amendment-bills/[Link]
Department of Labour date unknown Memorandum of Objects: Labour
Relations Amendment Bill, 2012 [Link]
downloads/legislation/bills/proposed-amendment-
bills/[Link] accessed 20 March 2019

ELRC date unknown [Link]

relations-amendment-act-6-2014
Education Labour Relations Council date unknown Summary of the Labour
Relations Amendment Act 6 of 2014 [Link]
labour-relations-amendment-act-6-2014 accessed 27 February 2018

ILO 2015 [Link]

protrav/---travail/documents/publication/wcms_436125.pdf
International Labour Office 2015 Collective Bargaining and Non-standard
Forms of Employment: Practices that Reduce Vulnerability and Ensure
Work is Decent [Link]
protrav/---travail/documents/publication/wcms_436125.pdf accessed 21
April 2019

Labour Law 4.0 date unknown [Link]

Labour Law 4.0 date unknown Labour Law 4.0: Labour Law in the Fourth
Industrial Revolution [Link] accessed 20 March
2019

Wikipedia date unknown [Link]

Industrial_Revolution
Wikipedia date unknown Fourth Industrial Revolution
[Link] accessed 20
February 2019

List of Abbreviations

4IR Fourth Industrial Revolution

BCEA Basic Conditions of Employment Act
CCMA Commission for Conciliation Mediation and
Arbitration
DOL Department of Labour
EEA Employment Equity Act
E HUYSAMEN PER / PELJ 2019 (22) 42

ELRC Education Labour Relations Council

IJLMA International Journal of Law and
Management
ILJ Industrial Law Journal
ILO International Labour Office
LAC Labour Appeal Court
LC Labour Court
LRA Labour Relations Act
LRAA Labour Relations Amendment Act
PELJ Potchefstroom Electronic Law Journal
SA Merc LJ South African Mercantile Law Journal
Stell LR Stellenbosch Law Review