In what circumstances can an employee be classified as an FTC?
In the Labour Relations Act “a fixed term contract means a contract of employment which terminates on the occurrence of a specified event, the completion of a specified task or project, or on a fixed date other than an employee’s normal or agreed-upon retirement age.”
The entering into of a fixed-term contract usually occurs in the following circumstances, where the fixed term contractor:
- Is replacing another employee who is temporarily absent from work.
- Is employed on account of a temporary increase in the volume of work which is not expected to endure beyond twelve months.
- Is a student or recent graduate employed for the purpose of being trained or gaining work experience to enter a job or profession.
- Is employed to work exclusively on a specific project which has a limited or defined duration.
- Is a non-citizen who has been granted a work permit for a defined period of time.
- Is employed to perform seasonal work.
- Is employed for the purposes of an official public works scheme or similar public job creation scheme.
- Is employed in a position funded by an external source for a limited period.
- Has reached the normal or agreed-upon retirement age applicable in the employer’s business.
There is a relatively common practice in South Africa for employers to rollover fixed term contracts on a regular basis. Where this is done employers should consider whether this moves a fixed term contractor more into the definition of permanent employee and what this might mean to the benefits to be provided to the contractor.
As a reminder, section 200A of the Labour Relations Act sets out what constitutes an employee as opposed to a fixed term contractor:
Until the contrary is proved, a person, who works for or renders services to any other person, is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present:
- The manner in which the person works is subject to the control or direction of another person;
- The person’s hours of work are subject to the control or direction of another person;
- In the case of a person who works for an organisation, the person forms part of that organisation;
- The person has worked for that other person for an average of at least 40 hours per month over the last three months;
- The person is economically dependent on the other person for whom he or she works or renders services;
- The person is provided with tools of trade or work equipment by the other person; or
- The person only works for or renders services to one person.