If you have been rolling over fixed term contracts for a year, you probably assume you have no security and no rights. A great many South African employers rely on you assuming exactly that.
Section 198B of the Labour Relations Act says otherwise.
The three month rule
If you earn below the BCEA earnings threshold, which from 1 May 2026 is R269 600.90 a year, or R22 466.74 a month, then a fixed term contract longer than three months is only lawful if your employer has a justifiable reason for it.
No justifiable reason, and you are deemed to be employed indefinitely. Permanent, in ordinary language, whatever the piece of paper says.
Check which side of the threshold you are on first. Above it, section 198B does not apply to you at all, and your fixed term contract is simply a contract. See overtime rate for how the threshold works and what “earnings” actually means, because it is not your cost to company.
What counts as a justifiable reason
The Act lists them. The common ones are:
- Replacing an employee who is temporarily absent
- A temporary increase in work volume, not expected to last beyond 12 months
- A student or recent graduate employed for training or work experience
- Work on a specific project of limited or definite duration
- A non citizen with a work permit for a defined period
- Seasonal work
- An official public works or job creation scheme
- A position funded by an external source for a limited period
- An employee who has reached normal retirement age
Notice what is not on that list. “We prefer contractors.” “That is how we do it here.” “The budget is annual.” Rolling three month contracts for the same permanent job, year after year, is the classic abuse, and it is exactly what section 198B was written to stop.
Your employer has to be able to point to the reason. And the reason must be genuine.
Equal treatment
After three months, you must be treated no less favourably than a comparable permanent employee doing the same or broadly similar work, unless there is a justifiable reason for the difference.
Same work, materially worse pay or benefits, no good reason, and you have a claim.
You are also entitled to equal access to opportunities to apply for vacancies. Your employer cannot run an internal recruitment process that quietly excludes the fixed term staff.
The severance nobody claims
This one is worth money and almost nobody knows about it.
If you are employed on a fixed term contract for longer than 24 months to work on a specific project of limited or definite duration, your employer must pay you severance of one week’s remuneration for every completed year of service when the contract ends.
Not if your employer offers you, or procures for you, suitable alternative employment before the contract expires.
If you have been on a long project contract and it simply ended, work out what you may be owed with our retrenchment package calculator, and read severance pay for how “remuneration” is defined. It is not your basic salary.
Non renewal can be a dismissal
Here is the other thing employers rely on you not knowing.
If you had a reasonable expectation that your contract would be renewed, on the same or similar terms, and your employer either did not renew it or renewed it on less favourable terms, that counts as a dismissal under the LRA.
Not a contract that simply ran its course. A contract you had good reason to think would continue.
What creates a reasonable expectation? A history of repeated renewals. A promise, verbal or written. A practice in the workplace. An assurance from your manager. Being told to plan for next year’s work.
If that applies to you, you can refer an unfair dismissal dispute. And the ordinary clock applies: 30 days. See unfair dismissal and use the calculator there.
What to do
- Check the threshold. Below R269 600.90 a year, section 198B protects you. Above it, you are on your own contract.
- Count your months. Past three, ask your employer in writing for the justifiable reason for the fixed term. Make them commit to an answer.
- Compare yourself to a permanent colleague doing the same work. Pay, benefits, leave, access to vacancies.
- Keep every contract and renewal. The paper trail of rollovers is your case.
- Keep the evidence of expectation. Emails, messages, anything suggesting the contract would continue.
- Act within 30 days if a non renewal is really a dismissal.
Frequently asked questions
How long can a fixed term contract be in South Africa? Longer than three months only if the employer has a justifiable reason. Without one, an employee earning below the earnings threshold is deemed permanently employed.
Can rolling fixed term contracts make me permanent? Yes. If you earn below the threshold and there is no justifiable reason for the limited duration, you are deemed to be employed indefinitely.
Do fixed term employees get the same pay as permanent staff? After three months you must be treated no less favourably than a comparable permanent employee doing the same or similar work, unless there is a justifiable reason.
Do I get severance when my fixed term contract ends? Generally no, but there is an important exception: a contract longer than 24 months for a specific project attracts severance of one week per completed year.
Is non renewal of my contract a dismissal? It can be. If you had a reasonable expectation of renewal on the same or similar terms and it was not renewed, or renewed on worse terms, that is a dismissal you can take to the CCMA.
Does section 198B apply to me if I earn a good salary? No. It does not apply to employees earning above the BCEA earnings threshold of R269 600.90 a year.
Sources
- Department of Employment and Labour, Basic Conditions of Employment Act 75 of 1997
- CCMA, Frequently asked questions
Fixed term contracts are governed by section 198B of the Labour Relations Act 66 of 1995. This is general information, not legal advice.
