It seems that s 198B of the LRA makes special provision for ‘retired’ persons or retirees affirmative action.  Employers may engage their services on any type of fixed term contract simply because they are retired.  The section defines a “fixed term contract” for the purposes of that section to mean that a contract of employment terminates when:

  • a specified event happens; or
  • a specified task or project is completed; or
  • a date is fixed.

Special provision is made for so-called ‘retirement’.  An employer may employ an employee on a fixed term contract, or successive fixed term contracts, for longer than three months of employment if the employer proves a justifiable reason for the fixed term. Justification includes the fact that an employee has reached the normal or agreed retirement age that applies in the enterprise.

The LRA purports to allow employment contracts to ‘expire’ when employees reach an agreed or normal retirement age.  In other words employers do not have to provide any valid or fair reason to end the contract.  Such employees also forfeit notice pay and severance benefits.  It has been argued that properly interpreted the LRA does not permit such a situation and that it is discrimination based solely on age.

See: Statutory interpretation: SCA approach and exceptions.  So perhaps parliament decided to do retirees a favour and allow them to work on fixed term contracts.  Any thoughts on this interesting topic are invited.

Section 198B of the Labour Relations Act

[inserted by s 38 of Act 6 of 2014.]

198B.    Fixed term contracts with employees earning below earnings threshold.

(1)  For the purpose of this section, a “fixed term contract” means a contract of employment that terminates on—

(a) the occurrence of a specified event;

(b) the completion of a specified task or project; or

(c) a fixed date, other than an employee’s normal or agreed retirement age, subject to subsection (3).

(2)  This section does not apply to—

(a) employees earning in excess of the threshold prescribed by the Minister in terms of section 6(3) of the Basic Conditions of Employment Act;

(b) an employer that employs less than 10 employees, or that employs less than 50 employees and whose business has been in operation for less than two years, unless—

(i) the employer conducts more than one business; or

(ii) the business was formed by the division or dissolution for any reason of an existing business; and

(c) an employee employed in terms of a fixed term contract which is permitted by any statute, sectoral determination or collective agreement.

(3)  An employer may employ an employee on a fixed term contract or successive fixed term contracts for longer than three months of employment only if—

(a) the nature of the work for which the employee is employed is of a limited or definite duration; or

(b) the employer can demonstrate any other justifiable reason for fixing the term of the contract.

(4)  Without limiting the generality of subsection (3), the conclusion of a fixed term contract will be justified if the employee—

(a) is replacing another employee who is temporarily absent from work;

(b) is employed on account of a temporary increase in the volume of work which is not expected to endure beyond 12 months;

(c) 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;

(d) is employed to work exclusively on a specific project that has a limited or defined duration;

(e) is a non-citizen who has been granted a work permit for a defined period;

(f) is employed to perform seasonal work;

(g) is employed for the purpose of an official public works scheme or similar public job creation scheme;

(h) is employed in a position which is funded by an external source for a limited period; or

(i) has reached the normal or agreed retirement age applicable in the employer’s business.

(5)  Employment in terms of a fixed term contract concluded or renewed in contravention of subsection (3) is deemed to be of indefinite duration.

(6)  An offer to employ an employee on a fixed term contract or to renew or extend a fixed term contract, must—

(a) be in writing; and

(b) state the reasons contemplated in subsection (3)(a) or (b).

(7)  If it is relevant in any proceedings, an employer must prove that there was a justifiable reason for fixing the term of the contract as contemplated in subsection (3) and that the term was agreed.

(8)

(a)  An employee employed in terms of a fixed term contract for longer than three months must not be treated less favourably than an employee employed on a permanent basis performing the same or similar work, unless there is a justifiable reason for different treatment.

(b)  Paragraph (a) applies, three months after the commencement of the Labour Relations Amendment Act, 2014, to fixed term contracts of employment entered into before the commencement of the Labour Relations Amendment Act, 2014.

(9)  As from the commencement of the Labour Relations Amendment Act, 2014, an employer must provide an employee employed in terms of a fixed term contract and an employee employed on a permanent basis with equal access to opportunities to apply for vacancies.

(10)

(a)  An employer who employs an employee in terms of a fixed term contract for a reason contemplated in subsection (4)(d) [is employed to work exclusively on a specific project that has a limited or defined duration]; for a period exceeding 24 months] must, subject to the terms of any applicable collective agreement, pay the employee on expiry of the contract one week’s remuneration for each completed year of the contract calculated in accordance with section 35 of the Basic Conditions of Employment Act.

(b)  An employee employed in terms of a fixed-term contract, as contemplated in paragraph (a), before the commencement of the Labour Relations Amendment Act, 2014, is entitled to the remuneration contemplated in paragraph (a) in respect of any period worked after the commencement of the said Act.

(11)  An employee is not entitled to payment in terms of subsection (10) if, prior to the expiry of the fixed term contract, the employer offers the employee employment or procures employment for the employee with a different employer, which commences at the expiry of the contract and on the same or similar terms.