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Fixed Term Contracts – A New Twist You Need To Know!

The unfair dismissal claim

Employees:  Are you employed on a fixed contract basis?  If so, what are your rights when your contract expires?  In a nutshell, you will have a case against your employer for unfair dismissal if: –

  1. You have “a reasonable expectation” that the fixed term contract will be renewed on the same or similar terms; and
  2. Your employer fails, without a “fair reason”, to renew your contract on the same or better terms, or fails to renew it at all.

Employers:  Tread carefully here, and take advice in doubt!  Routine renewal of a fixed term contract without explanation and without justification will virtually guarantee an unfair dismissal claim in the end.

And a new twist – can an employee demand a permanent position?

There’s a new twist here which both employers and employees need to be aware of – the effect of a recent Labour Appeal Court decision is that an employee is not protected by our labour laws where he/she has an expectation of indefinite (i.e. permanent) employment.  In other words, although it is “dismissal” where the employee reasonably anticipates renewal of a fixed term contract, it is not “dismissal where he/she expects to be offered a permanent position but is instead offered only renewal.

The facts of the LAC case were that, after her fixed term contract had been renewed seven times over a three and a half year period, a university employee was interviewed for a permanent position but was unsuccessful.  Instead she was offered another temporary contract on improved conditions – she declined the offer and approached the CCMA with an allegation of unfair dismissal.

Think twice before declining any offer!

However the LAC held that there had been no “dismissal” – the employer had complied with its statutory obligation to offer the employee a renewal of her fixed term contract and she had declined the offer.   She was therefore not protected by the labour legislation, and (although it seems likely that amending legislation will change that in due course) for the moment at least employees need to think twice (and seek legal assistance!) before declining any similar renewal offer.

© DotNews, 2005-2012. This newsletter is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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