The Importance of the Contract of Employment – Part 2

Aug 11, 2021

In Part 1 we discussed the importance of the contract of employment and that it is a legal requirement that employers must provide employees with a written contract of employment or a letter of appointment specifying the main terms and conditions of employment.

There are various types of employment contracts such as permanent employment, fixed term employment, probation employment, and project employment. In this article, Part 2, we are briefly discussing the following two types of contracts.

Permanent contract of employment

The first thing that happens is that an offer of permanent employment is given in writing to the prospective employee.

The prospective employee then accepts the offer of employment in writing. The permanent contract of employment is then entered into.

It is a long term relationship that remains effective until the contract is terminated by either party for whatever reason (dismissal, retrenchment, resignation) or until the employee deceases or the employer stops its operations due to bankruptcy/liquidation.

Fixed term contract of employment

The fixed term contract of employment is in fact almost identical to the permanent contract of employment.

The only real difference is that the fixed term contract of employment will stipulate a starting date and an ending date.

The contract will state that “Upon the attainment of (state ending date) this contract of employment will terminate, and the employment relationship between the employee and the employer will cease.

The employee will no longer be employed by the employer as from (state ending date.)

Apart from this clause, the contract will be the same as the permanent contract of employment, except that in the fixed term contract the employer will stipulate whether benefits such as pension, medical aid, provident fund, any group life assurance facility, etc. is applicable or not applicable to the fixed term contract.

A further important paragraph to be included would be as follows:

“This contract of employment may be terminated by either party to the contract providing to the other party to the contract, 4 weeks written notice of intention to terminate, for any reason recognised in law as being sufficient. The employer may terminate this contract of employment at any time during the duration of the contract, for reasons of the incapacity or misconduct of the employee, or the operational requirements of the employer.”

Should this contract be terminated for any of the above reasons, the employee agrees that he shall have no claim against the employer for any outstanding benefit, including remuneration, to the end of the contract.

An employee on a fixed term contract is entitled to paid annual leave and paid sick leave (from the first day of employment) as well as family responsibility leave (only after 4 months employment), in terms of the Basic Conditions of Employment Act. In the next article, Part 3, we shall discuss the temporary contract of employment and the project contract of employment.


Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

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