Effective January 1, 2015, fixed-term employment contracts with
lower earning employees who work for employers with 10 or more
employees must be limited to a period of three months, except for
under certain prescribed circumstances.
The Labour Relations Amended Act of 2014 introduced a
new regulation of fixed-term employment contracts. The Amended Act
became effective on January 1, 2015. The regulation is set forth in
Section 198B and applies only to 1) employers with 10 or more
employees (and for new businesses during the first two years of
their operations, the regulation applies only if the employer has
50 or more employees), and 2) to lower earning employees, which are
employees earning less than a threshold annual wage determined by
the South African Minster of Labour. Since July 1, 2014, the
earnings threshold is South African Rand 205,433.50, which at the
current exchange rate is about US $20,000.
Under the new statutory regulation, as a general rule,
fixed-term employment contracts with lower earning employees are
limited to a period of maximum three months. After the three month
period, the employee will be deemed to be an indefinite period
employee of the employer, and be protected against unfair
A fixed-term employment contract with a lower earning employee
for a period of longer than three months will be permissible only
if either the nature of the work is of a limited or definite
duration, or the employer can demonstrate a "justifiable
reason" for the longer term. Such longer fixed-term contracts
must be in writing and state the reason for its longer term. The
following are examples of "justifiable reasons" for
setting the duration of the fixed-term employment contract (or
successive contracts) for a period in excess of three months:
Replacing another employee who is
temporarily absent from work;
Employment due to a temporary
increase in the volume of work, which is expected to last for less
than 12 months;
Employee will be working exclusively
on a specific project that has a limited or defined duration;
Employee is a foreigner working on
work permit for a defined period;
The position is funded by an external
source for a limited period; and
The employee is retained past the
normal or agreed retirement age in the employer's
Lower earning employees with fixed-term employment contracts for
longer than three months have the following two new statutory
rights: 1) equal treatment with full-time employees, unless a
justifiable reason exists for the different treatment; and 2) equal
access to opportunities to apply for vacancies. The justifiable
reasons for different treatment include the application of a system
that takes into account factors such as 1) seniority, experience or
length of service; 2) merit; 3) the quantity or quality of work
performed; or 4) any other criteria of a similar nature.
Finally, if the fixed-term contract of a lower earning employee
is for a specific project (which is one of the listed
"justifiable reasons" for longer terms) and which exceeds
a period of 24 months, upon termination of the contract, such
employee will be entitled to statutory severance pay, unless the
employer offers the employee employment or finds employment for the
employee with a different employer. The severance pay is calculated
at a rate of one week's wages for each year of service.
No statutory restrictions apply to the duration of fixed-term
employment contracts with employees who earn more than the earning
threshold of R205,433.50 per year (or as the earnings threshold may
Multinational employers with employees on fixed-term employment
contracts in South Africa should take several steps in light of
this new regulation
Review whether those contracts
include employees earning below the annual earnings threshold.
Evaluate whether the reason for the
fixed-term might be justified to permit a contract of a longer
Ensure those contracts are
memorialized in writing and state the reason for their extended
If the contract is not justified for
a longer duration, consider whether the services of the employee
are necessary and whether business needs justify engaging the
employee for an indefinite period.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Employees must understand the notice periods stipulated by law. When an employee gives notice of their resignation to an employer, they is advising the employer that they will cease to work for the employer from a certain date.
Nigeria is a federal constitutional republic located on the west coast of Africa. Modern Nigeria has its origins as a British colony through the 19th and 20th century until it achieved independence in 1960.
The jurisprudential basis is pithily expressed as staying in sync with the global position on employment relationship, easily summed up as "International Labour Standard" and "International Best Practice".
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).