Fixed term contract headaches

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Davies Ndumiso Sibanda
ONE of the most common contracts that is misunderstood by workers and employers is the Fixed Term Contract, which has resulted in many workers engaging in wasteful litigation and employers having costly payments to the employees.

A Fixed Term Contract is legal and is provided for in our labour laws. It is a contract whose duration is determined in advance, usually at the time of contracting. However, it has several features that require a legally trained mind to handle and provide guidance to workers and employers.

After several re-engagements, which can run for several years, many workers cry foul when the contract is terminated claiming all sorts of benefits and at times arguing they had an expectation of being re-engaged when they were terminated. Many such cases have been lost for different reasons depending on how the contract has been crafted. The first issue is that at common law both parties knew the contract was to come to an end. Secondly, if the relevant legal notice was given there is no case.

Even where notice was not given the remedy is likely to be payment of cash in lieu of notice as an arbitrator cannot create a new contract for the parties.

There are also cases where the employer expressly puts a clause in a contract, which says that, “in this contract there is no expectation of being re-engaged” or something similar. In such cases expectation of being re-engaged is extinguished as long as the employee signed the contract voluntarily.

Some workers have cited provisions of the Labour Act Chapter 28:01 section 12B.  A case only arises where someone was engaged and the terminated employee had an expectation of being re-engaged. However, most contracts today extinguish the expectation of being re-engaged and as such this argument can be problematic and costly for the worker.

There are, however, cases that can be problematic for employers such as occasion where the worker works beyond the life of a Fixed Term Contract and claims he is permanent or is on a contract without limit of time. Such cases have been treated differently by the courts depending on circumstances of each case. However, the likelihood of the employee being deemed permanent is high. For employers to avoid problems workers must work with valid contracts at all times that have been professionally crafted.

There are some Fixed Term Contracts that are tied to service contracts or occurrence of some future event. Such Fixed Term Contracts can trigger unilateral termination of the workers contract. These types of contracts have not been fully dealt with by our courts but looking at decided cases in other countries, their legality depends on how the contract was crafted. There are cases of permanent contract employees who have been made to sign Fixed Term Contracts. At law the employee is not compelled to sign the less secure Fixed Term Contract.

However, if the employee volunteers to sign the contract his employment ends at the end of the Fixed Term Contract as he will have abandoned his rights as a permanent employee and his service is as long as the last Fixed Term Contract. Earlier contracts are not relevant unless they are expressly linked in one way or another.

For employers, moving workers from permanent employment without first legally extinguishing the permanent contract is very risky as if workers claim unfair labour practice the courts will scrutinise the circumstances and environment under which the change occurred and if the court finds it was not free and voluntary even if the contract say it was voluntary the new contract may be deemed a nullity. In conclusion, the Fixed Term Contract has many complex features, which workers and employers must be familiar with so as to avoid costly problems.

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