When a fixed-term employee becomes permanent by law, and how to use fixed-term contracts properly.
Section 198B of the Labour Relations Act limits the use of fixed-term contracts for employees who earn below the earnings threshold set under the BCEA.
The rule: such an employee may be employed on a fixed-term contract, or successive contracts, for longer than three months only if the nature of the work is for a limited period, or the employer can show a justifiable reason. Otherwise the employee is deemed to be employed indefinitely.
Justifiable reasons include replacing an employee who is temporarily absent, a temporary increase in work not expected to last more than 12 months, a specific project with a defined end, seasonal work, training or work experience for a student or graduate, and employing a non-citizen on a time-limited work permit.
Put it in writing: the contract must state the reason for the fixed term.
Equal treatment: after three months, fixed-term employees must not be treated less favourably than permanent employees doing the same or similar work, unless there is a justifiable reason.
Longer than 24 months: if a fixed-term contract runs for more than 24 months, the employee is generally entitled to one week's pay for each completed year of service when it ends, unless the employer offers or arranges other employment.
Who is exempt? Employers with fewer than 10 employees, and employers with fewer than 50 employees whose business has operated for less than two years (with some exceptions).
Tip: rolling over a fixed-term contract repeatedly without a valid reason is one of the most common ways employers end up with permanent employees they did not plan for.
This article is general information, not legal advice for your specific situation. Speak to a MetaCo consultant about your organisation.