Difference between causal labour and fixed term contracts

Distinguishing between casual labour and fixed term contracts makes it possible to properly understand the concept of casualisation of labour.
The two labour concepts are beguiling even to experienced lawyers and labour officers.

By MIRIAM TOSE MAJOME

They are often conflated and this leads to misinterpretation of the law and the concept itself.

We shall attempt to breakdown and simplify the concepts in order to know whether it is justified to allege that casualisation of labour is taking place when fixed term contracts are continually renewed.

We will bear heavily on the Supreme Court judgment Simbi Steelmakers (Pvt) Ltd v Shamu and 43 Others SC71/2015.

The case is extremely important for anyone interested in this topic as it clearly explains the concept of casualisation of labour by distinguishing between casual work and fixed term contracts.

In summary, the Supreme Court ruled that indefinite renewal of fixed terms contracts is not wrong and the practice does not constitute casualisation of labour.

Failure to confirm casual workers as permanent workers after they have worked more than six weeks in four months is what constitutes casualisation of labour.

Seasonal, casual, fixed term and permanent

The Labour Act (Chapter 28:01) describes casual work as work for which an employee is engaged for not more than a total of six weeks in any four consecutive months.

Section 12 makes distinct references to the different types of contracts i.e casual work, seasonal work, fixed term contracts and contracts without limit of time.

Seasonal work refers to industry and season specific work performed only at certain times of the year.

A contract with a fixed term duration is one that specifies a date or time or condition under which it will terminate.

A fixed term contract is not only governed by date of termination, but may be dependent on the completion of a particular stipulated task such that when the task is complete the contract too comes to an end but its termination is always specifically stated.

A fixed term contract does not become permanent in the way casual work does – that is – by working for more than six weeks in four consecutive months.

Failure to confer casual workers with the same status as permanent employees after the stipulated period is what casualisation of labour is and this does not apply to fixed term contracts.

We shall now turn to the Simbi Steelmakers judgment decided in the Supreme Court for a clearer explanation and deeper insight into the law.
The facts

Forty three people were employed by Simbi Steelmakers on contracts that were continuously renewed monthly over a number of years.
The longest contract had been renewed continuously for six years.

This ordinarily rouses a certain discomfiture, as it sounds patently unfair to be employed temporarily for such a long period.

Simbi Steelmakers terminated all the fixed term contracts because the fixed term contracts had expired.

The employees alleged unfair dismissal and the matter was referred to arbitration.

Their argument was that after such a long period of continued renewal, the employees had developed a legitimate expectation that their contracts would continue to be renewed as always.

The arbitrator decided in their favour and ordered Simbi Steelmakers to reinstate them or instead pay them damages for the alleged unfair dismissal.

Unhappy with the arbitrators’ decision, Simbi Steelmakers appealed to the Labour Court, which, however, upheld the arbitrator’s decision and ruled once again in favour of the employees.

In deciding the case, the Labour Court drew on both the Labour Act and international labour provisions and protocols, which campaign against the exploitation of workers through making them permanent temporary employees.

It is common cause that it is more burdensome for employers to employ people permanently than temporarily.

Employers are freed from the burden of providing the employee benefits that are ordinarily given to permanent employees such as pensions, medical aid, vacation leave, study leave, sick leave, promotion and salary increments etc.

The employee is disadvantaged because they have no sense of job security and this is a situation that does not bode well with their economic wellbeing and career advancement.

The Labour Court ruled that Simbi Steelmakers’ conduct was akin to casualising labour.

It reasoned that the practice of renewing short term contracts repeatedly was prohibited by section 46(1) of the Constitution, which charges local courts to factor international law.

It also relied on section 65(4), which prescribes the implementation of just and equitable work conditions.

The judgment

Dissatisfied once more with the judgment, Simbi Steelmakers appealed to the Supreme Court arguing that the workers had not become permanent workers simply by the continuous renewal of their fixed term contracts.

They opposed that this amounted to casualisation of labour.

The Supreme Court emphasised that the intention of a fixed contract of employment is clear.

It expires on the stipulated date and, hence, there is no justification to turn it into a permanent contract simply because it has been continually renewed whenever it expired.

Whereas, on the other hand, casual work depends on the work itself and permanence is justified because it’s conclusion is unknown and employees cannot be casual workers forever.

If the work is still there and continuing after six continuous weeks in a four-month period, there is justification to turn it into permanent work because it could even last for years.

A typical example is restaurant waiters.

They may have been employed as casual workers at the beginning, but if the restaurant business thrives it may even continue to run for many years with the same waiters.

The law requires that they be installed as permanent employees as they cannot be casual workers forever.

The Supreme Court ruled in favour of Simbi Steelmakers and against the employees, the arbitrator and Labour Court.

The Supreme Court found that the 43 employees were not casual workers, but were on fixed term contracts and, hence, there was no justification to allege unfair dismissal or turn their contracts into permanent contracts.

The Supreme Court emphasised the difference between casual workers and fixed term contract employees.

It said employers cannot be forced to employ fixed term workers permanently simply because of continued renewal of their contracts.

Misinterpreting section (12)3 causes people to think that fixed term contracts become permanent contracts after more than six continuous weeks yet the clause refers specifically to casual workers.

The Supreme Court further and importantly ruled that employers can continue to renew fixed term contracts indefinitely as long as they do not deprive employees of basic employment rights such as their remuneration, appropriate notice periods, vacation leave, sick leave, special leave, public holidays off and maternity leave.

Miriam Tose Majome is a lawyer and a teacher. She can be contacted on enquiries@legalpractitioners.org

6 Comments

  1. Thank you for highlighting the difference so clear.

  2. good article

  3. Thank you for the article.

    Conversely, the NEC Commercial Sector now stipulates that a fixed term contract can only be renewed six times. Thereafter, an employee is deemed to have become an employee on a contract of employment without limit of time on the day of expiry.

    Employers be guided accordingly.

  4. Dear Miriam,
    Fixed Term contracts
    If any employee’s contracts has been renewed for many years at the end of the contract does the employee get a package, for every two years served the employee gets one month salary.
    My other question is what about if the employee has been found to be under performing? And he is required to leave the organization at the end of his contract? What does he get in terms of benefits.

  5. Tendai Chiunya

    The Labour Act Amendment bill of 2015 is clear on that. Every employee is qualified to be paid two weeks pay for every year served upon termination. Termination, might it be mutual or dismissal.

    This position has been appealed against but the Act’s provision still stand until otherwise overturned.

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