What Is the Difference Between Permanent, Fixed Term and Part Time, Contracts of Employment?

Governed by both the Labour Relations Act, as well as the Basic Conditions of Employment Act, permanent, fixed termand part time contracts of employment regulate the employment relationship (including rights, duties and obligations) between the employer and the employee.

Permanent Employment Contract

A Permanent employment contract endures indefinitely or at least until the date of retirement, subject to being terminated by resignation, mutual agreement or for reasons relating to misconduct, incapacity, or operational requirements of the employer.

Irrespective of the type of contract of employment, the Basic Conditions of Employment Act stipulates that at least the following particulars must be provided in writing to an employee at the commencement of employment:

  • the full name and address of the employer;
  • the name and occupation of the employee, or a brief description of the work for which the employee is employed;
  • the place of work, and whether the employee is required or permitted to work at various places;
  • the date on which the employment began;
  • the employee’s ordinary hours and days of work;
  • the employee’s wage or the rate and method of calculating wages;
  • the rate of pay for overtime work;
  • any other cash payments to which the employee is entitled;
  • any payment in kind that the employee is entitled to and the value of the payment in kind;
  • how frequently remuneration will be paid;
  • any deductions to be made from the employee’s remuneration;
  • the leave to which the employee is entitled;
  • the period of notice required to terminate employment, or if employment is for a specified period, the date when employment is to terminate;
  • a description of any council or sectoral determination which covers the employer’s business;
  • any period of employment with a previous employer that counts towards the employee’s period of employment.
  • a list of any other documents that form part of the contract of employment, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained

In addition to the above and irrespective of the type of contract of employment, the Basic Conditions of Employment Act also provides certain mandatory minimum standards of employment including, including inter alia, leave, hours of work, maternity leave, notice periods etc

The National Minimum Wage Act oversees minimum wages/remuneration, and an employer may not remunerate employees less than the minimum wage as determined from time to time.

In addition to the minimum standards of employment contained in the Basic Conditions of Employment Act and the Minimum Wage Act, the Labour Relations Act also provides certain additional protections to employees employed on a Fixed term and Part time contracts of employment.

Although, the employer and employee can at their discretion enter into a contract of employment on terms and conditions that are best suitable to both parties, the parties however cannot enter into a contract of employment that provides for terms and conditions of employment that are less favourable then the prescribed minimum standards of employment contained in the Basic Conditions of Employment Act and the National Minimum Wage Act or that is in contravention  of the protections afforded  in the Labour Relations Act.

Fixed Term Employment Contract

A fixed term contract of employment expires/terminates automatically on the arrival of a specific date or the occurrence of a specific event agreed to between the parties in the contract of employment.

Accordingly, fixed term contracts are generally utilised where the nature of the work is for a fixed duration only or linked to the conclusion of a specific project.

In addition to the prescribed minimum standards of employment mentioned above, the Labour Relations Act also provides additional protection to fixed terms employees who earn below the earnings threshold (as determined from time to time by the Minister of Employment and Labour in terms of the Basic Conditions of Employment Act). The current earnings threshold is R205, 433.30 per annum.

The purpose of the amendments is to provide protection against lengthy fixed-term contracts that are not justified and to avoid the continuous rollovers of fixed-term contracts.

The Labour Relations Act provides that an employee who earns below the earnings threshold can only  be employed on fixed term contract for a maximum period of 3 months or a period greater than 3 months under the following circumstances:

  • is engaged on account of a temporary increase in the volume of work which is not expected to endure beyond 12 (twelve) 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 engaged to work exclusively on a genuine and 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 engaged to perform seasonal work;
  • is engaged on an official public works scheme or similar public job creation scheme;
  • is engaged in a position which is funded by an external source for a limited period;
  • has reached the normal or agreed retirement age applicable in the employer’s business.

Failure to comply with the above will result in the fixed term contract of employment automatically being deemed as permanent in nature.

The above mentioned additional protections will not be applicable to  fixed term employee’s who earn  in excess of the earnings threshold or to an employer that employs less than 10 employees, or employs less than 50 (fifty) employees and the business has been in operation for less than 2  years, subject to certain conditions contained in the Labour Relations Act.:

In so far as fixed term contracts relating to employees who earn more than the earnings threshold, the principle relating to the reasonable expectation that the fixed contract will be renewed or be made permanent will be applicable.

Part Time Employment Contract

Part time employees differ from full time fixed term and permanent employees. Part time employees generally work less hours per week then full time fixed term and permanent employees. For example, part time employees generally only work half days, twice or thrice a week or only on weekends, etc.

In addition to the prescribed minimum standards of employment mentioned above , the Labour Relations Act also requires an employer to treat its part time employees on the whole not less favourably than a comparable full-time employee doing the same or similar work, unless there is a justifiable reason for different treatment.

A justifiable reason for different treatment is, inter alia, seniority, experience, length of service, merit, the quality or quantity of work performed or any other criteria of a similar nature.

For advice on employment contracts, contact the Employment and Labour Law Attorneys at Adams and Adams.

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