Termination of Fixed-Term Contracts During Probation – How Does It Work?
Today`s off-the-desk is based on the termination of fixed-term contracts during the probation period. Recently, I dealt with a case on the above-mentioned issue. It has become a norm that employers enter into employment contracts (Fixed or Permanent) with a probationary clause for a specific period in relation to the position occupied. What happens when the employer is not happy about the employee’s performance or demeanour during the period and considers terminating the contract before probation expires? Does the employer have enough grounds to terminate the contract?
Yes, an employer can dismiss an employee during probation, but they must follow fair procedures and have a valid reason. In South Africa, probation allows employers to assess an employee’s suitability for the role. An employer can terminate a fixed-term contract during probation before expiry if the contract allows for early termination with a valid reason (e.g., performance issues, operational requirements, and/ or misconduct), and fair procedures are followed.
It is Imperative that I unpack what needs to be considered before the employer initiates the process.
- Fair reason: Employers typically need a reason like performance issues or misconduct.
- Procedural fairness: Follow the company’s disciplinary procedures and give the employee a chance to respond, or to state their case/ side of the story.
- Notification: Check the employment contract for specific probation terms and Notice periods
In SA Rugby (Pty) Ltd v CCMA, the Court held that termination must align with contract terms and fairness principles. In Mouton v South African Revenue Service, the Labour Court held that employers must show the employee is unsuitable for the job, and in Hlope v Eskom Holdings SOC Ltd, the Labour Court emphasised that procedural fairness is required even during probation.
Failure to follow the correct procedure could lead to a serious breach of contract: If no valid reason or procedure, it could lead to contractual claims such as unfair dismissal, and the employee may claim at the CCMA if the procedures weren’t fair.
Should you be unsure of how to handle these things correctly, please reach out to us so that we can assist with the process and guide you through it all safely.
Off The Desk of
Hendrik Senona
Senior IR and HR Consultant