Non-Renewal of Fixed-Term Contract Letter | Sample and Guide

A non-renewal of fixed-term contract letter in South Africa is the written confirmation by an employer that a fixed-term employment contract will expire on its agreed end date and will not be renewed or extended. Under the Labour Relations Act 66 of 1995 (LRA), non-renewal may constitute dismissal — and attract CCMA jurisdiction — where the employee had a reasonable expectation of renewal based on the contract wording, prior renewal history, representations by the employer, or conduct after the original end-date. The letter must therefore be timed to give reasonable notice before the end-date, state the contract position unambiguously, and avoid wording or conduct that could crystallise that expectation.

What Is a Fixed-Term Contract and When Can It Be Non-Renewed?

A fixed-term contract is an employment contract with a defined start and end date, or one tied to the completion of a specified project or event. It is governed by the Basic Conditions of Employment Act 75 of 1997 (BCEA) and the LRA, and it is appropriate only where the work is genuinely finite.

Common situations in which a fixed-term contract is the right tool:

• Project-based work with a defined deliverable and completion date.
• Seasonal work tied to a recurring but bounded operational cycle.
• Replacement of an absent employee on a known return date (for example, maternity or study leave).
• Work tied to funding, a third-party contract, or another external authorisation that is finite by nature.

Non-renewal means the contract simply runs out and is not extended. It is distinct from termination for misconduct, incapacity, or operational requirements — those are dismissals on substantive grounds and follow separate procedures. Where the same employee has been re-engaged on successive fixed-term contracts covering essentially the same work, however, the employer must consider whether the relationship has become indefinite in substance, with the protections that flow from that status under the LRA and BCEA.

Does Non-Renewal of a Fixed-Term Contract Count as Dismissal?

Not automatically. Section 186(1)(b) of the LRA defines “dismissal” to include a refusal to renew a fixed-term contract where the employee had a legitimate expectation of renewal. The CCMA applies the “reasonable expectation of renewal” test — whether a reasonable employee in the same position would have expected renewal on the same or similar terms — to decide whether a particular non-renewal is in fact a dismissal.

The factors weighed in applying that test are:

• The wording of the contract itself, including any clause recording that the contract will not be renewed.
• Whether the contract has previously been renewed, and on what terms.
• Any representations made by the employer — verbal or in writing — about extension, permanence, or continued engagement.
• The nature of the work, including whether the underlying need is genuinely finite.
• The employer’s conduct after the original end-date — for example, continued work, continued pay, or representations about extension that crystallise an expectation.

Where the test is met, the non-renewal is treated as an unfair dismissal and is adjudicated as such at the CCMA, with potential compensation under section 194 of the LRA. Delay in communicating the decision, or allowing the employee to continue working past the end-date while the decision is being “considered,” is a recurring source of CCMA exposure for South African employers.

When Is Non-Renewal Not Dismissal?

Non-renewal is the natural expiry of a finite contract — and not a dismissal — where all of the following conditions are met:

• The contract expressly records that it will not be renewed and the work is genuinely finite.
• The employer gives clear, timely notice that the contract will not be renewed.
• There is no history of repeated renewals covering substantially the same role.
• No representations have been made (verbally or in writing) about extension or permanent employment.
• The employer does not continue to employ the employee past the end-date without a clear, fresh arrangement.

Each of these conditions is independently important. The last two in particular — representations and post-end-date conduct — are the conditions most often missed in practice, and they are the ones that convert an ordinary non-renewal into a constructive dismissal.

Grounds for a Fair Non-Renewal Decision

A non-renewal decision should rest on a genuine, documented reason rather than being communicated in response to a performance or conduct concern that has not been raised through the correct disciplinary process. Acceptable grounds include:

• Expiry of the genuine finite need — project completed, seasonal work ended, replacement employee returned.
• Genuine operational or financial reasons documented before the renewal decision is communicated.
• Expiry of funding, contract, or third-party authorisation that underpinned the fixed-term engagement.
• Restructuring of the role such that the original work no longer exists in its previous form.

The reason should be recorded in an internal file note at the time the decision is made — not retrospectively. The file note is the primary record the employer will rely on if the non-renewal is later challenged at the CCMA.

Notice and Timing Requirements

The BCEA’s notice framework in section 37 applies to non-renewal of a fixed-term contract, even though the contract is expiring on its own terms. The required notice is set out in the table below.

Continuous employment at the time of notice	Minimum written notice
Up to six months	One week
Six months to one year	Two weeks
One year or more	Four weeks

Practical points on timing:

• The notice should be given in advance of the contract end-date, not on or after it.
• Where the contract itself specifies a longer notice period, that period should be honoured.
• Paying the employee in lieu of notice is an option if the employer does not want the employee to work out the notice period, but it does not eliminate the expectation-of-renewal risk if the decision is communicated too late.

What the Non-Renewal Letter Must Contain

A well-drafted non-renewal letter does six things at once — it confirms the contract position, gives proper notice, addresses the financial close-out, and avoids any wording that could itself crystallise an expectation of renewal.

1. Clear identification of the employee, the position, and the original fixed-term contract (including date and reference where used).
2. A direct statement that the contract will not be renewed on expiry, and the agreed end-date.
3. Confirmation that this is the natural expiry of a fixed-term contract and not a dismissal for misconduct or operational requirements.
4. Reference to any notice being given in terms of the BCEA and the contract, with the last working day specified.
5. Arrangements for the final pay run, leave payout in terms of section 40 of the BCEA, and return of company property.
6. An offer to provide a certificate of service in terms of section 42 of the BCEA on request.

