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Fixed-term contract employee or full-time employee: which is it?

Article provided by SEESA

The COVID-19 pandemic has brought uncertainty in most instances, like when to appoint someone as a part-time employee or full-time employee.

As the economy is hankering toward the “normal”, meaning pre-COVID-19, employers may be sceptical about appointing full-time employees for fear of another hard lockdown on businesses and not being able to pay salaries to employees. Such fear may push employers to lean towards appointing people on a limited duration contract, making them part-time employees or not even calling them employees at all.

The law gives us guidance in an uncertain world on when to call someone an employee and when someone is an independent contractor or part-time employee.

Fixed-term contracts of employment

Section 198 B of the Labour Relations Act 66 of 1995 applies to employee’s earning below the earnings threshold set in terms of the Basic Conditions Earnings Threshold and are as follows:

(4) Without limiting the generality of subsection (3), the conclusion of a fixed-term contract will be justified if the employee—

  • 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 12 months;
  • is a student or recent graduate who is employed to be trained or gaining work experience to enter a job or profession;
  • is employed to work exclusively on a specific project that has a limited or defined duration;
  • is a non-citizen who has been granted a work permit for a specified period;
  • is employed to perform seasonal work;
  • is employed for the purpose of an official public works scheme or similar public job creation scheme;
  • is employed in a position which is funded by an external source for a limited period; or
  • has reached the average or agreed retirement age applicable in the employer’s business.

The earnings threshold set in terms of the Basic Conditions of Employment Act was determined on 1 March 2022 and is currently R 224 080,30 per year (R18 673 per month).

The Basic Conditions of Employment Act 75 of 1997 states the following under Section 83A Presumption to who is an employee. — (1) A person who works for, or renders services to, any other person is presumed, until the contrary is proved, to be an employee, regardless of the form of the contract, if any one or more of the following factors is present:

  • How 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;
  • with a person who works for an organisation, the person is a 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 that person 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.

The rule of thumb is if the work and or position you are employing the person in does not fit in with the above-listed ground(s), then the person will most likely be regarded as permanent and should be appointed as such. If you cannot financially keep the person employed in the position, then you may consider retrenchment if the unthinkable happens. Irrespective of the relationship, other remedies relating to performance issues or misconduct will still be available.

It is advisable to clearly define the employment’s nature before employment commences to prevent any disputes when the employment relationship is terminated. To assist you with the above-mentioned, contact your nearest SEESA Labour Legal Advisor. Alternatively, leave your name on our website, and a SEESA representative will contact you.

About the author

Rezonia Davids is a Legal Advisor with over ten years of experience in SEESA Labour. She obtained her LLB degree in 2007 at the University of the Western Cape and is an admitted Attorney in the High Court of South Africa.


The Labour relations amendment act 8 of 2018

The Basic Conditions Act 75 of 1997 as amended in terms of the Labour Laws amendment act 10 of 2018.

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