Short-term gain, long-term pain: Probation disguised as a fixed-term contract
How do you fire an employee who does not meet expectations? The idea of a fixed-term contract might seem a good solution: Inform the employee that the fixed-term contract has expired if you want to get rid of him.
How would this work?
It is not uncommon for an employer to appoint someone for a fixed term of, say, three months, and then to make the appointment permanent if the employee has shown he can do the job. If the person does not meet the required performance standards, or does not fit in with the business, you would merely inform the employee that the fixed-term contract has expired and he would not have to go through performance management proceedings with this employee. As this does not constitute a dismissal in terms of the Labour Relations Act, the employee would not be able to go to the CCMA to lodge an unfair dismissal case.
However, this approach is flawed.
Why?
Because this strategy creates more problems than it can solve:
- It provides short-term gain, a way out, but causes long-term pain:
- It is risky because arbitrators will ask you to explain why it has been necessary to appoint the person on a fixed term if the position is not inherently of a fixed-term nature. In other words, if you appoint someone on a fixed-term contract, and in the past you appointed other people in this same position on a permanent basis, the arbitrators will question this.
- If you can’t give a satisfactory answer, the arbitrator will assume that you appointed him on a fixed-term contract to deprive him of protection against unfair dismissal.
The fixed term will then be regarded as a hidden probation period and
not appointing the employee will be regarded as a dismissal.
- If the arbitrator feels that you appointed the employee on a fixed-term contract to deprive him of protection against unfair dismissal, the next question he will ask is if you have complied with the provisions of clause 8(1) of the Code of Good Practice (Dismissal) requiring:
- Counselling;
- Assistance; and
- Training for persons appointed on probation but who do not perform as required during the probation period.
If you do not comply with the provisions of this code, the termination of the employee’s services will be regarded as an unfair dismissal – and you could be taken to the CCMA.
The result?
Using a fixed-term contract as a hidden probation period might give you a false sense of security – you know that you can terminate a person’s employment very easily.
