Dangers of hiring fixed-term staff under vague conditions
By Ivan Israelstam
In cases where a job itself is permanent, it is dangerous to employ staff on anything but a permanent contract. In the first instance, this is fixed because the Labour Relations Act provides for fixed-term employees to have a reasonable expectation of renewal of their contracts at the expiry date. And secondly, case law has gradually narrowed down those circumstances under which an employment agreement can legitimately be accepted as a limited duration contract with no prospects of renewal.
In the case of Numsa obo Majoro and others v Purple Moss 1309 t/a Kopano Thermal Insulation (2008, 4 BALR 342), the six employees of Purple Moss, a labour broker, were placed at a client on limited-duration contracts. After a strike, the client informed the labour broker it no longer required the services of the six labour broker employees.
The labour broker therefore gave its six employees notice, invoking a clause in their employment contracts that effectively allowed the contracts to terminate automatically when the broker's client no longer required the services of the workers.
The trade union alleged these terminations were unfair because:
Aggravating matters was that after termination of the workers' employment, other employees were employed in their place.
The employer contended that the termination did not constitute a dismissal, but an agreed termination of a contract, as a result of a circumstance envisaged at the outset in the employment contract. Those circumstances were that the client had decided it no longer required the services of the employees.
The arbitrator assigned by the Metal and Engineering Industry Bargaining Council (MEIBC) found:
In fact, I believe that the arbitrator has exaggerated here, as this section merely requires that, where employment is for a "specified period", the contract must contain the date when the employment is to terminate. The section does not say that all limited period employment contracts must have end dates. That is, the BCEA does not prohibit employment contracts where the end of the contract is determined by an event instead of a specific date.
But the arbitrator goes on to state it is not right for employment contracts to contain agreements as to the end of the contract, unless the end date is specified in the contract. She argues this reduces the employment security of the employee, who due to the uncertainty as to the end date of employment is unable to manage his/her financial affairs properly, or to know whether to seek other employment or not. The arbitrator deemed the limited duration clauses in the employees' contracts to be invalid.
She deemed the employees to have been employed permanently, and the termination of their employment unfair! This finding followed a similar decision made by the Labour Court in the case of Saccawu and others v Primeserv (2007, 1 BLLR 78).
The arbitrator in the Purple Moss case found the dismissals to be unfair, and ordered the employer to pay each employee compensation equal to 12 months' remuneration. The key finding of the arbitrator was that, where a limited duration contract does not specify an end date, the employees are deemed to be permanent.
In the light of the above employers need to: