Do employers need to retrench fixed-term employees at the end of their Contracts


In the case of Dumisani Yeko v Red Mining South Deep (Pty) Ltd (LC) JS633/18 [2022], the employer terminated the fixed-term employment of an individual after the conclusion of a tender rail contract with Gold Fields, a joint venture. The employee’s tenure was directly linked to the duration of the rail contract.

Following Gold Fields’ termination of the contract, the employer initiated a retrenchment process, leading to the employee’s retrenchment. Despite the opportunity for fixed-term employees to apply for positions with the new contract holder, Flint, the employee was unsuccessful and subsequently lodged an unfair dismissal dispute. The court examined three key issues under the Labour Relations Act 66 of 1995, as amended (LRA):

  1. Whether the employee was unfairly retrenched under section 189A?
  2. Whether a transfer under section 197 of the LRA occurred?
  3. Whether the employee was entitled to protection under section 200B?

The court, referencing sections 189(1) and (3) and section 186(1) of the LRA pertaining to retrenchments, ruled that the termination of a fixed-term contract, either due to the passage of time or the occurrence of a specified event, did not constitute a dismissal as per section 186(1) of the LRA. Consequently, the employer was not obligated to follow the retrenchment process outlined in section 189A in such circumstances.

Regarding section 197 of the LRA, which addresses automatic transfers of employment contracts in business sales, the court clarified that this provision applied exclusively to the transfer of a business, not the loss and award of short-term service contracts. In this case, the court determined that no transfer had occurred, and Flint was not considered the new employer of the employee.

Despite this outcome, the court acknowledged the gap in protection for fixed-term employees resulting from the limited scope of section 197. It highlighted section 200B of the LRA as a source of protection for such employees. Section 200B holds employers liable for their obligations and extends this liability to individuals or entities engaging in associated or related activities or businesses with the intent or effect of undermining the purpose of the LRA.

The court emphasized that joint and several liability, as per section 200B, could apply even if the employer was not the contracted entity. However, in this specific case, the court couldn’t rule on this point as the employee’s claim didn’t rely on section 200B, and there was no allegation that Gold Fields was also an employer. Consequently, the employee’s case was dismissed.

This judgment underscores that, when fixed-term employment contracts end due to time lapse or contractual events, employers are not obliged to adhere to the section 189A retrenchment process. Additionally, depending on the circumstances, the loss and award of service contracts may not constitute a transfer. Nevertheless, the judgment underscores the possibility of joint and several liability for employers under section 200B of the LRA, even when they are not the contracted employer.