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What is "reasonable expectation" and how does it arise?

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South Africa’s labour legislation has, since 1996, been gradually but relentlessly removing labour flexibility from our economy. This is alarming because, especially in the modern world of business uncertainty, it endangers the survival of businesses big and small and damages the health and growth of our economy. It provokes the closure of businesses and fuels unemployment.

 

Therefore, in an attempt to escape the ever-tightening clutches of this strangulating legislation, employers have been using the loopholes of fixed-term contracts and labour brokering in order to retain a semblance of labour flexibility. These loopholes have their limits because the legislation already constrains their use. That is, if the employer gives a fixed-term employee a “reasonable expectation” that the contract will be renewed on expiry, the arbitrator could force the employer to renew the contract.

 

In the case of King Sabata Dalindyebo Municipality vs CCMA and Others (2005, 7 BLLR 696) the employer made a habit of regularly renewing fixed term contracts. But then it allowed the last contracts to lapse even though there was still available work for the terminated employees. The Labour Court found that the employees had a reasonable expectation of having their contracts renewed again and forced the employer to renew the contracts.

In the case of Pretorius vs Sasol Polymers (2008, 1 BALR 10) Ms Pretorius was appointed on a fixed-term contract to act in place of the permanent incumbent. When Ms Pretorius’s contract expired the employer advertised the post to be filled on a permanent basis and refused to renew Ms Pretorius’s contract. She referred an unfair dismissal dispute to the bargaining council because she claimed to have had a reasonable expectation that her contract would be renewed.

The arbitrator found that: 

  • The employer had a policy that required a fixed-term employee occupying a permanent post to be made permanent if management approved. 
  • The fact that management had advertised the post constituted management approval. 
  • This policy gave the employee a reasonable expectation of renewal of her contract. 
  • The employer’s failure to give the employee the permanent post constituted an unfair dismissal and the employee was retrospectively reinstated.

 

The trade union movement has been unhappy with the fixed-term contract legislation because it does not go far enough. As a result the labour movement was some time ago able to force through amendments that suit is agenda. This amendment to the LRA provides that a form of dismissal exists where an employee, engaged under a fixed term contract of employment, reasonably expected the employer to offer him/her a permanent contract of employment on the same or similar terms but the employer failed to do so. In effect, this means that employers can be forced by the CCMA to convert fixed-term contracts into permanent ones where the employer is unable to prove that the job itself is a temporary one.

 

This not only removes vitally needed labour flexibility from the workplace but forces employers to foot the heavy bill for the cost of providing such employees with long-term benefits such as medical aid and retirement schemes.

 

The extensive use by employers of temp. agencies and labour brokers has likewise been severely curtailed by the new section 198 of the LRA which substantially limits the use of temporary employment services. The labour law amendments further limit the function of employment agencies and brokers to providing job seekers with career information, matching them to vacant posts and referring them to employers. Such agencies and brokers are not be able to operate without a licence and such licences could be withheld or revoked should these agencies fail to comply with statutory requirements. In effect, this eliminates the use of labour brokers by their clients where the employees earn below the BCEA threshold:

  •  to avoid the client’s labour law obligations, and
  • to get rid of those workers that they do not want merely by instructing the broker to remove them.

 

Where brokers do place temporary employees with clients it is the client that will be viewed as the employer, and the temp. employees will have the right to press for permanent employment should the work itself be permanent.

 

Employers that are reeling due to the effects of the Corona lockdown are, due to the constrictive legislation, finding it very difficult to use fixed-term contracts and labour brokers to evade the heavy constraints of labour legislation in order to save their businesses. All employers therefore need, more than ever before, to use reputable labour law and productivity experts to sharpen their skills in running productive workplaces despite the ever increasingly restrictive labour legislation.

 

 BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: [email protected]a. Go to: www.labourlawadvice.co.za

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