The question that all small business owners will have at some or other point during the existence of their business is whether as an owner/employer, they can employ more people and whether they are obligated by law to give such people permanent employment.

What happens if you have a person that comes in on a part time basis to assist with admin, are they an employee by law, further what happens if you agree to a fixed term contract?

In terms of S 200 A of the Labor Relations Act and Section 83 A of the Basic Conditions of Employment Act you are presumed to be employees if:

• The manner in which a person works is subject to your control
• The person works for an average of 40 hours per month over a period of 3 months
• The person is a economically dependent on you
• The person renders services to one person
• You as the employer provide the employee with the tools to perform their duties

The question that then arises is whether a small business can employ on a fixed term contract?

A fixed term contract means a contract of employment that terminates on the occurrence of specific event, the completion of a specific task or project. The simple answer to the question above is yes; the LRA affords employees added protection. This is how:

• What protection are you afforded?

Fixed term employment contracts with lower earning employees are now limited to a 3 month period. After 3 months, the employee will be deemed to be an indefinite employee and will therefore be protected against things like unfair dismissal and will have to be registered with the Department of Labor for UIF benefits.

• What is meant by lower earning?

The LRA has set a threshold of R 205, 433.20 or less per annum what this means is that employees that earn more than the mentioned amount are not afforded the protection relating to fixed term contracts.

• What employers are exempted from the above?

Employers should take note of the fact that the above does not apply to employers that have less than 10 employees or to an employer that employs less than 50 employees and has only been in operation for less than 2 years.

• Requirements for renewal

It is now a requirement that renewal contracts should be writing and the reason for renewal should be stated as well as reasons why the employer chooses to fix the term. The onus is on the employer to prove why they chose to enter into a fixed term contract.

It is always justifiable to to enter into a fixed term contract if

• The nature of work is so limited or is definite in duration.
• The employer can demonstrate a reason for instance if the employee is a recent graduate and the objective of the employment is to gain experience.