Contract Not Renewed | What It Means and Your Legal Rights

In South Africa, non-renewal of a fixed-term contract amounts to dismissal under section 186(1)(b) of the Labour Relations Act 66 of 1995 only if the employee can show a reasonable expectation that the contract would be renewed on the same or similar terms — a test the CCMA and the Labour Court assess against the totality of the employment relationship, including prior renewals, the employer’s representations, and what the contract itself actually says. Where the test is met, the employee has the same unfair-dismissal rights as any other dismissed employee. Where the test is not met, the contract simply expires on its end date and the employee’s remedies are limited to unpaid wages, accrued leave, and any notice or payment-in-lieu required by the Basic Conditions of Employment Act.

The Legal Question: When Non-Renewal Counts as Dismissal

Section 186(1)(b) of the LRA reads:

“(b) an employee employed in terms of a fixed-term contract of employment reasonably expected the employer – (i) to renew a fixed-term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or (ii) to retain the employee in employment on an indefinite basis but otherwise on the same or similar terms as the fixed-term contract…”

The ordinary expiry of a fixed-term contract is not automatically a dismissal — the section 186(1)(b) test must be applied to the facts. The same employee on the same contract may be found to have been “dismissed” in one renewal cycle and not in another, depending on what was said and done between the parties in the run-up to expiry. Recent Labour Court decisions, including Tshwane University of Technology v Naidoo and Others (JR516/16), have applied this test directly to fixed-term academic appointments, treating prior renewals and the employer’s renewal practice as central to the analysis.

The Reasonable Expectation of Renewal Test

The leading articulation comes from the Labour Appeal Court’s treatment of the “reasonable expectation” doctrine in reported cases under section 186(1)(b). The test is objective: it asks how a reasonable employee in the position of the claimant would have understood the situation, not what the employer privately intended.

Factors that typically support a reasonable expectation of renewal

• Multiple prior renewals on the same or similar terms.
• Verbal or written assurances from the employer or senior management that the contract would be renewed.
• A past practice of renewing unless good cause exists.
• An industry or workplace norm that fixed-term contracts in that role are routinely renewed.
• Conduct by the employer after the contract was signed that pointed to continued employment — for example, allocating further work or extending responsibilities.

Factors that typically undermine a reasonable expectation

• Express wording in the contract saying it does not carry an expectation of renewal.
• Genuine project-based or seasonal work that has clearly ended.
• Notification, well before expiry, that the contract would not be renewed.
• Operational restructuring communicated to the employee in good time.

Contractual wording is useful to the employer but is not conclusive on its own — the CCMA and the courts have repeatedly held that the surrounding conduct can override even an explicit “no expectation” clause.

What the Employee Gets on the Contract Expiring Either Way

Whether or not the section 186(1)(b) test is met, the following payments fall due on the contract’s end date:

Item	Source	What is payable
Wages and allowances	Contract / BCEA	All unpaid salary, overtime, and agreed allowances up to the last day worked.
Accrued annual leave	BCEA section 40 read with section 20	One day’s remuneration for every 17 days worked or entitled to be paid during the leave cycle, paid out on termination.
Notice or payment in lieu	BCEA section 37	One week’s notice if employed four weeks or less; two weeks if more than four weeks but not more than a year; four weeks if employed one year or more. The employer may pay in lieu.
Certificate of service	BCEA section 42	Written record of the employee’s job title and start and end dates, on termination.
Severance pay	BCEA section 41	At least one week’s remuneration per completed year of continuous service — only if the non-renewal is rooted in the employer’s operational requirements. Not a default on ordinary non-renewal.

