TAKING on the wrong employee can become a stressful excercise as it is not that easy to dismiss them when they fail to perform. An alternative might be for business owners to consider hiring contract workers to do the job. In that way, if they don’t perform or become too expensive, it’s easier to dispense of them. But this is not always the case.

Karen Stott, who runs human resource consultancy Lewyll Communications, cautions business owners not to place employees on contracts unless it’s to fulfil a specific short-term need as is the case in the construction industry.

For example, getting a contract worker in for a staff member who has gone on extended sick leave, or maternity leave or to assist on a project to last a set length of time.

She says too many businesses are placing employees on contracts which makes it easier to dismiss them.

However, you could find yourself in hot water if you had continually renewed an employee’s short-term contract in the past, but then suddenly decide to terminate it or renew it on terms less favourable for the employee.

This means that the employee may have a case for unfair dismissal at the Council for Conciliation Mediation and Arbitration (CCMA).

Stott says the CCMA does not view contract roll-over in a favourable light. The employee can, in this instance, claim unfair dismissal if they reasonably expected to be employed there on a long-term basis.

As a precaution, Stott recommends business owners don’t renew contracts more than twice. If you decide to extend or renew the contract, you should do so in writing and preferably after the person has completed the contract and had a break.

Stott lists various reasons why you shouldn’t place employees on contracts:


Employees’ motivation may decrease if they are unsure of their position in the business. It may become difficult to retain good employees.

You’d be reluctant to spend time on training someone who you weren’t planning on keeping in the business for a long time.

Stott says some businesses employ workers on an initial short contract as a form of probationary period. The business owner then takes them off the contract if they see they are performing up to standard.

Barney Jordaan, a labour lawyer from Jordaan and Stander, says there is nothing wrong with appointing someone on a three-month contract and then later transferring them to a fixed-term contract. But he says there are risks involved.

Jordaan says the contract employee can still take you to the CCMA and argue that the contract period was a hidden probationary period.

To avoid running into trouble, employers should ensure that they provide the employee with performance counselling, even if they are a contract worker.

If you use the services of temping agencies, labour brokers or employment service companies, you should only use reputable ones as employers can be held liable for any overtime not paid or any defaults to the basic conditions of employment.

Stott also points out that:


Contract employees should receive the same disciplinary action as fixed-term employees.

Employment contract dates must be specified in the employment contract.

The dates cannot be exceeded, as this could result in an expectation of employment.

Should the employment contract change to a permanent contract, a new employment contract must be drawn up with a new date of engagement and the appropriate benefits.

The normal notice periods still apply.

You remind the employee that their contract terminates at the end of that particular month, preferably in writing.

Elliot Mokone, who runs Morena Corporate Services, a company that offers cleaning services, says he has all his employees on fixed-term contracts, even his six office staff. “People can perform, because they know they’re on a (fixed-term) contract,” says Mokone.

He explains that he once had open-ended contracts with his administration staff, but he discovered that they are more productive now that he has placed them on one-year fixed-term contracts.

But he says he won’t simply dispense of under-performing employees at the end of their contract, but rather enforce the necessary disciplinary procedures. He says neglecting to do so may land him in hot water with the CCMA.