Contracts of Employment

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By Ivan Israelstam


South Africa's labour legislation provides strong protection for employees.

That is, numerous and imposing obstacles in the law and in the legal system make it extremely difficult for employers to dismiss those employees who deserve to be got rid of.

These obstacles include:

  • A plethora of procedures that must be followed before a dismissal can be considered to be fair;
  • Stringent and numerous criteria for deciding whether the reason for a dismissal is fair;
  • Broad discrepancy between judges and arbitrators as to the interpretation of the labour law;
  • The provision that, where a dismissal is adjudged to be unfair, the arbiter may reinstate the employee or impose a heavy compensation order of up to 24 months' pay in some cases against the employer;
  • The employer is automatically considered guilty of unfair dismissal until it has proven otherwise; but despite this is still required to present its case first at the unfair dismissal hearing; and
  • Despite the fact that many employers do not have the expertise to defend cases at the CCMA, the law makes it difficult for them to use legal experts as representatives.


Therefore, in an attempt to circumvent all this onerous legislation, employers attempt to avoid having to dismiss undesirable employees by hiring 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. However, this is a dangerous tactic because labour law has virtually closed this loophole.

That is, if the employer gives the employee a "reasonable expectation" that the contract will be renewed on expiry, the arbitrator could force the employer to renew the contract.  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.

In the case of Pretorius vs Sasol Polymers (2008, 1 BALR 10) Ms Pretorius was appointed on a fixed-term contract to act in place of the permanent incumbent. When Ms Pretorius's contract expired the employer advertised the post to be filled on a permanent basis and refused to renew Ms Pretorius's contract.

She referred an unfair dismissal dispute to the bargaining council because she claimed to have had a reasonable expectation that her contract would be renewed.

The arbitrator found that:

  • The employer had a policy that required a fixed-term employee occupying a permanent post to be made permanent if management approved.
  • The fact that management had advertised the post constituted management approval.
  • This policy gave the employee a reasonable expectation of renewal of her contract.
  • The employer's failure to give the employee the permanent post constituted an unfair dismissal and the employee was retrospectively reinstated.


Impending legislation may go further than applying the "reasonable expectation" rule and may ban the use of fixed-term contracts except in cases where the employer can prove that the job itself is temporary.  Another method used by employers to bypass the tough labour legislation is the use of temp agencies and labour brokers. These agencies are referred to in the Labour Relations Act (LRA) as "temporary employment services" (TES).

Trade unions, which find this arrangement to be a thorn in their sides, call it "Atypical Employment" and have launched a campaign to oppose it. This campaign has gathered substantial momentum and is expected to culminate in highly restrictive legislation in the not too distant future.

Once the new legislation is implemented, employers will find it very much more difficult to use fixed-term contracts and labour brokers to evade the heavy constraints of labour legislation.  All employers will then need, more than ever before, to use reputable labour law experts to sharpen their skills in running productive workplaces despite the ever- increasingly restrictive labour legislation.

  • Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011 888 7944 or

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