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Don't create an expectation of fixed-term renewal. Your employee can claim unfair dismissal!

by , 06 May 2015
Many employers hire new people and later on decide they won't renew their initial fixed-term contracts. Doing this may have its consequences if you dont pay attention to what you're doing during the fixed-term contract period.

According to the Labour Relations Amendment Act, if you hire a person for a fixed-term, you don't have to renew the contract when it expires. But there is one aspect that you have to pay attention to: If the employee has a reasonable expectation of renewal or that you'll appoint him to a permanent position, he has the legal right to claim unfair dismissal (Section 186(1)(b) of the LRA).

So this means an employee could have a reasonable expectation for renewal or that you'll offer him a permanent position even if the contract says you won't.

It's important that you don't tell the employee you'll have more work for him when the contract expires or that you'll make him permanent. He can use this against you if you don't renew it!

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The Labour Relations Amendment Act is in effect from 1 April 2015...
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Avoid these four instances that could create the employee's expectation of renewal:

1. You promise or suggest he'll carry on working for you. For instance, you may say that he does a great job and that you'd like to carry on working with him when the project is over.

2. The wording of the contract suggests continued employment. For example, your employee's contract might read, 'when the contract expires, there is an option of renewal'.

3. The availability of the job or position continues. For example, your employee could know that at the end of the project, another job of the same type will start. Or he may believe you'll still need a pharmacist after the contract expires. Be aware that the job an employee earning below the threshold does, carries on after the fixed period, it may be very difficult for you to prove you had a justifiable reason for fixing the term of the contract.

4. Other factors show prospects of further employment. You could renew his contract so many times  before that he expects you to carry on. Also, consider the fixed-term employee for the job if  you make the position permanent. Keep in mind that if you don't hire  him or make him permanent by default, you must have a genuine reason for this.

Note that the longer the fixed-term employee works in the position, the more difficult it will be to justify if you don't keep him on and make the job permanent!

Finally, use this as a tip: As a rule, don't hire someone as a temporary worker in a permanent position. Unless the  temporary worker's filling in a permanent post.  Because it's a permanent job, he'll be able to  justify an expectation of renewal, because of the availability of the position. This could force you to  keep renewing the 'temporary contract', hire him as permanent or face unfair dismissal charges.

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