Fixed Term Contract vs Probation

For many years, companies have used a Fixed Term Contract as a way of “trying out” a potential new employee before appointing them in a permanent job.   Although this may seem like a good idea, it is actually quite dangerous. 

Firstly, the labour courts and the CCMA are very aware of this practice, and don’t look kindly on it.  Section 186(1)(b) of the Labour Relations Act 66 of 1995 (LRA) protects the rights of the temporary employee, if he/she can prove that any actions on the part of the employee lead them to believe that the contract would be extended.   So if a manager were just to mention that the job could be permanent and then doesn’t offer full time employment, the courts would look at the termination as a dismissal, irrespective of what the contract says.

Furthermore, new amendments to the Labour Relations Act (as at end of 2013) give specific protection to any employee earning less than R16 150 pm, where they are automatically seen as equal to full time employees unless the employer can give good reason for it not being so.  Simply having a clause in the contract stating that it is not a contract of employment will not suffice.

On the other hand, a Probation period is a far more effective way of making sure that the new employee is able to do the job that they said they could do during the recruitment process.  A probation period can be any reasonable length of time – four, six or even twelve months if necessary.   Furthermore should the employer feel it necessary, they can even extend a probation period as long as the reason is fair.  Dismissing an employee while on probation is far less onerous than one who is permanently employed – again, the company just needs to be shown to be fair in evaluating the employee’s performance and informing him/her thereof.  

So a Probationary Period is a much better idea than a Fixed Term Contract should your company ever end up in court, but there is something else to consider.  Good candidates are unlikely to leave permanent employment to take on a short Fixed Term Contract.  Why should they?  And if you tell them that you are just “trying them out” then the above applies.  So using a Fixed Term contract means that you are limiting your potential candidates to those who are desperately unhappy in their current jobs, or currently unemployed.  Not always the best. 

Use the Probation Period, it is what it is there for.

You are here: Home Employers Fixed Term Contract vs Probation