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Dismissing a fixed-term employee before the end of his contract

ContractIf an employer is considering to terminate a fixed-term employee’s contract early, then the following case should be noted:

Case Law: Buthelezi v Municipal Demarcation Board, JA 37/2002

In this case, the Municipalitty carried out an early termination of Buthelezi’s fixed-term contract. Buthelezi then claimed this as an unfair dismissal. The Labour Appeal Court (LAC) agreed with him. The LAC noted that Buthelezi’s fixed-term contract did not provide for early termination. Because of this, the employer had no right to terminate the contract earlier, even on notice.

What can be learned from this case?

The LAC made it clear that, when a fixed-term contract is entered into, both parties must see it through. So, neither the employer nor the employee can get out of the contract earlier than the agreed or end date.

However, there is an exception to this. In other words, if an employer made provision for the possibility of early termination in a fixed-term contract, then it can be done. For example, the employer may wish to do so for ‘operational requirements’ or for incapacity.

This can actually be beneficial to both parties, in that the employee too would not be bound to the contract if, for example, he/she was offered another job somewhere else.

At the end of the day, the importance of this case stands to remind employers to always think carefully before entering into a fixed-term contract. Employers should provide for the possibility of early termination of the fixed-term contract, if the employer thinks it might need to.

If employers do not do this, they then have to adhere to the contract’s period, until the end date.  If an employee takes an employer for an unfair dismissal, the employer could end up paying him/her compensation for the remaining period of the fixed-term contract.