How renewal of fixed-term contracts impacts on workers

A fixed-term contract of employment is one which specifies the duration of the contract or lapses at the completion of a specific task. These contracts may be renewed by the parties depending on the terms of the contract.

Cephas Mavhondo,Advocate

The continuous renewal of fixed-term contracts without an upgrade to an indefinite employment contract period brings mixed feelings to the employer and the employee. The employer may prefer to have a fixed-term relationship while the employee may prefer a permanent relationship.

A fixed-term contract means that the employer may not always have to provide benefits like medical aid and pension especially in short-term fixed contracts. With a fixed-term contract the employer is able to hire employees only when he actually requires them instead of having permanent employees.

An employee who is operating on continuous renewals of fixed-term contracts is not always entitled to benefits of permanent employees like annual paid leave. Due to the fact that the fixed-term contracts will be limited each time, the employee might not be able to take annual leave because his contract may be less than a year at any given time.

Pregnant workers may find themselves not entitled to full-pay maternity leave during the duration of their fixed-term contract of less than one year because section 18 of the Labour Act (Chapter 28:01) only entitles paid maternity leave to an employee who had served the employer for at least one year. Further, there is no job security for the employee.

The Labour Act deems it to be unfair dismissal a situation where upon termination of a fixed-term contract, an employee has a legitimate expectation of re-engagement and another person was engaged instead of the employee.

This will amount to an unfair labour practice contrary to the Constitution which provides for the right to fair labour practices in section 65. The courts have, in a number of cases, dealt with this issue.

In Gumbo v Air Zimbabwe 2000 (2) ZLR 126, Justice Chatikobo explained that: “There is a presumption that when parties continue the employer-employee relationship beyond the contractual period without agreeing on new terms, there is a tacit relocation of the expired contract on the same terms for the same duration.”

This means that it is implied that the employee may continue to work on the same terms and conditions as the fixed-term contract that had been agreed by the employer. It does not entitle the employee to a permanent position automatically.

In another case, Magodora & Others v Care International Zimbabwe (SC 191/13) [2014] the employees were engaged on fixed term contracts of nine months. Before the expiry of the last such contract, the employer purported to terminate the contracts of employment three months early. The employer later reinstated the employees to their positions up to the date the fixed-term contracts have expired without being renewed.

The contracts expressly provided that there would be no legitimate expectation of further employment beyond the stipulated date of termination. On appeal to the Supreme Court, the employees sought an order declaring them to have been unfairly dismissed and deeming them to be permanent employees on contracts without limit of time and without loss of salary and benefits or alternatively to be re-employed for a further period of nine months from the date of dismissal, on the same terms as before.

It was argued that the repeated renewals of the contracts changed their status to that of permanent employee and they had a legitimate expectation of permanency or renewal of their contracts on similar terms. The court held that: “. . . the legitimate expectation provisions of s 12B (3) of the Labour Act [Chapter 28:01] only apply where another employee is engaged in place of the employee whose fixed-term contract is terminated. The plain meaning of the provision is that the employee on a contract of fixed duration must have had a legitimate expectation of being re-engaged upon its termination and that he was supplanted by another person who was engaged in his stead. These requirements are patently conjunctive and the mere existence of an expectation without the concomitant engagement of another employee is not enough”.

In this case, it was clear that no one else was employed and the employees’ jobs had effectively been abolished. The employees were bound by the express terms that they had agreed to and could not complain that they had a legitimate expectation of being re-engaged.

It is not open to the courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted, even if they are shown to be onerous or oppressive.

Furthermore, in Kenya Airways Limited v Musarurwa & Another SC 67/14 the respondents were employed on five-year fixed-term contracts of employment and close to expiration received letters to the effect that their contracts were expiring and would not be renewed.

Another employee of the appellant was set to take over the first respondent’s duties. It was held that the objective behind section 12B (3) is to ensure that an employee is not discharged and replaced by another simply because his fixed-term contract has expired.

The appellant was ordered to reinstate the first respondent on the same terms and conditions that applied before his contract of employment was terminated or, alternatively, pay the first respondent damages in lieu of reinstatement.

