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Short-term contracts

Question from Christopher Chauke:

What are the proper guidelines for short term fixed contracts?

Answer:


This question is incredibly broad, but to summarise, in brief, a short term contract must be for a fixed duration and will come to an end once the end date is reached or, if the contract is for a specific task, when the task is complete. It is important to ensure that the employee is made aware that there is no expectation of a renewal of the fixed term and if the contract is renewed for operational reasons, that the employee has no expectation of any further renewal.

Fixed term employees acquire all the rights provided for in the Labour Relations Act and cannot be dismissed without a fair reason and in accordance with a fair procedure. The short term contract must contain a clause that the contract may be terminated within the fixed term for any reason sound in law, including the employee/s misconduct and the employer’s operational reasons. A failure to record this may result in an employer having to pay the employee for the full contract when wishing to terminate earlier for operational reasons.

It is also important to note that fixed term contracts for employees earning below the threshold must comply with section 198B of the Labour Relations Act i.e.: that the fixed term must be for specific reasons set out in the section, failing which the employment may be deemed to be of indefinite duration.


Michael concentrates on all aspects of industrial relations and employment law litigation. He spent a year practicing employment law with a prominent London-based international law firm where he was involved in the employment aspects of a number of multi-jurisdictional transactions and claims to the Employment Tribunal. At Shepstone & Wylie he concentrates on employment law issues that arise from the sale and purchase of companies, the restructuring of companies, executive dismissals, sex and race discrimination claims and restraints of trade including advising on all aspects of collective bargaining and strike action.