Legitimate expectation needs careful management

Labour Matters Davis Ndumiso Sibanda
Termination of fixed term contracts has resulted in many employees litigating arguing that they had a reasonable expectation of being re-engaged or being engaged permanently. The law that guides us on reasonable expectation is section 12B(3)(b) of the Labour Act which says, “if on termination of an employment contract of fixed duration, the employee had a legitimate expectation of being re-engaged and another person was engaged instead of the employee” then the termination is unfair.

While this definition sounds simple, a look at it closely shows that a number of things have to happen before one can claim legitimate expectation. At law the central question is whether a fixed term contract on its own creates a reasonable expectation of permanent employment. I am of the view that a fixed term contract by its nature and definition presents a relationship that is clear in that it will be extinguished once a specific date is reached or a project is completed. However employers at times during the course of the relationship create an expectation of permanent engagement by expressly promising permanent employment or impliedly promising permanent employment.

Implied promises are usually the basis of many disputes thus employers have to be careful about what they promise workers.
The Labour Act is silent on engaging fixed term contract employees on contracts without limit of time (permanent contracts). This expectation flows from the Bata Shoes vs Workers Committee case where fixed term contract employees demanded to be placed on permanent engagement and the Labour Court granted their wish.

I am of the view that, that case cannot be used as an authority considering the unique circumstances of that case. Further I am also of the view that if the employer places employees on fixed term contract and re-engages them from time to time there is no breach of the law despite the fact that continuous re-engagement create a pungent labour relations environment with workers demanding to be engaged permanently and alleging casualisation of labour.

Going back to legitimate expectation to be re-engaged, for a worker to claim legitimate expectation to be re-engaged when the employer terminated contract of employment and did not engage another person to take over ones’ job would not hold water. For an offence to occur the employer must terminate John the driver’s fixed term contract today and tomorrow or a few days later engage Peter to drive in John’s place.

The law will look further into the employer’s reasons for not re-engaging. For example John could have been a Class Four driver and company needed a Class One driver who would drive the new bus to take workers children to and from school but during the day drives the company van to carry out various errands. John can be terminated and replaced by Peter who has Class One driver’s licence without John claiming legitimate expectation of being re-engaged.

Where the employer re-engages an employee on expiry of fixed term contract many times, in my opinion no legitimate expectation is automatically created as long as the employer has legitimate business reasons for re-engaging employees. Legitimate expectation of being re-engaged is created when the employer puts employees in business plans that go beyond the lives of their contracts, or where the employer makes an express promise to re-engage, gives employees loans beyond the lives of their fixed term contracts, gives benefits which are expressly given as being for permanent employees, or the employee’s contract extinguishes while the parties are in the middle of a project and other similar cases. At times it can be the general conduct of the employer that can create the reasonable expectation of being re-engaged.

Further another test is whether the expectations of the employee were reasonable in the circumstances, for example when the business is downsizing and there hardly is work to go round it would be unreasonable for a fixed term contract comes to an end. The employer has to however give the requisite notice as provided for in Section 12(4) of the Labour Act.

Length of fixed term contract can not be used as a ground for creating reasonable expectation considering that Section 12(4)(4) impliedly allows for fixed term contracts of two years or more.

In conclusion it can be said that employers need to avoid creating reasonable expectation through express and implied acts.