Fixed duration agreements and long-term job security

15 Sep 2023

Introduction

Fixed duration agreements play a crucial role within the realm of employment, offering adaptability to both employers and workers. Nevertheless, concerns related to the prospect of secure, ongoing employment amidst fixed duration agreements have prompted inquiries into equity and legal responsibilities. The Labour Relations Act, specifically Section 186 (1) (b), tackles this matter by outlining a particular circumstance in which the non-renewal of a fixed duration agreement can be considered a termination.

Section 186 (1) (b) of the LRA constructs a framework to assess the expectations of an employee regarding the extension of a fixed duration agreement. As per this provision, a termination takes place when an employee reasonably foresees the renewal of their fixed duration agreement on comparable terms, but the employer suggests less favorable conditions or opts not to renew the agreement at all.

The underlying intent of Section 186 (1) (b) is to prevent employers from exploiting the temporary nature of fixed duration agreements. Employers are barred from keeping employees in protracted states of temporary employment without providing the stability and advantages associated with permanent employment.

The right to anticipate

A prevalent belief among employees is that consistent renewals of a fixed duration agreement over time could lead to a valid anticipation of permanent employment. However, this assumption is not always upheld in legal scenarios. For instance, in the Malandoh v SABC case, an employee who had their fixed duration agreement renewed for eight successive periods did not establish a justifiable anticipation of renewal. The court ruled that the employee’s contract did not foster a genuine expectation, and assurances made by unauthorised individuals couldn’t be enforced.

Determining the existence of a reasonable expectation of permanent employment necessitates a comprehensive evaluation of numerous elements. These elements include:

1. Stipulations and covenants within the contract.
2. Pledges and practices of the employer concerning agreement renewal.
3. Availability of tasks and their relevance to the employment affiliation.
4. Purpose and rationale behind the fixed duration agreement.
5. Inconsistent actions or demeanor of the employer.
6. Compliance with reasonable notice periods.
7. Nature of the employer’s enterprise.

While this roster of criteria isn’t exhaustive, it offers a framework to evaluate each case on an individual basis.

Case law has highlighted the intricate nature of establishing a credible anticipation of permanent employment. Successful assertions have been grounded in aspects like recurrent agreement renewals, continuous job responsibilities, and attainable financial resources. However, in cases where expectations weren’t regarded as reasonable, factors such as limited financial means and prior notification of termination played a pivotal role.

The landscape concerning the anticipation of permanent employment within the context of fixed duration agreements has encountered ongoing legal deliberations. While the legislative structure initially concentrated on fixed duration agreements, proposed amendments aim to extend the right to reasonable anticipation to indefinite employment.

Conclusion

Fixed duration agreements offer versatility in employment dynamics, yet they can also evoke concerns about the prospect of lasting employment. Section 186 (1) (b) functions as a safeguard against unjust practices, striving to harmonise the interests of employers and employees. The assessment of a reasonable anticipation of permanent employment hinges on diverse factors, demanding an exhaustive appraisal of the circumstances of each case. As the legal landscape progresses, stakeholders in the employment arena should remain watchful and well-versed regarding alterations that could influence their entitlements and duties.

For any assistance, contact an attorney at SchoemanLaw.

See also:

• Constructive dismissal: Understanding your rights at work
• National Minimum Wage under the spotlight
• Your legal career – Episode 3 – Pay rises & bonuses
• Is a fixed term contract really that fixed?

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)