In TelOne (Pvt) Ltd v Chigaazira SC 162/17, the appellant gave the respondent notice of both the expiry and the non-renewal of his five-year fixed-term contract.  The appellant went on to advertise the post of commercial director, a title which was previously held by the respondent but no one was actually employed for the position.

Respondent was of the view that he was unfairly dismissed as he had a legitimate expectation that his contract would be renewed.

It was held that even if the court were to find that the respondent had a legitimate expectation of his contract being renewed, his claim would fall on the basis that the second requirement was not met as there was no other person employed in his stead.

In TelOne (Pvt) Ltd v Sengende SC 24/15, the respondent was employed by the appellant on a fixed-term contract for a period of two years. Before the expiry of the contract, it was renewed for a further year.

The contract provided that: “The renewal of this contract is entered into with no guarantee of long-term employment or any expectation of any further renewals.”

Importantly, it was provided in this case that the employee who alleges that dismissal as unfair must show that:

  • Employee had a contract of fixed duration;
  • Employee had a legitimate expectation to be re-engaged; and
  • Another employee was engaged in his stead.

The respondent was offered, and accepted, a renewal of the contract on the understanding that the renewal would not create an expectation of further renewals. The court found that the respondent had no legitimate expectation.

In addition, to prove that another person had been employed in his stead, the employee must show what the nature was of the work in which he was engaged and in what manner he had been supplanted by another employee.

One of the ways in which the Labour Amendment Act 5 of 2015 amended section 12 of the Labour Act (Chapter 28:01) is in terms of the following provision:

(3a) A contract of employment that specifies its duration or date of termination, including a contract for casual work or seasonal work or for the performance of some specific service, shall, despite such specification, be deemed to be a contract of employment without limitation of time upon the expiry of such period of continuous service as is:

(a) fixed by the appropriate employment council; or

(b) prescribed by the Minister, if there is no employment council for the undertaking concerned, or where the employment council fixes no such period; and thereupon the employee concerned shall be afforded the same benefits as are in this Act or any collective bargaining agreement provided for those employees who engaged without limit of time. Pursuant to this section, there are various statutory instruments which have been put in place, covering specific industries and economic sectors, giving permanency of employment to the employee once a certain number of renewals of fixed-term contracts have lapsed.

These include the following examples:

l Statutory Instrument 67 of 2017 that is the collective bargaining agreement: agricultural Industry, which states that a fixed term contract should be fixed at nine months and when renewed for six times continuously the worker shall become a permanent employee;

  • Statutory Instrument 125 of 2018 that is the Collective Bargaining Agreement: tobacco (miscellaneous sector) Industry, which states that a fixed term contract employee will be deemed to be permanent on continuous service of five years;
  • Statutory Instrument 54 of 2016 that is the collective bargaining agreement: tourism Industry which states that a fixed-term contract shall be deemed to be an indefinite contract upon the expiry of four years of continuous service; and
  • Statutory Instrument 27 of 2018 that is the collective bargaining agreement: chemicals and fertilizers manufacturing Industry; which states that a fixed-term contract employee will be deemed to be a permanent one on continuous service of five years.

These instruments are beneficial to the employers as they assist with removing claims for legitimate expectations in certain industries as they expressly give specific period for continuous service which eventually make the contract permanent.

On the other hand, employees who have served employers for a number of years on fixed-term contracts also get the advantage of indefinite contracts.

In conclusion, when a contract is agreed upon by parties, it is important for the terms contained therein to be adhered to, in the interests of public policy. If a contract specifies a period of employment, it is the intention of the employer that they need services for only that amount of time and they have the right to renew or end the contracts at the expiry date when they have evaluated the need of further services or the lack thereof. Employers must not be forced to keep employees that they may not even afford to remunerate. However, it is unfair for employees to work on fixed-term contracts that are continuously renewed over a long period of time. An overview of the relevant case law has shown that courts will only intervene on behalf of the employee who can prove that a legitimate expectation was created and that another person was reengaged by employer in their stead after termination of contract.

Hence legitimate expectation is still relevant as a concept especially in industries that have passed regulations limiting the period of fixed terms contracts.

Mavhondo is an advocate and partner with Mhishi Nkomo Legal Practice. These weekly New Perspectives articles are coordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society, email: kadenge.zes@gmail.com, cell +263 772 382 852.

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