Does Non-Renewal Of A Fixed Term Contract Of Employment Constitute Dismissal? By Magate Phala Section 186(1)(b) of the Labour Relations Act 66 of 1995 defines dismissal as meaning that – “An employee reasonably expected the employer to renew a fixed term contract of employment on the same or similar terms, or did not renew it” According to A Van Niekerk et al, Law @ work 2nd edition, on page 217, this provision was incorporated into the Labour Relations Act to prevent employers from circumventing unfair dismissal laws by entering into a series of fixed-term contracts, and then relying on the termination of one of them as an automatic termination of the contract consequent on the effluxion of time, rather than a termination at the initiative of the employer (in other words, a statutory dismissal). John Grogan also states in his book, Dismissal, Discrimination and Unfair Labour Practices 2nd edition, that a failure to renew fixed term contract does not automatically terminate the employment relationship, even if the employee does not claim a reasonable expectation of renewal. If the employer permits the employee to continue working after the date on which the contract would otherwise have expired, the contract will be deemed to have been tactily renewed on the same terms, except that the contractual relationship is new of indefinite duration. Once this happens, the only way in which the contract can be terminated is by ordinary dismissal with or without notice, or by employee’s resignation. In Malandoh v SA Broadcasting Corporation (1997) 18 ILJ 544 (LC), the court held that “whether non-renewal of a fixed-term contract amounts to a dismissal depends on the circumstances, including, but not limited to, the number of previous renewals. However, if a contract clearly states that the contract is temporary in nature, or if sufficient notice is given for the termination thereof, the termination will not be regarded as a dismissal”. In University of Pretoria v CCMA & others (2012) 32 ILJ 183 (LAC), the court held that the dismissal of an employee whose fixed term contract was not renewed did not constitute dismissal. The court further held that it lacked requisite Jurisdiction to entertain the dispute referred to it by the applicant pertaining to her alleged unfair dismissal. In Foster v Stewart Scott Inc (1997) 18 ILJ 367 (LAC), the court held that “the terms of a contract of employment remains relevant when determining whether or not the non-renewal of a fixed-term contract constitutes dismissal. The contract itself is an important indication that the parties did, in fact, intend the contract and relationship to terminate on the date mentioned therein or upon the occurrence of the specified event”. In SA Rugby (Pty) Ltd v CCMA & Others (2006) 1 BLLR 27 (LC), the court held that 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. This is an objective enquiry, would a reasonable employee in the circumstances prevailing at the time have expected the contract to be renewed on the same or similar terms. As stated in Grogan, Workplace Law (ed) 2005 at 110-1: The notion of reasonable expectation suggests an objective test: the employee must prove the existence of facts that, in the ordinary course, would lead a reasonable person to anticipate renewal” In Cremark a Division of Triple P-Chemical Ventures (Pty) Ltd v SACWU (1994) 15 ILJ 289 (LAC), the Court held that the termination of fixed-term contracts of employment is no different from a termination of a contract on other grounds, ie misconduct, incapacity or operational requirements. What is required is that the termination must have been both procedurally and substantively fair/justified. In fact, the court confirmed that the employer did not have an unfettered discretion to renew or not to renew, whatever the reason might have been. In SA Bank of Athens Ltd v Cellier NO & Others (2009) 30 ILJ 197 (LC), the court found that the mere fact that the fixed term contract made provision for the negotiating of the possible renewal of the contract, does not in itself mean that there is a reasonable expectation for renewal. Magate Phala specialises in labour law. He is a registered SABPP ER Practitioner, a member of South African Society for Labour Law and writes in his own private capacity. You may contact Magate at magatephala@gmail
Posted on: Mon, 19 May 2014 09:56:38 +0000
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