- South African labour law protects employees from repeated fixed-term contract renewals where the work is permanent in nature.
- Employers must have a valid and objective reason for fixed-term contracts and record that reason in writing or risk employees being deemed permanent.
- Courts are focusing on the reality of the work rather than the wording of contracts, exposing employers to unfair dismissal claims and other legal consequences.
Fixed-term contracts have become part of everyday work life in South Africa. They’re in schools, non-profit organisations, call centres, shops, healthcare, and construction.
For employers, they offer flexibility. But for employees, they often mean living from one renewal to the next, never sure whether they’ll still have a job at the end of the month.
However, our labour courts are increasingly ruling that if the work is permanent, the contract has to be permanent, too.
It doesn’t matter what the document is called. It doesn’t matter how many times it’s been renewed. It doesn’t matter what the funding cycle looks like. The courts are now looking at the reality of the work, not the label on the contract.
And that has serious consequences for employers who have been relying on rolling renewals and for employees who have been stuck in “temporary” roles for years.
In terms of the Labour Relations Act (LRA), two critical elements affect workplace contracts today:
Section 186(1)(b) – which deals with reasonable expectation.
If an employee reasonably believes that their contract will be renewed, or that they’ll be made permanent, and then the employer doesn’t renew, the law will treat this as a dismissal. As a result, the employee will be able to challenge it as unfair.
Section 198B - the section that protects employees who earn below the BCEA (Basic Conditions of Employment Act) earnings threshold.
It says:
- A fixed-term contract longer than three months must have a valid, objective reason.
- That reason must be written into the contract.
- If not, the employee will be deemed to be permanent.
This prevents employers from using temporary contracts to avoid permanent obligations, and the courts are enforcing it.
Abuse of repeated renewals and why the courts are pushing back
For years, employers believed that as long as a contract had an end date, they were safe. Renew it every six months, every year, every two years - and the employee stays “temporary”.
That era is over! When a contract is renewed again and again, the courts will ask a simple question:
Is the work actually temporary, or is the contract temporary while the work is permanent?
Thandi’s story
Thandi is a foundation-phase teacher who was originally hired on a one-year contract. Then another. Then another. Five years later, she was still teaching the same class, following the same timetable, doing the same work as permanent staff. Yet, each year she was told, “We’ll see what the department approves.”
Since her work was clearly ongoing, the LRA views her employment as permanent, no matter what the contract says.
Funding structures don’t change the nature of the work
Because non-governmental organisations (NGOs) and public-sector programmes often rely on donor or Treasury funding, they sometimes argue that because the funding is temporary, the job is temporary, too. Not so.
Ayesha’s story
Ayesha worked as an operations administrator for an NGO. Her contract was tied to a donor grant that renewed annually. She handled finances, reporting, logistics and all the other elements that allowed the organisation to function effectively, and yet, when the grant amount dropped, her contract wasn’t renewed.
But her work didn’t disappear. The organisation still needed finance, reporting, and logistics. The funding cycle didn’t make her job temporary - it only made the money temporary.
The courts are clear that funding is not a justification for long-term temporary employment.
Client contracts are not “projects”
In outsourced industries, employers often tie employment to a client contract: if the client renews, the employee is renewed. If the client leaves, the employee is out.
That’s not good enough for the courts anymore.
Sipho’s story
Sipho worked in a call centre on a six-month contract linked to a corporate client. The client renewed its service agreement every year, and Sipho’s contract was renewed each time.
Then, after four years, the client moved to another vendor, and Sipho’s contract wasn’t renewed. But Sipho’s work didn’t disappear. The courts are clear that employment cannot depend on the “whims of a third party”.
Paperwork matters
If the contract isn’t in writing, or if the justification for the fixed term isn’t recorded, the employee becomes permanent by law. No argument, no negotiation.
Reasonable expectation is at the heart of disputes
Section 186(1)(b) protects employees who have been led to believe their contract will be renewed or converted to permanent employment.
When establishing reasonable expectation, the courts look at:
- How many times has the contract been renewed?
- What did the employer say or imply?
- Is the work ongoing?
- Whether others in similar roles were made permanent,
- The overall conduct of the employer.
It’s not about the employee’s hopes; it’s about the employer’s behaviour. If a reasonable expectation is found, the non-renewal is treated as a dismissal. And that opens the door to reinstatement, compensation, and findings of unfair dismissal.
This is one of the biggest risks for employers who use fixed?term contracts as a default.
Universal protections
All fixed-term employees are protected from:
- Unfair non-renewal.
- Misleading conduct.
- Inconsistent renewal practices.
And then there are the extra protections for employees below the earnings threshold, which is where section 198B becomes powerful: if the employer cannot show a valid, objective reason for the fixed term - and record it in writing - the employee is automatically deemed permanent.
Michael’s story
Michael was hired as a receptionist on a three-month contract to help during a busy period. The contract was then extended twice. Nine months later, the employer refused to renew his contract, saying that it was only ever temporary.
But under s198B, employers have to provide a lawful, factual reason for the limited duration. If they can’t, Michael’s job is permanent. Full stop.
The legal test at a glance
A fixed-term contract must be permanent if:
- The work is ongoing.
- The role is part of normal operations.
- The contract has been renewed repeatedly.
- The employer cannot show a valid, objective reason for the limited duration.
- Or the justification is not written into the contract.
If any of these apply, the employee may already be permanent in the eyes of the law, regardless of what the contract says!
Legal trends in 2026:
1. Substance over form
The courts look at the work, not the label.
2. Administrative precision is essential
A missing clause or vague justification is no longer a technicality - it’s a liability.
3. Rolling contracts are a red flag
The longer the renewals, the weaker the employer’s case.
4. Vulnerable workers are receiving better protection
Especially those earning below the threshold.
5. Employers must justify, not assume
The burden of proof sits with the employer.
What employers and employees should take from this
For employers
- Review all fixed-term contracts.
- Make sure each one has a lawful, factual justification.
- Put the justification in writing.
- Avoid rolling renewals unless the work is genuinely temporary.
- Communicate clearly and consistently.
For employees
- Know your rights under S186(1)(b) and s198B.
- Keep records of renewals and conversations.
- If the work is ongoing, you may have stronger rights than you realise.
The bottom line
Fixed-term contracts still have a place in South Africa: they’re appropriate for genuine projects, seasonal work, temporary peaks, and short?term replacements. But they can’t be used to disguise permanent roles. If the work is permanent, the contract must be permanent.
And both employers and employees need to act accordingly!
If you need to consult or have a question on these matters, email ann-suhet@vdm.law or phone 011 394 1606 Ext 105. Questions may also be sent to expert@conviction.co.za
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