‘Companies drag feet on fixed-term contracts’

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COMPANIES are reluctant to migrate executive staff from open to fixed-term contracts due to the need to pay termination packages and fear of violating labour laws, among other reasons, businessdigest has learnt.

Staff Writer

According to a survey carried out by Industrial Psychology Consultants titled: Employment Contract Survey Report, companies which participated in the survey revealed that it is proving difficult to change the contracts because managers want to be given packages before moving to fixed-term contracts, which they cannot afford to do due to financial constraints.

Other reasons cited include avoiding disengagement when reaching end of contract, historical legacies, whose transition is expensive, resistance by senior management to migrate to fixed-term contracts, to enhance employee productivity and loyalty through job security and the inadequate timeframe for managers to implement their plans during the period of a fixed-term contract, especially in sectors such as mining.

The survey also revealed that 51,4% of those surveyed are on open contracts, with 24,3% of them working within a fixed-term contract.

Most of the executives in sectors such as non-governmental organisations (NGOs) (80%) and tourism and hospitality (67%), are on fixed-term contract, the survey established.

Of the executives that are placed on fixed-term, 45,9% of them is to motivate them to perform, 27% of the executives are placed on fixed-term to make it easier to terminate if they fail to deliver and 5,4% are on fixed-term contracts to manage costs, the survey established.

It also found that most of the executives in the mining (67%), and financial Services (83%) sectors are on open contracts, without limit.

Most executives in the manufacturing, financial services and medical and pharmaceuticals sectors on five-year contracts.

The survey revealed that the duration of executives’ employment contracts for most executives in NGOs, education and transport and logistics sectors is three years. It also found that most executives on fixed-term contracts in the IT and telecommunications sector, have contracts of four years.

According to the survey, 43,6% of those surveyed are offered pre-agreed gratuities at the time of termination of fixed-term contracts.

There were 39 organisations which participated in the survey from 15 sectors of the economy.

The sectors which participated in the survey include manufacturing, mining, retail, engineering and education.

Other sectors involved in the survey are financial services, tourism and hospitality and agriculture.

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