PROBATION PERIOD VS FIXED-TERM CONTRACT

Probation Period vs Fixed Term Contract- don’t get caught on the wrong side of the law

Can a fixed term contract be substituted for probation?

There is often confusion around fixed-term contracts and the probationary period in permanent employment, and it is crucial to understand that these are two very different concepts designed to serve different purposes.

Many employers unwittingly offer an initial fixed-term contract of employment with a promise that should all go well, a permanent contract will be issued. The thinking being that the fixed-term contract provides the chance to assess an employee before making them a permanent team member, and that following this route allows for easier removal should the person not perform or be a good fit. But beware, if you do this in your business, you will very soon find yourself in the labour courts.

It is vital to know that under The Labour Relations Act only a closed list of justifiable reasons for fixing the term of a contract may be used and a probationary period is not one of them.

An employer may legally limit the duration of an employment contract for reasons such as:

? replacing an employee who is temporarily absent

? assisting with a temporary increase of work which will not endure longer than 12 months

? a student or recent graduate employee for training and gaining experience

? there is a specific project with a limited duration

? foreign national with a work permit for a defined period

? the employee performs seasonal work

? the employee has reached retirement age.

Fixed-term contracts should only be used for work that is of a genuine temporary nature, or where there is some other justifiable reason for fixing the term of the contract. If there is no justifiable reason for fixing the term, the employee will be deemed to be a permanent employee if the agreement endures (or is renewed) beyond a period of three months. Clause 8 of the Code of Good Practice: Dismissal (Schedule 8 of the Labour Relations Act) deals specifically with probation. It states that the purpose of the probation is to give the employer an opportunity to evaluate the employee’s performance before confirming the appointment. It then states: “Probation should not be used for purposes not contemplated by this Code to deprive employees of the status of permanent employment.”

Where it is found that an employer has circumvented the probationary procedures by using a fixed term contract, it would be regarded as an unfair dismissal. There is substantial established case law in this area.

From a recruitment perspective it is also important to note that attracting talent already engaged in permanent employment to a fixed-term contract is almost impossible. For most professionals, leaving the security of a permanent role for a contract-based position just doesn’t make career sense. Not only is using a fixed-term contract as a probationary period not legal, it also greatly shallows the pool of potential candidates.

If you’ve been bitten by poor hiring practices in the past, offering a fixed term contract to assess someone might seem like a way to avoid problems in future but if you choose this route, you will certainly find yourself in hot water at the CCMA.

Partner with MPC Recruitment for peace of mind when it comes to Talent Acquisition and let’s make hiring a great experience for all involved!