We rely on income to sustain ourselves and our families, yet its adequacy can vary widely, sometimes stretching comfortably across the long term, while at other times barely lasting a month. To mitigate such uncertainties, many seek permanent employment supplemented by additional income streams to weather unforeseen challenges.
However, circumstances don’t always align with our plans. Some individuals find themselves in fixed-term employment contracts, known under the Employment Act as contracts of specified duration, indicating their time-bound nature. It’s important to note that these contracts can be verbal or written, as outlined in Section 2 of the Employment Act. This section defines a contract of employment as an agreement, regardless of its form, wherein one party agrees to provide labor in exchange for wages or other benefits under the direction of another party. With this context in mind, this article aims to clarify whether employers are legally obliged to inform employees when their fixed-term contracts are ending and will not be renewed.
While some argue that such notification allows employees to plan for alternative income sources, the article explores the legal stance on this matter.
The error
There is a misconception that when employment contracts (generally) come to an end, one party must notify the other of such. When it comes to fixed-term contracts, most people believe that when it comes to an end, the employer must notify the employee that the contract is coming to an end and it will not be renewed. This is normally linked to the notice period outlined in the contract of employment i.e., one month notice or three months’ notice.
This is further linked to section 18(2a-b) of the Employment Act which reads “notwithstanding anything to the contrary contained in the contract of employment, the minimum length of any notice referred to in subsection (1)(b) shall where the wages are payable in respect of any period exceeding a day but less than a week, be one day or where the wages are payable in respect of any period not less than a week, be equal in length to the period.” This section states that the minimum lawful notice period is linked to the payment cycle.
Therefore, employees who are paid on a monthly basis are to serve or receive one month notice. As such employees on fixed-term contracts would expect their employer to give them one month notice prior to their contract expiring.
The correct stance
Fixed-term contracts are time-specific, what this means is that they are based on a specific duration. Some can be two years or five years etc. These contracts normally also include specific dates i.e., effective 1st December 2023 until the 30th November 2024.
The law states that by virtue of the actual dates and duration of the contract being specified in the contract of employment, then both parties automatically know when the contract starts and ends. This therefore means that there is no need for any formalities as far as notice is concerned. There is a plot twist though, if an employee is on a renewed fixed-term contract or a series of them, then some sort of expectation has been created as such there would be a need to communicate a nonrenewal.
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