One of the issues that constantly arises in the workplace is that of people employed on fixed-term contracts. Quite often when these contracts come to an end through effluxion of time, employees raise the issue of legitimate expectation i.e., they had a reasonable expectation that, either their contracts would be extended or they would be permanently employed. Invariably, employees cite the conduct of the employer as the rationale for such expectation.

The case I want us to examine involves Ukweza Holdings versus Nyondo, citation: PA2/19. The matter was placed before the Labour Appeal Court. It was heard on 18 February 2020 and the judgment was handed down on 4 March 2020.

According to the court records, Ukweza Holdings (PTY) LTD, a catering company, employed Nyondo as a stand-in project manager on a fixed-term contract, whose duration was from 11 to 31 December 2014.
Although the contract ended on 31 December 2014, the employee continued to render services to the company.

It was only after the middle of January 2015 that the company approached the employee to extend the fixed-term contract to 31 January 2015. The employee agreed to the extension. On 3 February 2015, the employee received a notice of termination of his employment which unequivocally reflected that his “fixed-term contract will end on 13 February 2015”.

It is also worth mentioning that, in the intervening period, the employee had inadvertently been made aware that the post that he was occupying had been advertised and that he was at liberty to submit an application thereto. Indeed, the employee did so.

This notice of termination of employment referred to above was issued a day after the employer had emailed the employee notifying him that he had been unsuccessful in his application for the same position that he was occupying. According to court records, the employer argued that the basis of the two-weeks notice period (3 to 13 February 2015) granted to the employee was informed by their understanding that they were obliged, in terms of the Basic Conditions of Employment Act 75 of 1997, to give two weeks’ notice of termination to the employee.

The employee construed the termination of his contract as a dismissal and referred his case to the CCMA, arguing that he had an expectation that he would have been made permanent once his employer had secured a long-term contract with their client, Life St George Hospital.
The CCMA had to make a determination whether indeed Nyondo had been dismissed. On the other hand, the employer argued that Nyondo’s contract had run its course, and that it was terminated through effluxion of time. The commissioner made a ruling that the employee was dismissed and that the appellant had to prove the fairness of the dismissal.

The CCMA found that the letter of 3 February 2015 constituted a notice of termination of the employee’s contract and a dismissal in terms of section 186(1)(a) of the Labour Relations Act 66 of 1995. Section 186 (1) (a) of the LRA regulates instances where an employer terminates a contract of employment with or without notice. The section goes on to say that such a dismissal must relate to an employee’s conduct, capacity or the employer’s operational requirements to be fair.

Having made a ruling that the matter was a dismissal dispute, the CCMA determined the dismissal had been unfair and awarded the employee compensation. The employer was naturally dissatisfied with the ruling and accordingly referred the matter to the Labour Court (LC) for review.
The LC dismissed the review application on the basis that the CCMA had jurisdiction to preside over the matter, and furthermore, the LC found that the CCMA could not be faulted in its reasoning that the fixed-term contract had already expired at the time that the employer issued the notice of termination of employment.

The Labour Appeal Court (LAC) found that the CCMA had erred in concluding that there had been a dismissal, and therefore it had lacked the jurisdiction to preside over the matter. The LAC reasoned that there had been no dismissal as the contract had been terminated by effluxion of time. The LAC also found that the fact that Nyondo was aware that the employer had advertised the post that he had occupied, and had applied for the position, which essentially meant that he understood that there was a possibility that he could be unsuccessful in his application, thus dealing a fatal blow to his legitimate expectation argument.

The LAC further held that the fact that he continued to render his services to the employer after the end of January when his fixed-term contract came to an end did not imply that the fixed-term contract had morphed into permanent employment.

In addition, the LAC held that the 3 to 13 February notice period, during which Nyondo did not, nor was he required to render any services did not imply that the employment relationship had gone beyond the fixed-term relationship. The LAC accordingly held that Nyondo’s fixed-term contract had ended on 31 January 2015. In the view of the LAC, the fact that the employer did not inform Nyondo prior to the expiry of the contract that the contract would not be renewed or extended, or that it will be coming to an end, did not mean the contract would either automatically be extended or that the employment would become permanent.

Now, let us look at some of the contentious issues that this case raises:

  1. It is a fact that Nyondo, despite, according to the employer, not having the requisite experience to be appointed into that role, was nevertheless appointed. Therefore, the employer’s argument that Nyondo did not have the required skills set to occupy the role is an argument that cannot stand much scrutiny.
  2. The employer’s argument is further weakened by the fact that while his initial contract was meant to end on 31 December 2014, he was allowed to continue rendering his services well into the middle of January 2015, when the employer, no doubt, having realised their error, extended his contract to 31 January 2015.
  3. Only on 3 February 2015, probably upon realising that Nyondo was still reporting for duty, did the employer serve him with a notice that his contract would end on 13 February 2015, during which period he was now no longer required to report for duty, but would essentially be paid for sitting at home, while ostensibly “serving his notice”.
  4. A proper fixed-term contract, should by its very nature, include a clear and unequivocal clause that should state that upon the arrival of the termination date, it lapses through an effluxion of time. This is done in order to introduce clarity among parties and avoid unnecessary disputes. As we have seen in this case, this was not the case. That Nyondo was allowed to continue reporting for duty, despite his contract having ended, is a mistake for which the employer should be held accountable.
  5. In addition, the employer chose to extend Nyondo’s contract to 31 January 2015. The question that beggars an answer is, why? Most notably, the employer, according to the court records, indicated that Nyondo was found to be unsuitable for the role. The question remains, why extend a contract of a person who, in your view, is clearly not suitable for the role?
  6. The employer, and indeed the LAC, make the case that, albeit it in not-so-clear terms that the fact that Nyondo applied for the position he was then occupying, implied that he ought to have known that there was a chance that he wouldn’t be successful is, in my view, immaterial. The fact is that Nyondo was occupying the role, and according to the court records, the employer had never raised concerns about his capacity or conduct. The issue relating to the employer’s operational requirements does not even arise, as this position was required going forward.
    In closing, it is my humble opinion that the CCMA and the LAC were correct, and that it was the LAC whose judgment is open to scrutiny and challenge.

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