The closing of the letter should be courteous but should not invite representations, negotiations, or further engagement that could be relied on later as creating an expectation of renewal. Phrases such as “we hope to work with you again” or “subject to further engagement” are best avoided.

Sample Non-Renewal of Fixed-Term Contract Letter

The template below is suitable for most South African fixed-term engagements. Square brackets indicate fields to be completed before issue.

[Date]

[Employee name]
[Employee address]

Subject: Non-renewal of fixed-term employment contract

Dear [Employee name],

This letter refers to your fixed-term employment contract dated [contract date], under which you were employed as [job title] for the period [start date] to [end date].

The purpose of this letter is to confirm that, in line with the terms of your contract, the contract will not be renewed on expiry. Your last day of employment will be [last working day], which gives you [notice period] notice as required by section 37 of the Basic Conditions of Employment Act and clause [clause number] of your contract.

This letter does not constitute a dismissal. Your contract is expiring by its own terms, and the decision reflects the natural end of the [project / seasonal / replacement / funding-linked] work for which you were engaged.

We will pay out any outstanding annual leave in your final pay run in terms of section 40 of the Basic Conditions of Employment Act, and we will provide a certificate of service under section 42 on request.

Please return all company property in your possession by your last working day. If you have any questions about the contents of this letter, please contact [name and contact details].

We thank you for your contribution during the contract period and wish you well in your future work.

Yours sincerely,
[Employer representative name and title]
[Company name]

What to Do If You Are an Employee Receiving a Non-Renewal Letter

If you have just received a non-renewal letter, work through the following steps before deciding what to do next:

1. Check whether the letter was given within the required notice period under section 37 of the BCEA and whether the contract wording supports non-renewal.
2. Consider whether a reasonable expectation of renewal has been created by prior renewals, representations by managers, or conduct by the employer after the original end-date.
3. If you believe the non-renewal amounts to unfair dismissal, refer the matter to the CCMA within 30 days of the dismissal date in terms of section 191 of the LRA.
4. Ensure that any accrued annual leave is paid out in terms of section 40 of the BCEA and that a certificate of service is provided on request under section 42.
5. Consult a labour-law attorney to review the letter and the contract and assess whether the expectation-of-renewal test is met.

Time is the critical variable — the 30-day CCMA referral window is strict and is not easily extended. A non-renewal dispute is processed at the CCMA through conciliation, and if not resolved, through arbitration; the Labour Court becomes involved only on review or in limited later stages.

Common Mistakes That Convert a Non-Renewal Into a Dismissal

Five recurring drafting and conduct errors are responsible for most of the CCMA exposure that flows from fixed-term engagements:

• Communicating the decision too late — after the end-date, or so close to it that the employee could not reasonably have prepared.
• Allowing the employee to continue working past the end-date while the renewal decision is being “considered.”
• Having managers verbally suggest the contract “will probably be extended” before the formal letter is issued.
• Issuing successive fixed-term renewals without addressing why the work remains genuinely finite.
• Drafting the letter with language that acknowledges continued need or expresses openness to future engagement without a clear non-renewal position.

Each of these can, on its own, be enough to convert an ordinary non-renewal into a deemed dismissal. A labour-law attorney can review a draft non-renewal letter before it is issued to identify and remove any wording that creates this risk.

Frequently Asked Questions

Does non-renewal of a fixed-term contract automatically count as dismissal in South Africa?

No — non-renewal only counts as dismissal under section 186(1)(b) of the LRA where the employee had a legitimate expectation of renewal. If the contract is genuinely finite, the notice is clear, and no expectation has been created, the non-renewal is the natural expiry of the contract and is not dismissal.

How much notice must an employer give when not renewing a fixed-term contract?

The BCEA notice framework in section 37 applies — one week’s notice for employment up to six months, two weeks for six months to one year, and four weeks for one year or more, unless the contract specifies a longer period. Notice should be given in advance of the end-date, not on or after it.

Can the employee challenge a non-renewal at the CCMA?

Yes. Where the employee can show a reasonable expectation of renewal, the non-renewal is treated as a dismissal and can be referred to the CCMA within 30 days of the dismissal date in terms of section 191 of the LRA for unfair-dismissal adjudication, with potential compensation under section 194 of the LRA.

What must the non-renewal letter include?

The letter should identify the contract and the parties, state the agreed end-date, confirm that the contract will not be renewed, set out the notice being given in terms of the BCEA and the contract, address leave payout and return of company property, and offer a certificate of service on request. It should not invite representations or negotiations that could create an expectation of renewal.

Is a non-renewal letter different from a retrenchment letter?

Yes. A non-renewal letter confirms the natural expiry of a fixed-term contract — it is not a dismissal based on the employer’s operational requirements. Retrenchment letters (under section 189 of the LRA) address dismissal for operational reasons and follow a separate consultation process.

If you need a fixed-term contract reviewed before issue, want a non-renewal letter drafted that protects against an expectation-of-renewal challenge, or have received a non-renewal letter and want to assess whether it amounts to dismissal under the LRA, Burger Huyser Attorneys’ labour-law team can help. The practice is run by specialist consultant Marius Ferreira, with intake handled through the head office at 49 First Avenue, Linden, Randburg (011 888 0246, after-hours 061 516 6878) and the Sandton (011 253 3080) and Centurion (012 644 4990) branches serving the wider Gauteng region. The firm is rated 4.8/5 across 250+ Google reviews (Trustindex verified “Top Rated Law Firm in South Africa”) and is a member of the Pretoria Attorneys Association and the Johannesburg Attorneys Association. Get in touch to talk through the contract and the letter with someone who handles these files regularly.