When ‘fixed-term’ is no longer fixed: The illusion of expiry

 

In Maphosa and Others v New Model Private College and Others (Labour Appeal Court, 28 May 2026), the Labour Appeal Court was required to determine whether employees engaged on repeated fixed-term contracts could be treated as having no employment relationship after the expiry of their contracts, or whether statutory provisions deeming such employment indefinite applied.

The case raises important questions regarding the interaction between fixed-term contracts, reasonable expectations of renewal, and the deeming provisions in section 198B of the Labour Relations Act. The judgment provides decisive clarity on when employees are regarded as permanent by operation of law, even where written contracts suggest otherwise.

 

Background

The appellants were educators who had been employed by the respondent for extended periods under successive fixed-term contracts, in some cases for up to ten years.

In December 2020, the employer informed them that their contracts would terminate on 31 December 2020 and that they could apply for positions in 2021. At the same time, the employer alleged that the educators had participated in an unprotected strike and reserved its right to take disciplinary action.

Despite applying for positions for the following year, the educators received no response and were not permitted to return to work when the school reopened in January 2021. The employees referred a dispute to the Commission for Conciliation, Mediation and Arbitration, characterising the employer’s conduct as an unfair suspension.

 

Arbitration and Labour Court findings

The commissioner found that:

• The repeated renewal of contracts created a reasonable expectation of continued employment.
• The employees remained in employment.
• The employer’s conduct amounted to an unfair suspension.

Compensation equivalent to twelve months’ remuneration was awarded.

On review, the Labour Court disagreed. It held that a reasonable expectation of renewal (relevant to dismissal disputes) does not establish the actual existence of a contract for purposes of a suspension claim. The Labour Court therefore set aside the award.

 

Labour Appeal Court judgment

The Labour Appeal Court overturned the Labour Court’s decision and upheld the commissioner’s award.

Key legal finding

The Court held that the decisive issue was not the doctrine of reasonable expectation, but the operation of section 198B(5) of the Labour Relations Act.

Section 198B provides that:

• An employee may only be employed on a fixed-term contract beyond three months if there is a justifiable reason.
• If no such justification exists, the contract is deemed to be of indefinite duration.

The Court found:

• The employees earned below the statutory threshold.
• They had been employed on successive fixed-term contracts for long periods.
• No justifiable reason for the fixed-term arrangement had been established.

Accordingly, the employees were deemed by law to be employed indefinitely.

This meant that:

• The purported expiry of their contracts had no legal effect.
• Their employment relationship continued.
• The employer’s conduct constituted a suspension.

The Court concluded that the suspension was unfair and reinstated the arbitration award.

Implications of the judgment

• Statutory deeming overrides contractual form
  • The judgment confirms that section 198B(5) has automatic effect.
  • Once its requirements are met, the law deems the employment relationship to be indefinite regardless of what the written contract states.
  • This reinforces that contractual labels cannot override statutory protections.
• Expiry of a fixed-term contract is not decisive
  • Employers cannot rely on the expiry of a fixed-term contract if the employee has, in law, become permanent.
  • The Court made it clear that the “effluxion of time” argument fails where section 198B applies.

Distinction between dismissal and suspension remains important

The Labour Court was correct in principle that a reasonable expectation of renewal relates to dismissal. However, the Labour Appeal Court clarified that the real enquiry must focus on whether an employment relationship exists in law. Where section 198B applies, that relationship exists regardless of contract expiry.

Long-term rolling contracts are high risk

Employers who repeatedly renew fixed-term contracts without justification:

• Risk employees being deemed permanent.
• Lose the ability to rely on contract expiry.
• May incur liability for unfair labour practices or dismissal.

Remedies can be substantial

The compensation awarded (twelve months’ remuneration) reflects the seriousness of non-compliance with statutory protections.

 

Key takeaways

For employers

Fixed-term contracts beyond three months require a clear and defensible justification.

Repeated renewals without justification will trigger section 198B(5).

Do not assume that contract expiry ends the employment relationship.

Ensure that reasons for fixed-term arrangements are recorded in writing.

Review long-term fixed-term employees urgently for compliance.

For employees

Long periods of employment under fixed-term contracts may entitle you to permanent status in law.

You may challenge employer conduct, such as exclusion from work, as an unfair labour practice.

A claim does not depend solely on proving a dismissal.

For legal practitioners

Carefully distinguish between:

• reasonable expectation (dismissal context); and
• statutory deeming (existence of employment).

Plead section 198B explicitly where applicable.

Evaluate earnings thresholds and duration of employment early in disputes.

This judgment confirms the growing importance of statutory deeming provisions in labour litigation.

 

Conclusion

The Labour Appeal Court’s decision is a strong affirmation of the protective purpose of section 198B. It confirms that the law will look beyond contractual form to the reality of the employment relationship.

Where employees are kept on successive fixed-term contracts without justification, permanence is imposed by law. Employers who ignore this principle do so at significant risk.

Ultimately, the judgment sends a clear message: fixed-term contracts cannot be used indefinitely as a substitute for permanent employment.

 

For advice or more information, please contact Riona Kalua.