The Labour Relations Amendment Act was signed into law on 17 August 2014, however its operative date must still be announced by the President. The Amendment Act places significant restrictions on the use of fixed term and part-time contracts, as well as labour brokers.

Exclusions from these provisions apply to “small businesses” – i.e. a business with fewer than 10 employees; or fewer than 50 employees when it is the sole business of the employer and the business has been in operation for less than 2 years.

The “benefits” of using non-standard employees that some employers may have exploited thus far, have been all but eliminated with the new provisions.

Temporary employees

A limited duration (fixed-term) contract is one entered into for a temporary period, for example to relieve an employee who is temporarily absent; for completion of a specific project or until a specified event occurs.

On termination of the temporary contract, the employee does not have a right to further employment (either renewal of the contract or permanent employment) – unless the employee reasonably expected such further employment. If such an expectation is proved to exist and the employer did not offer further employment, this could constitute dismissal. Note that the test for the existence of a “reasonable expectation” includes many factors, and the number of times the contract might have been renewed in the past, is only one factor.

In addition to this principle, the LRA Amendment Act now adds further protection to lower-earning employees against possible abuse by employer of temporary appointments. For example, when a position is not really temporary but the employer wants to “try out” the employee and, if it does not work out, appoints someone else on the same basis upon expiry of the contract; or the employer prefers temporary employees because the cost of employment is less – mostly because of the lack of benefits such as medical aid, pension, bonuses, etc.

The new provisions below only apply to employees on a fixed-term contract earning less than

the BCEA threshold, which is currently R205,433 per year.

  • An employee employed temporarily for longer than 3 months will be deemed to be a permanent employee – unless the employer can satisfactorily prove that there was a justifiable business reason for the temporary appointment.
  • Such business reasons could for example be seasonal employment; employment on a specified project; internships; temporary increases in work volume; positions funded by external sources for limited periods; after retirement age was reached; appointment in place of someone who is absent for a temporary period; or ‘the nature of the work for which the employee is employed is of a limited or definite duration’.
  • A temporary employee (even if the reason for the temporary status is justified) may, after 3 months, on the whole not be treated less favourably than a comparable permanent employee – including payments, benefits and having the same opportunities in terms of vacancies, access to training and development. Justifiable differentiation such as merit, performance, seniority, length of service, etc. may however be applied.
  • A temporary employee who is employed for longer than 24 months, will be entitled to severance pay of at least one week’s remuneration for each completed year of service.
  • The contract of a temporary employee must now be in writing, must specify the reason why the appointment is only temporary and must contain the employee's agreement to the temporary appointment. If the contract needs to be extended, a full new contract should be signed in the same way, in stead of simply giving an extension letter.
  • In respect of temporary employees already in employment, there is a 3-month period of grace after the Act becomes operative.

Part-time employees

Part-time employees are now defined in the Act as “an employee who is remunerated wholly or partly by reference to the time the employee works and who works less hours than a comparable full-time employee” in the employ of the same employer. It however excludes employees temporarily working less hours in terms of an agreement around operational requirements.

  • Part-time employees earning less than the threshold and working for longer than 3 months must also be given pay and benefits on par with a comparable full-time person doing the same or similar job; and must be given equal opportunity to training opportunities and to apply for vacancies as their full-time counterparts.
  • Differentiation can however be justified in terms of the same factors that apply to temporary employees.
  • This however does not apply to employees who work less than 24 hours per month, or to small businesses.

Temporary Employment Services (Labour Brokers)

The provisions above regarding temporary employees apply equally to the TES as the employer of the employees whose services are sold to the client.

  • The client would be jointly and severally liable with the TES for contraventions of the BCEA, arbitration awards, collective agreements etc.
  • If the employee (earning below the threshold) works for a client for longer than 3 months and it is not a true temporary service, he/she is 'deemed to be' the employee of the client and then may not be treated on the whole less favourable than the client’s comparable employees.
  • This will also mean that the client may now be liable for unfair dismissal or unfair labour practice claims by that employee.

Clients should ensure that they protect themselves by way of their commercial contact with the TES. This may include guarantees of fair treatment of the employee by the TES; indemnities; and assurances that grievances or disciplinary decisions taken by the TES should be done in consultation with the client.

Any scheme by the TES and/or the client to circumvent the provisions of the Act, e.g. by replacing the employee by someone else every 3 months, is prohibited.

Should you require any assistance in this regard, contact us.

Judith Griessel
This email address is being protected from spambots. You need JavaScript enabled to view it.