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What Happens When A Fixed Term Contract Ends?

Quick Summary

When a fixed-term contract comes to an end, both employers and employees need to understand the legal implications. Fixed-term contracts can be terminated automatically at the agreed finishing point or by the employer, but fair treatment and following dismissal procedures are essential. Fixed-term employees have the same rights and obligations as permanent employees, and any misconduct should be dealt with through normal disciplinary procedures.


When a fixed-term contract comes to an end, it is important for both employers and employees to understand the legal implications and obligations that arise. A fixed-term contract refers to an employment agreement that expires upon the occurrence of a specified event, completion of a specific task or project, or on a predetermined date other than the employee’s normal retirement age.

It is crucial to note that while fixed-term contracts may terminate prior to their agreed-upon ending dates due to reasons recognized in law such as misconduct or poor performance, proper procedures must be followed according to the requirements set out by labor regulations.

In this blog post, we will explore what happens when a fixed-term contract ends from both employer and employee perspectives. We will also discuss common questions related to termination under these circumstances. Understanding your rights and responsibilities can help ensure fair treatment during this transitional period.

Understanding Fixed-Term Contracts

A fixed-term contract is a type of employment agreement that has a predetermined end date. It expires upon the occurrence of a specified event, completion of a specific task or project, or on a fixed date other than the employee’s normal retirement age.

Employers often use fixed-term contracts for various reasons. One common reason is to meet temporary labor needs such as covering for someone on maternity leave or hiring employees for seasonal work. Additionally, employers may hire individuals with specialized skills through fixed-term contracts to fulfill certain projects or tasks.

Despite having an expiration date, it’s important to note that employees on fixed-term contracts have rights and obligations similar to those in indefinite-period employment agreements. This means they are entitled to fair treatment and protection under labor laws.

Fixed-Term Employees’ Rights

  1. Equal Treatment: They should receive equal pay and benefits compared to permanent workers unless their overall terms and conditions are just as good or better.
  2. Statutory Protection Against Unfair Dismissal: If their contract is not renewed at its agreed finishing point without valid reasons recognized by law (such as misconduct), they can claim unfair dismissal against the employer.
  3. Redundancy Rights: In case of non-renewal after two years’ continuous service, these employees enjoy redundancy rights equivalent to those granted to permanent employees.

Termination of Fixed-Term Contracts

Fixed-term contracts have specific provisions for termination, which can occur either at the agreed finishing point or through early termination by the employer. It is important to understand these aspects in order to navigate the legal implications and obligations associated with ending a fixed-term contract.

Automatic Termination at the Agreed Finishing Point:

When entering into a fixed-term contract, both parties agree upon an end date or event that will trigger its automatic termination. This means that once this specified time period has elapsed or when the predetermined task/project is completed, there is no need for any further action from either party. The employment relationship simply comes to an end without requiring notice periods or additional steps.

Early Termination by Employer:

In some cases, employers may find it necessary to terminate a fixed-term contract before its agreed-upon finishing point due to various reasons such as changes in business needs, financial constraints, restructuring efforts, etc. However, employers must exercise caution when considering early terminations as they could potentially be breaching contractual terms if not explicitly stated within their agreements. If there are no clauses allowing for early terminations outlined in the agreement itself, the employer should consult with legal counsel prior to taking any actions. This ensures compliance with labor laws and minimizes potential risks of breach claims against them.

Redundancy Rights and Protection Against Unfair Dismissal:

  1. Redundancy rights: When terminating employees on fixed-term contracts prematurely, due consideration must be given towards redundancy payments. In South Africa, fixed-term contractors who have been employed continuously for two years or more are entitled to redundancy payments. These payments are similar in nature to permanent employees and aim to provide financial compensation during periods of unemployment resulting from the termination of their contracts. It is important that employers take into account these payment obligations to avoid any potential legal issues related to redundancy.
  2. Protection against unfair dismissal: Fixed-term employees are protected by labor laws and have the same rights as permanent employees when it comes to protection against unfair dismissal. If an employer terminates a fixed-term contract without valid reasons or fails to follow proper procedures, the employee may file a claim for unfair dismissal. It is crucial that employers adhere to fair practices throughout any termination process involving fixed-term contracts. This includes providing clear communication regarding their intentions, offering reasonable notice periods where applicable, and ensuring compliance with all relevant legislation. Failure to do so could result in legal consequences such as compensation claims or reputational damage.

