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Avoid the pitfalls of fixed-term contracts

by , 25 June 2014
As an HR executive or manager in your company, you no doubt have to deal with lots of different employee issues and problems every day. These may range from hiring and writing employment contracts through to issuing warnings and firing, as well as all the salary negotiations, annual reviews and general employee management in between.

And, of course, each and every one of these areas is full of their own traps and tribulations that can potentially cause you a lot of trouble - and cost your company a lot of money.

Going through a disciplinary procedure, for example, can be a nightmare for anyone. A tiny step wrong and you may have a CCMA case on your hands. You also have to be on your toes right from the start as even a single missed or defective clause in an employment contract could lead to problems in the future.
To help you steer clear of trouble and successfully navigate your way through the many HR and labour minefields in the future, I have put together for you a special five-part course that addresses five of the most common problem areas and questions in our business. 
I hope you enjoy reading all the interesting discussions and solutions you'll find in this five-part programme.

Get your employment contracts right at the start and you could avoid all later trouble with employees completely
Managers in companies are always incredibly busy and active people. That's why when it comes to dealing with employee problems we often work on a rather reactive basis. I.e. we'll deal with issues whenever they present themselves. 

The ONLY way to seamlessly protect your business from being dragged to the CCMA every time you have an employee problem is to have a comprehensive HR Policy Manual in place.
It's so important we believe you can manage your HR and IR risks far more effectively if you put the appropriate HR Policy or Procedure in place.

And today, we want to help you do just that…

To find out how to implement your HR Policies and Procedures click here now.


Contents of the five-part special course
Part 1 Avoid the Pitfalls of Fixed-Term Contracts
Part 2 What Counts as a Dependant's Emergency?
Part 3 How to Stop Grievances Escalating to Constructive Dismissal Claims
Part 4 Induction: Inspire Employees from Day 1
Part 5 Can We Dismiss an Employee Covered by a Sick Note?

Avoiding the Pitfalls of Fixed-Term Contracts?

Many employers use fixed-term contracts to address the need for additional temporary work, or to provide the staffing for a specific project or task. However, there are some important points to note to ensure you avoid some of the pitfalls associated with using fixed-term contracts.

End Date of the Contract

A fixed-term contract expires on a specific date, runs for a set period, or ends when a specific event occurs (e.g. a project comes to an end). If the wording in the contract says that the contract will expire on a specific date, it cannot be terminated earlier without making the employee redundant (or dismissing on the grounds of conduct or capability if that is relevant). However, sometimes the employee is not needed as long as expected. To overcome this, ensure that you write into the contract that it will expire on a specific date or earlier if the purpose for which the employee was recruited ends. Without this clause the employee could claim damages equal to pay/benefits of the unexpired portion of their fixed-term contract. 

Becoming Permanent

The proposed changes to the Labour Laws will mean if an employee is employed on a series of fixed-term contracts that total six months or more, then the employee is a permanent employee. This will be the case even if you continue to issue fixed-term contracts. If you want to avoid the employee becoming permanent ensure that you keep a careful note of how long a fixed-term employee has been with you and never employ staff on one or a series of fixed-term contracts which exceed six months.

Offering Permanent Employment

Employers are required to ensure those working on fixed-term contracts are made aware of any opportunities for permanent work in the company. There's no obligation to offer alternative employment to someone whose fixed-term contract has come to an end, but if there is work available and it isn't offered it'll be more difficult to explain why the employee has been dismissed, so you should always carefully consider whether you can offer alternative employment to the employee. If you decide not to offer work that is available to an employee you must have a fair reason for this. 

Terminating the Contract

The termination of a fixed-term contract is legally seen to be a dismissal. But, the dismissal must still be fair. You must communicate with the employee before to the termination of the contract, explaining that the date for the contract to end is approaching and confirming that the employment will terminate, so always hold a meeting with them for this purpose. Ensure the employee's aware of the end date, and is also aware of any other employment opportunities in the company. Explain why you are not going to renew the fixed-term contract.

Don't let anybody in your company issue another employment contract to a new employee until they've read this report 
What MUST every contract include? What clauses can smart employers add to help protect themselves against potential problems in the future? Is it better to use a probationary clause or a fixed-term contract? What clauses can you add to allow yourself more flexibility and space to manoeuvre in the future? How should you go about negotiating changes to an existing contract? Click here now to find out everything you need to know about implementing policies and procedures in your company today.

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