In a country like South Africa stability is what people crave. With the economy dropping and levels of unemployment rising, people want to know that their jobs are secure and that they will be able to provide for themselves and their families in the future. The amendments to the Labour Relations Act (“LRA”) show that the government noticed this need for protection of employment and attempted to do something to fix the issue. The amendments have unfortunately had the adverse intended effect.
With every part of the employment value chain now specifically regulated by law, employers are effectively forced into keeping permanent employees out of fear of the fines and penalties attached to the new changes. While the intention of adding these stringent rules was to protect employees, unfortunately the reality is that employers are negating these regulations by simply opting to outsource and sub-contract over hiring permanent staff. Understandably so. Herman Mashaba, Chairman of the Free Market Foundation, elaborated on this, stating that:
“We now have the unfortunate situation where the labour laws that were intended to make life better for South Africans are making their lives worse. Instead of having secure jobs with decent wages, seven and a half million members of the potential workforce have no jobs at all”.
As an Employer you need to ensure that you are aware of all the changes to the LRA to ensure you make the best possible decisions for your business. Ultimately you need to understand what S198B entails so that you can decide what kind of employment you are prepared to offer potential employees and what consequences may materialize from offering fixed term contracts that last longer than three months.
S198B of the LRA
Under section 198B of the LRA, it states that an employee who has been employed by a company on a fixed term basis for longer than three months (by or after 1 April 2019), can be considered to be a permanent employee. It is important to note however, that it depends entirely on the factual circumstances of each case and does not apply as a hard and fast rule.
What are the requirements?
In order for S198B of the LRA to apply, the factual circumstances need to be established and there needs to be no justification available to the employer for fixed, as opposed to permanent, employment.
The factual circumstances that need to be met
S198B is only available to fixed term employees on the following conditions:
- The employer must not employ less than ten employees or less than 50 in the case of businesses that have been in operation for less than two years unless the business was formed by dissolution or division of an existing business or where the employer conducts more than one business.
- The employee must be earning less than R205,433 per year (the current earnings threshold requirement of the BCEA)
- The fixed term contract must not qualify as fixed term work as permitted by any statute or collective agreement.
If the factual circumstances meet the requirements, then the next thing that needs to be proved is that there is no justification for the employee to remain on a fixed term contract.
Justification for fixed term contracts
If the employer proves that the fixed term employment on a particular case is truly temporary, then the duration of the contract does not bare weight and will remain a fixed term contract. A list of justifiable reasons for temporary appointment has been clearly laid out in S198(b)(4) and include reasons that relate to the nature of the work only requiring assistance for a limited or determinable period.
If the factual circumstances meet the requirements and there is no justification for a fixed term employment, then the employee should be provided with equal access to apply for permanent employment vacancies, they can demand to be treated equally to permanent employees and they should effectively be regarded as a permanent employee (although they can only demand to be offered a contract as one once their fixed term contract has expired).
If all the requirements above have been met and yet they are still offered another fixed term contract over a permanent contract, then they have the right to challenge this in the CCMA or refer the dispute for conciliation and arbitration.
Knowing this information is important for all employers as you could face having to permanently keep an employee that you didn’t intend to by offering them the wrong kind of contract.