In conclusion, the termination of fixed-term contracts can occur either at the agreed finishing point or through early termination by the employer. It is important for both employers and employees to understand the procedures and obligations associated with such terminations. Employers that wish to take early actions must ensure that they are complying with contractual terms, labor laws, and fair practices. Furthermore, fixed-term employees have protection against unfair dismissal and may be subject to redundancy payments depending on their length of service. Thus, it is critical for all parties to approach these terminations in a compliant, moral, and lawful manner.

Legal Implications for Employers

Fair treatment and following dismissal procedures:

When a fixed-term contract comes to an end, employers have certain legal obligations towards their employees. It is important for employers to ensure fair treatment throughout the termination process and follow proper dismissal procedures.

Employers should provide clear communication regarding the expiration of the fixed-term contract well in advance. This allows employees sufficient time to prepare for any potential changes or seek alternative employment opportunities if necessary.

In cases where misconduct or poor performance has occurred during the duration of the contract, it is crucial that employers handle these issues through normal disciplinary procedures. Fairness must be maintained by providing appropriate warnings, conducting investigations when required, and giving employees an opportunity to respond before making any decisions about terminating their contracts.

Breach of contract if early termination is not specified:

If an employer wishes to terminate a fixed-term contract earlier than its agreed finishing point, they need to carefully review the terms outlined in the agreement itself. If there are no provisions specifying early termination within this document, ending it prematurely may constitute a breach of contract on behalf of the employer.

To avoid breaching contractual agreements with their employees, employers should always consult legal counsel or HR professionals who can guide them through such situations appropriately. By doing so proactively rather than unilaterally deciding upon premature terminations without just cause as defined under labor laws will help protect both parties involved from unnecessary disputes down the line.

Legal Implications for Employees

Proving the existence of a fixed-term contract:

When a fixed-term contract comes to an end, it is important for employees to understand their legal rights and obligations. One crucial aspect is proving the existence of a fixed-term contract. This can be done by providing documentation such as written contracts or offer letters that clearly state the duration and terms of employment.

Employees should also gather any additional evidence that supports their claim, such as emails or correspondence discussing the nature of their employment arrangement. It’s essential to have clear proof in order to establish that they were indeed employed on a fixed-term basis.

Conduct leading to reasonable expectation of contract renewal:

In some cases, even if there isn’t an explicit agreement stating so, certain conduct from employers may lead employees reasonably expect their contracts will be renewed upon completion. For example, consistent renewals over time without significant changes in job responsibilities or conditions could create this expectation.

Other factors contributing towards reasonable expectations include verbal assurances given by supervisors or managers regarding future extensions and ongoing discussions about potential projects beyond the current term.

It’s important for employees who believe they had legitimate reasons for expecting renewal based on employer conduct not only document these instances but also consult with labor experts who can provide guidance specific to South African law.

Four situations considered as dismissals under the law:

Under section 186(1)(b) of South Africa’s Labour Relations Act (LRA), four different scenarios are recognized where ending a fixed-term contract constitutes dismissal:

  1. Non-renewal: If an employer chooses not renewing a employee’s fixed-contract at all after its expiration date, this would qualify as a dismissal under the LRA. This applies regardless whether or not a new contract was offered on less favorable terms.
  2. Renewal on less favorable terms: If an employer decides to renew a fixed-term contract, but offers lesser benefits, wages, or working conditions compared to the original contract, this is considered a dismissal under the law.
  3. Offer to retain on less favorable terms: If an employer offers the employee continued employment but with lesser benefits or conditions than their previous fixed-term contract, this is also considered a dismissal under section 186(1)(b) of the LRA.
  4. Failure to offer indefinite retention: If an employer fails or to offer fixed-term employee continued employment on an immediate indefinite basis without any changes in terms and conditions of their previous agreement, it constitutes dismissal as well.

It’s important for employees who believe they have been unfairly dismissed in any of these situations to seek legal advice and consider lodging a complaint with relevant labor authorities such as the Commission for Conciliation, Mediation and Arbitration (CCMA).

