South Africa: Is There Still Place For Fixed-Term Contracts In The Construction Industry?

Last Updated: 8 December 2016
Article by Ricardo Pillay and St Elmo Wilken

Can a construction contractor automatically terminate its employees' contracts when skills are no longer required for a construction project? This question was at the centre of the Labour Court case of National Union of Mineworkers obo Milisa and Others v WBHO Construction (Pty) Ltd.

In this matter, WBHO (the "contractor") employed concrete and general workers on fixed-term contracts in 2012. The employees contended that, on signing their employment contracts, they were told that they would stop working once the construction project was complete. The project was scheduled for completion in July 2013, however, in December 2012 some of these employees were issued with letters terminating their employment contracts on 19 December 2012.

The employees approached the Labour Court, claiming that they had been unfairly dismissed. The contractor denied this, arguing that the employees were employed on fixed-term employment contracts and that it needed different skilled workers at different times during the project. While the employees' skills were needed during the initial stages of the project, they were not required for its full duration. The employment contracts stipulated that each employee would remain in employment for "the duration of his skills requirement on the contract".

The court's decision

Before the court, the employees argued that their dismissal was an unlawful premature repudiation of their fixed-term contracts of employment, and that the contractor was not entitled to terminate their employment contracts before the completion of the construction project.

The court, however, held that the employees' argument that their employment contracts would endure until the "end of the project" was untenable because the employees conceded having signed employment contracts in which they agreed to remain in the contractor's employ for the "duration of their skills requirement in the project". Relying on the "automatic termination" clause in the employment contracts (which provided that the contract would be terminated by the occurrence of an event or the passing of time), the contractor argued that the employees' contracts ended when their skills were no longer required. The employees argued that a maximum-duration contract could be terminated before the expiry date only on good cause shown; for example, if employees are in material breach of their contracts, and if such condition is agreed for the employer's operational requirement. The onus rested on the contractor to establish that the automatic termination clause prevailed over the relevant provisions in the Labour Relations Act, 1995 ("LRA").

The Labour Court held that parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to an employee under the LRA, whether through "automatic termination" provisions or otherwise, because the LRA was promulgated to cater for the public's interest, not only an individual's interest.

The employees argued that the automatic termination provision of their contracts entailed a unilateral and subjective assessment by the contractor that granted it an unfettered discretion to decide when the employees' skills were no longer required. Due to the nature of the duties of a general worker, the decision on whether his or her skills were no longer required was subjective. The contractor could not shed any light on how it came to the conclusion that the employees' skills were no longer required and why the contractor had retained 20 to 30 other general workers until February 2013.

The court held that the automatic termination provision was invalid as it disregarded the provisions of the LRA that preclude employers from terminating employees' contracts "at will". It was found that the contractor dismissed its employees for operational requirements as it no longer had work for them. When the contractor contemplated dismissing its employees for operational requirements, it was required to ensure that the dismissal was substantively and procedurally fair, which it had failed to do.

Fixed-term contracts – the amendments to the Labour Relations Act

An important consideration for employers when concluding fixed-term contracts are the amendments introduced by the Labour Relations Amendment Act, 2014, which became effective on 1 January 2015. The amendments are aimed at avoiding the abuse of fixed-term contracts in a bid to avoid employer obligations under the employment laws. The amendments expressly stipulate the circumstances in which fixed-term contracts are permitted. For the purpose of section 198B of the LRA, a "fixed-term contract" means a contract of employment that terminates on either:

  • the occurrence of a specified event
  • the completion of a specified task or project
  • a fixed date, other than an employee's normal or agreed retirement age

The amendments do not apply to:

  • employees earning more than (currently) R205 433.30 per year
  • an employer that employs less than 10 employees, or that employs less than 50 employees and whose business has been in operation for less than two years
  • employees employed in terms of a fixed-term contract that is permitted by any statute, sectoral determination or collective agreement

Employment in terms of a fixed-term contract (newly concluded or renewed) for longer than three months will be deemed to be employment for an indefinite period (permanent employment), with some exceptions. One exception is the utilisation of a fixed-term contract of employment where the employee is employed to work exclusively on a specific project that has a "limited or defined duration" (section 198B(4)(d) of the LRA). But be warned: when such an employee is employed for more than 24 months, the employer must, subject to the terms of any applicable collective agreement, pay the employee, on expiry of the contract, one week's remuneration for each completed year of the contract, calculated in accordance with section 35 of the Basic Conditions of Employment Act, 1997 (section 198B(10) of the LRA).

This will have far-reaching implications for employers in the construction sector, where employment is often not of indefinite duration and contracts are often linked to specific projects.

Take-away message for construction contractors

Employers should take great care in defining the nature and term of the duration of employment in any construction project, since such projects often require reliance on some employees for a limited duration, where the project is used to determine the duration of the fixed-term contract. There should be no room for doubt about whether the employment contract will terminate on the occurrence of a specified event or the sectional completion or final completion of the works that are the subject of a construction project. Contractors should ensure that their employment contracts comply with applicable labour legislation and that the expiration of fixed-term contracts is managed properly and with the necessary care.

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

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Werksmans Incorporated
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”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Werksmans Incorporated
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions