Much has been said concerning justifying the use of a fixed term contract for employees earning below the threshold. (Currently R205 433.30). Whilst the Labour Relations Act (LRA) sets out the principles in this regard, the LRA does not specify whether such a contract may be terminated prior to the date specified in the contract.

The question to be answered is what happens if due to economic considerations or otherwise a company is required to terminate the fixed term contract prior to the end date specified?

The courts are clear that if the contract does not make provision for its early termination, the employer is not able to cancel the contract to the detriment of the employee.

In such situations the employer would be forced to continue employing the employee or would need to pay the employee for the balance of the contacted period.

The above clearly shows how important it is to ensure that the fixed term contracts utilised are well constructed as the converse could be a costly mistake.

For expert advice contact Tracey Mouton on 041 501 9800. Email traceym@goldlaw.co.za

© Copyright - Goldberg & de Villiers Inc.