Market Insights
Labour Relations Act changes that could
affect your business
If you're a smaller business then you may well use fixed-term contracts or have part-time staff on your books, so the Labour Relations Amendment Act that came into effect in January 2015 could mean you need to make some changes to how your company deals with what the Act refers to as 'non-standard' employees.
Non-standard employees
Basically this includes anyone whose services your company uses for a temporary period or fixed term.
These limited duration contracts terminate after a period of time has elapsed.
One of three things happens after a period of time elapses
- A specified event occurs;
- A specified task or project is completed; or
- A fixed date (other than retirement date) arrives.
Written agreements
Fixed-term contracts for employees earning below the threshold must always be in writing, must specify why the appointment is only temporary, must allow for the employee to agree to the temporary appointment and must specify the agreed duration. Some experts are of the opinion that, if the contract needs to be extended, a full new contract should be signed as a precautionary measure, rather than opting simply for an extension letter to an original agreement.
Good reason
If you employ employees who earn below the threshold (currently R205 433.30 per year) on fixed-term contracts for longer than three consecutive months without having a good reason or justification for the fixed-term nature of the contracts, these employees will be seen as permanent employees.
Further labour-related change
It is not only the Labour Relations Amendment Act that has brought change. Make sure you consult the Basic Conditions of Employment Amendment Act, the Employment Equity Amendment Act and the Employment Services Act (No. 4 of 2014, assented and gazetted on 7 April 2014).
Severance pay
Certain fixed-term contracts entitle the fixed-term employee to severance pay. A fixed-term employee (earning below the threshold) employed on a specific temporary project for longer than 24 months will, on the termination of his/her contract, be entitled to severance pay of at least one week's remuneration for each completed year of service.
Applying for vacancies
A fixed-term employee earning below the threshold must be granted the same access to opportunities to apply for vacancies as your permanent employees.
Consult with legal professionals to ensure you align your company policies and practices with all the new legal compliance requirements.
