Contracts of Employment

A question that crops up repeatedly in instances where the employee is employed on a fixed term or temporary contract of employment, is a question of when does the employee become entitled to appointment as a permanent employee?

It is well-known that many employers utilise fixed term contracts and temporary contracts of employment in order to avoid their responsibilities and obligations imposed by the Labour Relations Act for permanent employees.

The question also arises as to how many times may an employer "roll over" or continued to renew a fixed term or temporary contract of employment before "reasonable expectation" of permanent employment is created?.

The purpose of Section 186 (1) (b) is to prevent the unfair practice of keeping an employee on a temporary basis without employment security until such time as the employer wants to dismiss the employee without having to comply with his obligations in terms of the LRA. (Biggs v Rand Water)

It must be decided, when such a fixed term or temporary contract is terminated by the employer, whether the employees expectation of renewal was a "reasonable" expectation, and whether the definition includes the expectation of permanent employment as opposed to temporary employment.

Some employers try to circumvent this by stating in the employment contract that the employee should not expect permanent employment or renewal of the contract. However, the employer then does in fact proceed to roll over or continually renew the contract and in Mediterranean Woollem Mills (Pty) Ltd v SA Clothing & Textile Workers Union, the supreme Court of Appeal held that the wording of a contract, in itself, does not suffice to exclude an expectation of renewed employment.

The Labour Court, in Dierks v University of South Africa, held that an evaluation of all the surrounding circumstances, including "the significance or otherwise of the contractual stipulation, agreements, undertakings by the employer, or practice or custom in regard to renewal or re-employment, the availability of the post, the purpose of or reason for concluding the fixed term contract, inconsistent conduct, failure to give reasonable notice, and the nature of the employer's business are all criteria that must be included in the evaluation.

The criteria mentioned above is not an exhaustive list.
In applying the above test, the Court found that a letter received by the applicant after an unsuccessful application for appointment, rumors, and the fact that other temporary staff members contracts had been renewed, or had been permanently appointed, were not sufficient to establish a "reasonable expectation".

A stipulation in a contract of employment which specifically excludes any expectation of renewal is therefore not necessarily the deciding factor - the courts will place considerable weight on it in practice.

In one instance of continual renewal or “rolling over” of a contract, the particular contract was renewed for eight consecutive periods before the employee was informed that it would not be renewed again. (Malandoh v SABC).

The Court found that the contract itself created no expectation of renewal and although there were certain persons who had allegedly promised the applicant a permanent position, it was found that they had no authority to do so.  Further, it was found that the applicant had been unsuccessful in a previous application for a permanent post and in addition the employer was bound by a collective agreement in which there was no provision for an appointment as a result of “reasonable expectation."

The Court therefore ruled that there was accordingly no "reasonable expectation" of renewal.
So there is an instance where, despite continual renewal ( 8 times) of the contract, and despite the fact that the employee had been informed by certain persons - although unauthorised persons - that he would be given a permanent post, it was found that there was no "reasonable expectation" created.

As with all such matters, no hard and fast rules can be laid down for what constitutes "reasonable expectation".
It is the circumstances in each matter that will be the deciding factor.

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