Fixed-Term Contracts (FTCs) have long been known by various names: Limited Duration Contracts, Short-Duration Contracts, and Project Employment Contracts. Regardless of the terminology, the essence remains the same: an FTC is a contract clearly circumscribed by a defined time-period or a specific project description. After this period or upon project completion, the automatic termination doctrine applies. It is not a dismissal but rather a termination of the contract due to the effluxion of time or the end of a defined project.

However, when these defining characteristics are absent, the Labour Relations Act (LRA) views the contract as indefinite duration. In such cases, the termination must adhere to procedurally and substantively fair legal requirements. Further to this, Section 198B of the LRA codifies the nature and extent of legitimate FTC’s.

In this article, we aim to demystify common beliefs surrounding FTCs. Let’s address these myths head-on:

Myth 1: FTCs Become Indefinite After Three “Rolling” Events

It is widely believed that after three renewals or “rolling” events, FTCs automatically become permanent or create an expectation of renewal. However, each case is evaluated based on its unique circumstances. There is no fixed rule; as in the case of probation, it depends on the specific facts – there is no “magical” three months or three rolls provision at law.

Myth 2: Probation Can Avoid FTC Regulations

Some employers mistakenly believe that placing employees on probation can circumvent FTC regulations. This is incorrect and can lead to legal complications. Probation does not alter the fundamental nature of the contract.

Myth 3: “No Expectation of Renewal” Clause Is Final

Including wording that the employee does not have an expectation of renewal does not absolve employers from legal obligations. If other actions suggest otherwise, the clause alone is not conclusive.

Myth 4: Long Durations Raise Expectations of Permanence

FTCs spanning several years do not automatically raise expectations of permanence. However, the duration may influence how Courts view employee expectations.

Myth 5: No Need for Detailed Project and Termination Indicators

Employers must provide detailed descriptions of projects and termination indicators to avoid ambiguities. Clear communication is essential to prevent legal disputes.

Myth 6: Misconduct Leads to Automatic Termination

FTCs cannot be used as an easy route to terminate employment for misconduct. Standard legal procedures must still be followed.

Myth 7 & 8: Exclusion from s197 and s189 Rights

Employees on FTCs are indeed part of section s197 transfers and have rights under section s189. These rights cannot be overlooked or bypassed.

By dispelling these myths, we hope to enhance understanding and promote fair treatment within the realm of fixed-term contracts.