Avoid the pitfalls of a FIXED-TERM CONTRACT

February 2025

DIRK COETZEE, LABOUR RELATIONS SPECIALIST

A QUESTION THAT IS OFTEN ASKED DURING THE BUSY PLANTING AND/OR HARVESTING PERIODS ON SOUTH AFRICAN FARMS AND NEEDS TO BE CONSIDERED CAREFULLY, IS: ‘I NEED TO EMPLOY ADDITIONAL PEOPLE FOR THIS PLANTING SEASON, BUT CANNOT KEEP THEM IN SERVICE FOR THE WHOLE YEAR. IS THERE AN OPTION AVAILABLE TO ME THAT DOES NOT FALL OUTSIDE OF THE LABOUR LAWS?’

Seasonal and/or fixed-term contracts of employment are contractual arrangements that are often misused and abused by employers to evade their statutory obligations in terms of the Basic Conditions of Employment Act and the Labour Relations Act.

Commissioners at the CCMA and inspectors of the Department of Labour frown upon the use of these contracts. They view it as a tool used by employers to save money by denying workers possible payment towards provident funds, medical aids and severance.

This is, however, a pity because agricultural producers are not unscrupulous and irresponsible when they engage workers in fixed-term or seasonal contracts. Most agricultural operations have a genuine need to employ additional employees in addition to their permanent staff during certain seasonal periods. The normal staff component is just not sufficient during planting, harvesting and spraying seasons.

AVOID PITFALLS
What is a fixed-term or seasonal contract?
This is a contract defined for the purposes of the Labour Relations Act as a contract that expires on one of the following conditions:

• The occurrence of a specified event. This may be at the conclusion of the planting season.
• The occurrence of a specified task or project. This may be the finalisation of the erection of a fence or any other clearly defined project.
• A fixed date, other than an employee’s retirement age. An example of this is that your contract will commence on 1 December 2025 and end on 23 December 2025.

Please remember that the fixed-term contract of employment should only be used for work that is genuinely temporary of nature. If a producer cannot justify proper reasons for fixing the terms of the contract, the employee will be deemed as a permanent employee as per the deeming clause of the Labour Relations Act. If a contract is renewed or endures longer that a period of three months, the employee will be deemed as permanent. This will ultimately render the fixed-term contract null and void.

Normally, if the reasons mentioned above are clearly defined in the fixed-term contract, the termination of the contract will not be viewed as an unfair dismissal. Therefore it is very important to conclude the agreement with the stipulated clauses before the employee starts working.

Many employers say that they agreed with the workers that their contract is of a fixed-term nature and after a week of employment the employee refuses to sign the agreement. Make sure that the agreement is signed before the employee starts working.

When farmers employ additional workers during the season, fixed-term contracts should be signed.

What are justifiable reasons to enter into a fixed-term/seasonal contract with your employee?
It is categorically stated that probation is not a valid reason for entering into a fixed-term contract. Often people sit in front of a CCMA commissioner, where the employee states that he was informed that he will receive a three-month contract and if his services are satisfactory, he will receive a permanent contract.

Unfortunately this practice creates a reasonable expectation that the contract will be renewed or become permanent on the same or similar terms on conclusion of the specified period. The unfortunate effect of this created expectation is that it may be viewed as an unfair dismissal on termination of the fixed-term contract of employment.

It is also a very good practice to include a clause in the agreement that is clearly stipulating who the person is that may authorise the extension, renewal or making the contract permanent. This will ensure that the employee does not say that a supervisor not mentioned created the expectation that the contract may become permanent.

IN CONCLUSION

• Fixed-term contracts are often over-used or used inappropriately by South African employers. Make sure that there is a real reason for using fixed-term contracts.
• Fixed-term employees have the same rights and obligations as permanent employees. 
• Fixed-term employees should adhere to the same disciplinary rules and procedures as permanent employees and are entitled to unemployment insurance, leave, sick leave, PAYE, etc. on termination of employment.

For any clarity or more information, contact the author by email at dirk@nvbd.co.za.

Publication: February 2025

Section: Pula/Imvula