What the Employee Gets If Non-Renewal Is a Dismissal

If the reasonable-expectation test is met, the employee gains the full unfair-dismissal rights of any other dismissed worker under the LRA:

• The right to refer the dispute to the CCMA under section 191 of the LRA and challenge both the substantive and procedural fairness of the dismissal.
• The employer’s obligation to show a fair reason (typically operational requirements / retrenchment, or misconduct / incapacity) and a fair procedure.
• If the dismissal is found to be unfair, the CCMA can order reinstatement, re-employment, or compensation up to 12 months’ remuneration under section 194 of the LRA.
• If the dismissal is automatically unfair — linked to a protected right under section 187 of the LRA, such as union membership, pregnancy, or a protected disclosure — the higher 24-month cap under section 196 applies.

Where the dispute is not a dismissal but a pure contract-money claim (unpaid wages, accrued leave, notice pay), the employee’s alternative route is the Labour Court under section 77(3) of the BCEA, which has concurrent jurisdiction with the civil courts over contracts of employment.

The CCMA Steps, Quick Version

1. Confirm the date of dismissal. This is normally the date the contract expired, or earlier if the employer confirmed in writing that it would not be renewed.
2. Attempt internal resolution. The CCMA expects — and the process benefits from — a record of attempted conciliation with the employer first.
3. Lodge Form 7.11 within 30 days. Use CCMA Form 7.11 to refer the unfair-dismissal dispute to the CCMA, within 30 days of the date of dismissal. The CCMA has discretion to extend this period on good cause shown, but condonation is not automatic.
4. Attend conciliation. The CCMA appoints a commissioner and tries to settle the dispute. If it settles, the agreement is made an arbitration award. If it fails, a certificate of outcome (Form 7.13) is issued.
5. Refer to arbitration. If conciliation fails, request arbitration within 90 days of the certificate of outcome. The arbitrator’s award is final and binding, subject to limited review in the Labour Court.

What the Employee Should Do Right Now

• Read the contract. Confirm the precise wording and any side letters — look for the “no expectation of renewal” clause, and check whether prior renewals had any material variations.
• Build the paper trail. Pull the email and message trail around the time the contract was signed, around any prior renewals, and around any recent communications about the contract’s end.
• Do not sign a settlement before getting legal advice. A once-off ex-gratia payment in exchange for a full and final settlement closes the dismissal claim.
• Calculate the time limit. The 30-day CCMA clock starts on the date of dismissal, not the expiry date of the contract, and late referrals risk being out of time.

Common Pitfalls

• Treating expiry as automatically not a dismissal. The reasonable-expectation test exists precisely because the position is not automatic.
• Missing the 30-day CCMA referral window. The CCMA has discretion to extend but does not have to.
• Signing a waiver in exchange for an ex-gratia payment. Always read what is being given up.
• Assuming severance is payable. Severance follows from the cause of termination (operational requirements), not the fact of termination.
• Confusing the BCEA notice rule with the LRA dismissal rule. Two separate regimes: BCEA governs the contract-end money; LRA governs whether the ending itself was a dismissal.

Fixed-Term vs Permanent Employees — Why the Distinction Matters

Factor	Fixed-term contract (no expectation of renewal)	Fixed-term contract (reasonable expectation of renewal)	Permanent employment
Does the contract simply expire?	Yes — no dismissal claim.	No — non-renewal is a dismissal under LRA section 186(1)(b).	No — termination is a dismissal under LRA section 186(1)(a).
Notice / payment in lieu	BCEA section 37 notice.	BCEA section 37 notice.	BCEA section 37 notice.
Accrued leave payout	BCEA section 40.	BCEA section 40.	BCEA section 40.
Unfair dismissal claim	No.	Yes — to the CCMA.	Yes — to the CCMA.
Severance	Only if the BCEA section 41 trigger is met.	Only if the BCEA section 41 trigger is met.	Only if the BCEA section 41 trigger is met (e.g. retrenchment).
Appointment to a comparable position on expiry	Not required.	May be ordered as a remedy.	May be ordered as a remedy.

Frequently Asked Questions

If my fixed-term contract just expires, am I dismissed?

