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Misuse of fixed term contracts can ruin employers

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Misuse of fixed term contracts can ruin employers

5th July 2016

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According to sections 193 and 194 of the LRA the awards and orders that can be made against the employer for unfair dismissal are as follows:

  • The LRA requires the CCMA or Labour Court to reinstate the employee. This means that the employer must give the employee his/her job back and to pay the employee all remuneration calculated back to the date of the dismissal.
  • The LRA also permits the CCMA or Labour Court to order re-employment instead of reinstatement. This means that, while the employer must give the employee his/her job back, this might not be with back pay.
  • Or the employer may be ordered to pay the employee compensation up to a maximum of 12 months’ remuneration calculated at the employee’s newest rate of remuneration.
  • If the dismissal is deemed to be automatically unfair the maximum compensation that may be awarded is 24 months’ remuneration.

More and more lawyers and consultants are therefore advising employers to offer reinstatement to dismissed employees where the employee disputes the dismissal procedure. That is, the employer’s legal experts are advising employers to reinstate the employee before the matter gets as far as court or arbitration so as to avoid these heavy penalties being imposed by the CCMA or Labour Court.

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In many cases the employer cannot or prefers not to take the dismissed employees back. Therefore, in an attempt to circumvent the laws protecting employees employers hire workers on fixed-term contracts. Then, if the employee is seen as unsuitable, the employer merely allows the contract to lapse at its expiry date and says goodbye to the employee. However, this is a dangerous tactic because labour law has closed this loophole. In the case of King Sabata Dalindyebo Municipality vs CCMA and Others (2005, 7 BLLR 696) the employer made a habit of regularly renewing fixed term contracts. But then it allowed the last contracts to lapse even though there was still available work for the terminated employees. The Labour Court found that the employees had a reasonable expectation of having their contracts renewed again and forced the employer to renew the contracts.

The only route to follow is to obtain expert advice before dismissing employees for any reason and to make sure that you are getting the advice from a genuine and reputable labour law expert.

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To book for our 22 July seminar in Johannesburg on COMBATTING ABSENTEEISM AND LATE-COMING please contact Ronni on ronni@labourlawadvice.co.za or 0845217492.

Submitted by lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or at ivan@labourlawadvice.co.za. Also go to: www.labourlawadvice.co.za

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