OPINION: Regulating fixed term contracts by commercial sectors likely to cause job losses

Davies Ndumiso Sibanda

The Labour Amendment Act chapter 28:01 section 12(3a) provides for regulation of Fixed Term Contracts a thing that has to be carefully handled to avoid the intended act of loss of jobs.

While most NECs have taken a wait and see attitude allowing for litigation related to the Amendment Act to go through the legal process, the NEC for Commercial Sectors has moved ahead to negotiate and agree on a collective bargaining agreement (CBA) that limits the use of Fixed Term Contracts by employers, a thing that has set the commercial sectors into turmoil with employers not sure of what to do and getting legal advice that takes them in different directions.

The first amendment in my opinion is just administrative where the CBA substitutes casual employee for casual work and this is merely compliance with the Act. It must however be noted that the Act does not define casual work or a casual worker but merely puts a cap on how long one can remain a casual worker and the consequences of going beyond the limit.

The major challenge is item 3 of the CBA which reads “Section 24 in subsection (15) by the deletion of the whole subsection and the substitution of a contract of employment which is for a stipulated period which shall not be less than three months and flexible up to a maximum period of twelve months, shall specify the date of commencement and the date of termination thereof.

The fixed term employment contract can be renewed for a maximum of six times/and thereafter, an employee is deemed to have become an employee on a contract of employment without limit of time on the day the sixth fixed term employment contract expires”.

The first challenge is that like the Labour Amendment Act, the document lacks evidence of wide consultation thus leaving too many questions unanswered risking the future of the NEC and also likely to put lots of workers out of jobs.

The CBA bars employers from using Fixed Term Contracts that are less than 3 months, what it means is that those employers who require workers for 3 months or less and do not want to use a casual contract have a problem, the CBA does not explain what these employers will have to do.

Possible options available to employers are to use casual contracts, apply for exemption from the NEC to have the CBA apply to you, handle Fixed Term Contracts that are 3 months or less through another NEC which has no restrictions, pull out of the NEC completely and join an NEC that is user friendly and argue freedom of association. There are however challenges related to having workers who belong to different NECs.

Another option available for those employees who feel hard done by the CBA is to talk to the workers who also feel hard done by the CBA and they work towards forming their own NEC.

The other option is to approach the NEC and push for an amendment of the CBA. To me, the latter is a better option as it is likely to yield results faster.

For the workers who are used to periodically short term Fixed Term Contracts, the CBA means in some cases those jobs will no longer be available as employer avoids breaking the law. This, to me is cruel for those workers who got periodic jobs despite the attendant moral question of casualisation of labour.

The CBA further limits the renewal of Fixed Term Contracts to a maximum of 6 times. It must be noted that the Labour Act has no provision for renewal of Fixed Term Contracts but it provides for re-engagement and at law these two are different if we are to follow principles of the law of contract. The legal question that arises is whether the CBA is using “renewed” loosely or legally as if the term is used legally, employees can be re-engaged without offending the CBA as the CBA has nothing to do with re-engagement cases but renewal cases.

The challenge however is that the maximum of 6 times has not taken into consideration the fact that circumstances of each organisation are different as some will reach the maximum renewal in 6 months, others in 10 months, others in one year, others in two years and others in 15 years.

When that happens, the employee will be deemed to be permanent meaning that even if the worker is on Fixed Term Contract, he has the rights of a permanent employee.

I can foresee many employers terminating employment contract at the end of 6 Fixed Term Contracts, a thing that I consider cruel to the workers and I find it difficult to believe that unions are ceded to such an agreement. The CBA has no provision for transitional arrangements, that is, it does not say when does the counting of six renewals start. There are likely to be disputes related to that.

Further, the future of the NEC is placed at risk because employers might choose to leave the NEC using the cover of freedom of association and workers who are approaching the 6th Fixed Term Contract might resign from the union in order to save their jobs in the instances where they have seen other workers lose their jobs.

There is also the question of the employer’s common law right to engage and terminate contracts over times mutually agreed by parties. By limiting the Fixed Term Contract to a minimum of three months I am of the view that the CBA is tempering with a common law position which is beyond the territory of a CBA as only an act of Parliament can vary a common law position.

Another big challenge is that once the employee has worked for an employer for 6 Fixed Terms Contracts, the worker can never work for the same employer again unless the employer is willing to treat him/her as a permanent employee.

Where the cost of terminating the contract is higher, the CBA fails to address this problem as I do not believe it was the intentions of the parties, as things stand no reasonable employer would opt for an expensive employee than a cheaper one.

The CBA goes against the grain of the employment creation and it is not investor friendly and at the same time does not create job security for the employees as after 6 Fixed Term Contracts is the end of employment as not all employers would be willing to place workers on better conditions which are more expensive and where the terminations of the contract is complex since it involves retrenchment procedures.

On the face of it, as one reads the CBA without applying his mind, the document looks very good for the workers as it manages the problem of casualising labour. However, the reality on the ground is that employers will shun anything that increases their costs.

The CBA also provides employers with a cheap tool for getting rid of older employees as the safeguards provided by section 12B of the Labour Act on terminating an employee and replacing are not water tight and employers can easily navigate around them.

The CBA leaves a lot of unanswered questions and I have not been able to address them all but from the reaction of employers and workers, it is evident that the CBA was rushed and it requires further refining.

In conclusion, parties can choose to live with the CBA as it is and live with the consequences or be bold enough to accept that mistakes were made, withdraw the CBA or amend the CBA to make it user friendly and talk to the intention of crafting labour legislation which is to help develop a nation through quality of working lif  e and growth of businesses.

Davies Ndumiso Sibanda can be contacted on: email: [email protected], Or cell No: 0772 375 235

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