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Terminating a Fixed Term Employment Contract


With regard to the termination of fixed term employment contracts, one needs to look at the specific circumstances regarding such employment in order to best identify the best course of action when dealing with the termination thereof. Thus, when looking at the applicable legislation surrounding fixed term employment contracts (often referred to as 'temporary employment contracts'), the following is noteworthy:

Employment in terms of a fixed term contract for longer than 3 months will be deemed to become permanent employment with few exceptions. An employer cannot circumvent this provision by using successive fixed term contracts limited to 3 months each. It is not the current contract period, but the total period of employment, that must not exceed the 3 month rule.



Exceptions are if the employer can satisfactorily prove that:

  • The nature of the work for which the employee is employed, is of a limited or definite duration; or
  • There is another justifiable reason for the temporary appointment, such as (section 198B(3)):
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 for the purpose of being trained or gaining work experience in order 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 defined 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 normal or agreed retirement age applicable in the employer’s business.

This is however not a closed list of justifiable reasons.

When drafting a fixed term employment contract which exceeds 3 months, the following needs to be compiled with:
  • Firstly, the nature of the work must be for a limited duration or there must be some other justifiable reason for fixing the term of the contract;
  • Secondly, the fixed term contract must be in writing;
  • Thirdly, the contract must specify the ‘justifiable reason'.

Additionally, case law has shown that the employer may not create the impression that the employment contract is permanent. The temporary nature of the contract should be strictly adhered to.



A dispute would typically arise in the context of termination of employment, should the employer fail to prove that the requirements mentioned above have been met, the employee will be regarded as having been employed on an indefinite (permanent) basis.



In these circumstances there is a good chance that the employee’s services would not have been terminated for a fair reason and it is unlikely that the requirements of a fair procedure (for misconduct, incapacity or operational requirements) would have been met.


Prepared by Alexander VD Laan

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