[Question] Fixed term contractors vs permanent employees - salary.

[Mary]

I'm struggling to find definitive answers to salary related question for fixed term employees.
What is considered acceptable compensation for fixed term employees?
Should they be paid similarly to their permanent counterparts?
If not, how much of a difference in pay to their permanent counterparts is acceptable?
Should their original contract be rolled or should they obtain a further qualification during the term of employment, are they entitled to an increase?
Any tips on where I could get more info about this is appreciated!

[HR-Student]

try www.acts.co.za

[BusFact]

Hi Mary

I don't think you will find a definitive answer. Unless you work for the Government or a huge corporate with existing salary structures, then any employee's salary is a matter of negotiatation between employer and employee.

Factors such as market related rates and the employee's previous salary would influence the discussions, but aren't decisive factors. In my opinion the actual employee skills (not just their qualification but rather how they work) are what should determine their pay rate. Whether they are permanent or temps would probably be a minor factor.

As for the increase, I would suggest you decide amongst yourselves, clearly upfront in the contract whether an increase in qualification would result in an increase in pay. I would imagine that if this resulted in more productivity for the company, then a pay increase would be a good idea. If it was largely irrelevant, then no increase.

As for the roll over, then its a new contract and you negotiate again. All things being equal, I would say its reasonable to have an inflation linked increase after a year. Of course factors such as whether they are still doing the same job and whether their performance has matched the expectations created in the cv and job interview might affect decisions. Ultimately its down to how much the employer is prepared to retain the services of the employee and how much the employee feels they can get if they went elsewhere.

[Mary]

Ok so there are no hard and fast rules with this, it seems that it's dependant on the situation as well as on the company policy.
There is a perception that fixed term contractors should be earning more than their permanent counterparts - but again I suppose this depends on the skill set of the employee etc.
Thank you for that input - it certainly helps!!

[Dave A]

There is a perception that fixed term contractors should be earning more than their permanent counterparts

Given the lack of stability and benefits, I can understand where that perception comes from. But as far as I'm aware it isn't legislated - at least not in a general way.

[Mary]

I imagine though that good business practice would be to be fair in this regard - is it possible that there is a possible obligation for this if it is the accepted practice/norm?

[Mary]

Sorry, I mean, is there potential grounds for liability if the expectation (based on market practice) is that they should be paid at a higher rate? i.e. is market practice enough to create such? Or is it again dependent upon the situation?

[Dave A]

Sorry, I mean, is there potential grounds for liability if the expectation (based on market practice) is that they should be paid at a higher rate?

I doubt a claim based on "common market practice" would fly. Besides which, there are industries where the "common practice" is to pay fixed term contractors at a lower rate than permanent employees.

When it comes to "good business practice", I'd suggest only that the business is consistent in its handling of the issue (rather than pander to perceptions of common market practice). A claim of precedent or established company operating procedure would have some weight and an inconsistent approach could open doors to a claim (if not reasonably justifiable).

[Mary]

Makes sense that consistency is key, thank you!