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What is the labour position with historical fixed-term contracts?
19 February 2020
“I work for an construction company and was appointed in 2014 on a fixed-term contract of two years, which would automatically renew annually thereafter if the project  work is not completed. The project is ongoing and so my contract keeps renewing, but I don’t get the same benefits as the other workers in the office that are permanently employed and have been there shorter than me. I know I signed a contract, but it does feel like I’m being prejudiced because I’m on a fixed-term contract.”

The position regarding fixed-term contracts is now largely regulated by Section 198(B) of the Labour Relations Act 66 of 1995. Essentially, these provisions, although only applying to employees that earn less than the set threshold determined by the Minister of Labour, are aimed at protecting vulnerable employees who are denied job security and benefits by being placed on countless fixed-term contracts that are successively renewed without jusitifiable reason.

Section 198(B) essentially prohibits persons after 1 January 2015, from being placed on fixed-term contracts or successive contracts for longer than three months, without justifiable reasons. Section 198(B) additionally provides protection to such employees by stating that they are to be treated no less favourably than permanent employees performing the same or similar work, again, unless there are justifiable reasons for the different treatment. 

The question of whether Section 198(B) applies to your position becomes important when considering that your fixed-term contract was concluded in 2014, prior to the commencement of Section 198(B). Our Labour Appeal Court recently held that S198(B) does not apply retrospectively to fixed-term contracts that were concluded before its commencement and that endure after the commencement of Section 198(B) without renewal. This does raise the question whether your contract’s automatic renewal in accordance with its terms would amount to renewal or not. But in principle, the provisions of Section 198(B) would not apply retrospectively to your fixed-term contract, unless the renewal thereof could be construed as creating a new fixed-term contract, which would be subject to Section 198(B). 

Importantly though, the provisions of Section 198(B) that relate to similar treatment has been held by the Labour Appeal Court to have retrospective application in the sense that it applies to all fixed-term contracts, irrespective of their date of conclusion. This means that, unless there are justifiable reasons for your treatment and benefits being different to other employees in the office that do the same or similar work to you, you may be justified in demanding to be treated on the same terms as these employees.

With the above in mind, it may therefore be prudent for you to discuss your situation with a labour specialist that can review your fixed-term contract and advise you on the correct steps to approaching your employer.
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