2 June 2023
It happens every so often that an employer places an employee on a fixed-term contract for 3-months to gauge their suitability for the job. The question is then asked, are employers allowed to use a fixed-term contract for a probation period?
Challenging the Misuse of Fixed-Term Contracts
In the case of National Union of Public Service and Allied Workers (NUPSAW) V Mfingwana and Others (C251/17) [2020] ZALCCT 4 (20 February 2020), the employer, who was a trade union, used a fixed-term contract as a probation period.
The Union employed Mr Mfingwana as an organiser on a fixed-term contract lasting six months from 1 October 2015 to 31 March 2016. The six-month period had come to an end, and the contract was not renewed. The employee, however, continued working for the union.
Unfair Dismissal and the Debate over Reasonable Expectations of Permanent Employment
In July 2016, the union proposed an addendum to the employee’s original contract, backdating and extending it from 1 June to 31 November 2016. The time came in November when the employee was advised that his contract would not be renewed when it expired on 30 November 2016.
The employee claimed to have been unfairly dismissed based on his reasonable expectation of permanent employment. The employee argued that the nature of the position he was in was not temporary, and since he had been allowed to continue working after the expiry of the initial 6-month contract on 31 March 2016, he was to be deemed a permanent employee.
Upon being heard at the CCMA, it was found:
- The employer did not provide any justifiable reasons for limiting the duration of the contract;
- The nature of the role was not of a temporary duration;
- It appeared as if the union was using fixed-term contracts as a probation period, which is not a valid reason for fixing the term of a contract;
- If the union had wanted to assess the employee’s performance or suitability for the job, it should have employed the employee on a permanent contract subject to a probation period;
- It was not open to the practice of an employer employing someone for over a year before deciding not to renew their contract or to make their contract permanent based on alleged poor performance.
The CCMA found that Mr Mfingwana’s employment was deemed permanent from 1 January 2016, after having served a 3-month fixed term contract for which there had been no justifiable reason. The Labour Court, on review by the employer, confirmed the CCMA’s finding of unfair dismissal and the review was dismissed.
Understanding the Legal Limits of Fixed-Term Contracts
From the above, it becomes evident that an employer’s choosing to use a fixed-term contract as a probationary tool will end up on the wrong side of a CCMA award should an employee refer to unfair dismissal. The Labour Relations Act lists various justifiable reasons for fixing the term of a contract, a probation period not being one of these reasons.
An employer may legally limit the duration of an employment contract for reasons such as:
- replacing an employee who is temporarily absent
- assisting with a temporary increase of work which will not endure longer than 12 months
- a student or recent graduate employee for training and gaining experience
- there is a specific project with a limited duration
- foreign national with a work permit for a defined period
- the employee performs seasonal work
- the employee has reached retirement age
Invictus Group can expertly assist employers with the drafting of employment contracts of all natures, as well as advising employers on the correct use of fixed-term contract altogether, thus eliminating any legal risks. Contact Invictus Group on 0861 737 263 for us to assist you.