Not automatically. Under section 186(1)(b) of the Labour Relations Act 66 of 1995, non-renewal is a dismissal only if the employee had a reasonable expectation that the contract would be renewed on the same or similar terms. Whether that expectation exists depends on the totality of the relationship — including any prior renewals, what the employer said or did, and the wording of the contract itself. If the expectation test is met, you have the same unfair-dismissal rights as any other dismissed employee.

How long do I have to challenge non-renewal at the CCMA?

An unfair-dismissal referral must be lodged using CCMA Form 7.11 within 30 days of the date of dismissal. The date of dismissal is normally the date the contract expired, or earlier if the employer confirmed in writing that it would not be renewed. If conciliation does not resolve the dispute, the matter must be referred to arbitration (Form 7.13) within 90 days of the certificate of outcome. Both time limits may be extended on good cause shown.

Am I entitled to notice or a payment in lieu of notice on a fixed-term contract?

Under section 37 of the Basic Conditions of Employment Act 75 of 1997, an employer must give notice of at least one week if the employee has worked four weeks or less, two weeks if employed for more than four weeks but not more than a year, and four weeks if employed for one year or more. The notice must be in writing, and the employer may pay in lieu of working it out. A collective agreement may permit a shorter period, but no agreement may require or permit an employee to give a longer period of notice than the employer.

What if my contract has a clause saying there is no expectation of renewal?

Helpful to the employer, but not decisive. The CCMA and the Labour Court treat the contractual wording as one factor among many. An employee can still establish a reasonable expectation from surrounding conduct — repeated prior renewals, oral or written assurances, or the employer’s own established practice — even where the contract itself contains a no-expectation-of-renewal clause.

Can I get severance pay if my fixed-term contract is not renewed?

Not as a default. Severance pay under section 41 of the Basic Conditions of Employment Act 75 of 1997 is triggered when an employee is dismissed for reasons based on the employer’s operational requirements (such as retrenchment). The ordinary non-renewal of a fixed-term contract does not, on its own, trigger severance. Where the non-renewal is driven by genuine operational restructuring, severance may follow; a routine end-of-contract exercise does not usually attract it.

What is the maximum compensation I can get if the CCMA finds the non-renewal was an unfair dismissal?

Up to 12 months’ remuneration for an ordinary unfair dismissal under section 194 of the Labour Relations Act 66 of 1995. If the dismissal is automatically unfair — for example, because it was linked to a protected right such as union membership, pregnancy, or a disclosure protected under the Protected Disclosures Act — the cap rises to 24 months’ remuneration under section 196 of the LRA.

Should I sign a settlement offered by the employer when the contract is not renewed?

Not before reading what the settlement closes off. A settlement recorded as a full and final settlement closes the unfair-dismissal claim against the CCMA. Once you sign, the right to refer the dispute is over. Get legal advice before signing anything your employer puts in front of you.

Can I get my job back rather than compensation?

Yes — reinstatement or re-employment is the primary remedy under section 193 of the Labour Relations Act 66 of 1995, and compensation is only ordered if reinstatement is not practicable. In practice, reinstatement is more likely to be ordered for older, longer-tenured employees, and the CCMA also weighs whether the working relationship can realistically be restored.

If your fixed-term contract has just expired or you have been told it will not be renewed, Burger Huyser Attorneys’ Labour Law team can advise on whether your situation qualifies as dismissal under the LRA, what your options are at the CCMA or the Labour Court, and what to do before you sign anything your employer puts in front of you. The firm has a dedicated Labour Law consultant — Marius Ferreira — and attends to CCMA disputes across the Gauteng region, with branches in Randburg (011 888 0246), Sandton (011 253 3080), Pretoria (012 471 5700), Centurion (012 644 4990) and Roodepoort (011 668 0030). Contact the branch nearest you to book a first consultation; bring the contract, the non-renewal letter or text, and any prior correspondence about the contract’s end date.