BCHC: Can an employee hold a reasonable expectation of renewal and permanency at the same time?

An employee can refer an unfair dismissal dispute to the CCMA or bargaining council in terms of section 186(1)(b) of the Labour Relations Act, 66 of 1995 (LRA) if the employee was employed on a fixed term contract and reasonably expected that the employer would –

  • Renew the contract on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or
  • Retain the employee on an indefinite basis on the same or similar terms as the fixed term contract, but the employer offered to retain the employee on less favourable terms, or did not offer to retain the employee.

Employers occasionally face cases where employees claim that they held both a reasonable expectation of renewal and a reasonable expectation of permanency.

Commissioners then have to figure out what the employee’s actual expectation was. If this clarity is not sought or cannot be obtained, they often conclude that the employee held both an expectation of renewal and an expectation of permanency which results in the award being susceptible to review by the Labour Court.

Such a review application was heard in the Cape Town Labour Court on 31 May 2017 by Judge Anton Steenkamp in City of Cape Town v IMATU obo Searle & Others under case number C494/2016.

In that case the City argued that an employee who was employed on a fixed term contract, could not have held both expectations at the same time. This was based on the fact that the previous version of section 186(1)(b) of the LRA only referred to a reasonable expectation of renewal which meant that there was no basis for an expectation of permanency. This section was, however, amended in 2015 to include a reasonable expectation of permanency as a new and alternative remedy to a reasonable expectation of renewal. The mutual exclusivity of these remedies are evident from the use of the word “or” as opposed to “and” in the amended section.

The Court in the Searle case agreed with the City’s interpretation of the section and inter alia concluded that the award should be reviewed and set aside for the following reasons:

  1. The commissioner committed an error of law by ignoring the use of the word “or” in the amended section of the LRA.
  2. The employee could not have held both expectations at the same time as the two are mutually exclusive.
  3. Any reasonable expectation of renewal cannot include a reasonable expectation of permanency.

Employers should therefore insist that employees clarify the exact basis of their disputes before proceeding with their cases. If commissioners are reluctant to accept the above interpretation of section 186(1)(b), the above judgment can be referred to.