Employment contracts define the working relationship between employer and employee. South African law requires that all employees be given certain particulars in writing, in line with the Basic Conditions of Employment Act (BCEA). These include details such as job description, working hours, remuneration, and other key terms and conditions.

The Labour Relations Act (LRA) provides additional protection for certain employees, including those on fixed-term or part-time contracts who earn below the threshold set under section 6 of the BCEA. Understanding different types of contracts and their legal requirements helps ensure a fair and compliant work environment.

Core Provisions

Employers must provide employees with:

• Name and address of the employer, and the employee’s name and job title.
• Work location, start date, and typical working hours per day/week.
• Details of wages, payment intervals, and any overtime rates.
• Leave entitlements (annual leave, sick leave, family responsibility leave, etc.).
• Any applicable notice periods for termination.

The BCEA sets minimums for working hours (no more than 45 hours per week ordinarily), overtime pay (usually 1.5 times normal rate if earning below threshold), and rest breaks. The LRA addresses fairness in dismissals, especially on grounds like misconduct, incapacity, or operational requirements.

Employment contracts in South Africa generally fall into:

• Permanent (indefinite duration) contracts
• Fixed-term contracts
• Part-time contracts
• Temporary Employment Service (TES or labour broker) placements

Each type has unique features and is subject to specific legal requirements under sections 198A-D of the LRA and relevant BCEA provisions.

A permanent or indefinite contract does not have a defined end date. The employment relationship continues until either the employer or employee ends it (through resignation, dismissal, or retirement). This is the most common contract form, providing employees with the greatest job security.

Key Points

• Contract must include standard terms (wages, hours, leave, notice periods, etc.).
• May include a specified retirement age, after which the contract ends by operation of law.
• Employee cannot be dismissed arbitrarily; it must be substantively and procedurally fair.

It is good practice to specify in writing what the job entails, expected performance standards, and the disciplinary and grievance procedures the employer follows.

A fixed-term contract has a specified end date or ends upon the occurrence of a particular event or completion of a project. Under section 198B of the LRA, additional rules apply for employees earning below the BCEA threshold:

• Generally, a fixed-term contract may not exceed 3 months unless the nature of the work or other justifiable reasons warrant it.
• If it exceeds 3 months without justifiable reason, the employee is deemed indefinite.
• Upon expiry, if the employee had a reasonable expectation of renewal but the employer fails to renew (or renews on less favorable terms), it can be considered a dismissal under section 186(1)(b) of the LRA.

Examples of valid reasons for using a fixed-term contract include:

• Replacing an employee on temporary leave.
• A once-off project of limited duration.
• Seasonal work (harvest, holiday rush, etc.).

At the end of a legitimate fixed-term contract, no severance is usually due, unless the contract is over 24 months for a limited-duration project or an agreement so provides. However, if the employer’s conduct leads the employee to expect renewal, and it is not renewed, it may be considered an unfair dismissal.

Part-time employees are those who work fewer hours than a comparable full-time employee. Under section 198C of the LRA, part-time employees below the threshold must not be treated less favorably than a full-time employee performing similar work, unless there is a justified reason (like length of service, performance, etc.).

Other non-standard forms include:

• Temporary Employment Service (labour broker) placements: Under section 198A, employees are deemed the client’s own after 3 months if not replacing a temporarily absent employee or not meeting special conditions.
• Casual or variable-time contracts: Hours or shifts vary. BCEA minimum entitlements still apply (like 4-hour minimum daily pay if earning below threshold, etc.).

Employers often include a probation clause in contracts, typically ranging from 3 to 6 months. During probation:

• Employees are assessed for overall suitability.
• Employers must offer training, guidance, or other support, not a “sink or swim” approach.
• If performance is not acceptable, the employer can dismiss or extend probation, but still must follow a fair process (explain issues, allow representation, consider the employee’s input, etc.).

While dismissing a probationary employee is easier than dismissing a permanent employee, the employer must still follow a fair procedure to avoid an unfair dismissal claim. This typically involves counseling, feedback, and the chance to improve.

• Use the correct contract type for the situation: indefinite for ongoing roles; fixed-term for genuine limited-duration projects.
• Provide employees with clear written particulars (job title, pay, hours, leave, notice periods, etc.).
• For any non-standard contract (fixed-term, part-time, or TES), ensure compliance with sections 198A-D of the LRA, especially if employees earn below the threshold.
• When probation is used, be sure to provide adequate support, not just a shorter path to dismissal.
• When a contract ends (especially a fixed-term), check if there was any reasonable expectation of renewal. If so, not renewing might be deemed a dismissal.

Disclaimer: This guide is informational. Always consult specialized advice for complex employment contract scenarios.