Understanding these legal implications empowers employees by ensuring that their rights are protected when it comes to ending fixed-term contracts. By being aware of how to prove the existence of a contract, recognizing conduct leading towards reasonable expectations, and understanding what constitutes dismissals under South African law, employees can navigate through potential disputes more effectively while safeguarding their interests.

Misconduct and Disciplinary Procedures

Dealing with misconduct of fixed-term contract employees:

When it comes to dealing with misconduct by a fixed-term contract employee, employers should follow the same disciplinary procedures as they would for indefinite-period employees. It is important to note that despite being on a fixed-term contract, these employees have the same rights and obligations as permanent staff.

Applying normal disciplinary procedures:

  1. Investigation:

    The first step in addressing any alleged misconduct is conducting a thorough investigation. This involves gathering all relevant information, interviewing witnesses if necessary, and giving the accused employee an opportunity to present their side of the story.

  2. Informal resolution:

    In some cases where minor or isolated incidents occur, employers may choose to address them through informal means such as counseling or verbal warnings rather than formal disciplinary action.

  3. Formal process:

    If the allegations are serious or repeated offenses have occurred, it may be necessary to initiate formal disciplinary proceedings following company policies and legal requirements outlined in employment contracts or collective agreements.

  4. Notice of charges:

    The employer must provide written notice outlining specific details about each charge against the employee along with supporting evidence gathered during investigations.

  5. Disciplinary hearing:

    A fair hearing should be conducted wherein both parties can present their case before an impartial decision-maker (such as a manager not directly involved). The accused has every right to state his/her defense while presenting any mitigating factors which could influence potential sanctions imposed upon him/her.

  6. Decision-making & Sanctions:

    After considering all presented evidence at hand, the person presiding over this matter will make decisions based solely on facts provided without bias towards either party. The outcome might include one/more actions like issuing warning letters, suspension from work duties, fines, demotion, etc., depending on the severity level associated with particular incident(s).

  7. Appeals Process:

    The disciplined individual reserves full right to appeal against given verdicts/decisions made during the disciplinary hearing. The appeal should be lodged within a specified time frame and must outline the grounds for challenging the decision.

It is crucial to ensure that all steps taken throughout this process are fair, consistent, and in line with company policies as well as legal requirements outlined by labor laws.

By following these procedures diligently, employers can address misconduct effectively while upholding fairness and protecting both their own interests and those of fixed-term contract employees.

Frequently Asked Questions

Question 1: What happens if a fixed-term contract is not renewed?

When a fixed-term contract comes to an end and it is not renewed, it is considered as a dismissal. The employee has full redundancy rights and statutory protection against unfair dismissal. It’s important for employers to act fairly in such situations.

Question 2: Can an employer end a fixed-term contract early?

If the terms of the fixed-term contract allow for early termination, then yes, an employer can legally end the contract before its agreed finishing point. However, if there are no provisions regarding early termination in the contract, terminating it prematurely may be seen as breaching the agreement.

Question 3: What are the rights of fixed-term employees in terms of pay and benefits?

Fixed-term employees have similar minimum rights when compared to permanent workers. They should receive equal pay rates unless their overall terms and conditions are just as good or better than those offered to permanent employees. Fixed-term workers also enjoy other employment benefits like leave entitlements based on their length of service.

Question 4: Can a fixed-term employee refuse to accept renewal on less favorable terms?

Yes! If an employer offers renewing contracts with less favorable conditions or changes that significantly impact job security or remuneration negatively, employees reserve every right within reasonability grounds (as per labor laws) to decline these new agreements without facing any repercussions from management.

Question 5: What happens if a fixed-term employee works past their contract?

When a fixed-term employee continues working after their initial contracted period ends, it implies that both parties agree upon extending this contractual relationship. In such cases, the employer must provide proper notice according to labor regulations prior to dismissing them.

Question 6: Do fixed-term employees have redundancy rights?

Yes! Just like permanent workers, fixed-term employees who have completed two or more years of continuous service are entitled to redundancy rights. They should not be selected for redundancy solely because they have a fixed-term contract, and their entitlements must align with those provided to permanent employees.


  1. https://smelaboursupport.org.za/download/what-happens-when-a-fixed-term-contract-comes-to-an-end/
  2. https://www.nidirect.gov.uk/articles/fixed-term-workers
  3. https://labourguide.co.za/employment-condition/the-fixed-term-contract-of-employment/

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