# Regulatory Compliance Category > Labour Relations and Legislation Forum > [Question] Fixed term employee/rolling over contracts/independent contractor??

## NEO

Please can you assist/advise me with the below issue i as well as about 25 other people are having within our company employment for years now!

I am currently working for a large IT broker/TES which is contracted out to another global IT company's client and based at their premises. i am on a fixed term employee contract for the past 3 years which has been renewed annually(rolled over) 3 times-once it expires upon the set date a new contract is signed for another year. Prior to this we were given independent contractor contracts which were also rolled over annually 4 times(they refer to us as annual contractors).only after 3 years of disputing that initial contract about being an independent contractor which I feel we were not and not getting leave/sick leave/public holiday pay(no work no pay rule) etc and escalating the working conditions to their client where we are based, did they then make us fixed term employees and gave us leave and sick leave and public holiday pay only (no bonus/13th cheque/medical aid/pension fund etc that permanent staff get) for past 3 yrs. They continue just rolling over the contract once it expires after 1 year. After numerous attempts to be made permanent with benefits they just plain down refuse and threaten us with not renewing the contract which we are dependent on. . the client as well as other onsite contract companies have offered us permanent jobs but they have blocked it many times threatening us with action as we have clauses in our contracts saying we cant work for any other company or directly for this client.(restraint of trade) for 1 year after leaving but they refuse us permanent jobs. please help. NOTE: we do earn over the earnings threshold. i do believe we are permanent employees as we fill the same role as a permanent employee and meet all of the section 200A(1)presumption list factors. what can be done? 

We have just received a phone call now stating our contracts wont be renewed once it terminates in 1 month as the client has advised it does not want to renew the contract with the broker anymore. Another outsourced company of the client has approached us and said if we are interested we can apply for jobs with them at the same client for the same jobs but it is a new application with no guarantee of anything. the broker has said we must go register for UIF but our contracts are over and no payout/retrenchment or anything will be paid out as we are not employees but FTE's.. i feel we have been mistreated and lost 5 years of benefits and now might not have employment. please can you advise or recommend someone who is willing to take this case up. also, after rolling over the contract 8 times doesnt this create a reasonable expectation of renewal hence dismissal now as they have not renewed?
thanks.

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## Dave A

Welcome to the way employment works in most of the rest of the world...  :Stick Out Tongue: 

 :Embarrassment: 

Please pardon my cynical moment. Let me try to be more helpful.

What I find fascinating in this particular mix is the restraint of trade. Pretty bold as brass to claim you're an independant contractor, or even a fixed period employee, and also slap you with a 1 year post employment restraint. Sounds like a rather questionable cocktail to me.

Anyway.. what to do?
Your contract is ending so what have you got to lose? Lodge a complaint with the CCMA. I'm sure someone will advise you through the process there and it won't cost you a cent (other than getting there).

Good luck. And don't hesitate to give feedback. I'd love to hear how this one goes.

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## NEO

am definitely gonna do that.. will post outcome here..

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Retha (08-Feb-11)

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## BusFact

NEO, sorry can't add any more value than Dave already has - go with what he says, but your situation does hit a whole lot of nerve centers for me.

I'm what you would call a reluctant employer. I find it an administrative burden and a long term liability I would really prefer to do without. So I in fact do my best to avoid employing people, but relent on occasion.

On the other hand I do realise the reality of poor, uneducated, desperate people being taken advantage of. Hence the complicated rules and procedures.

On the one side you can have a system with only the pure independant contractor with no such thing as an employee, no long term commitment. On the other you have the employer - employee relationship with significant long term commitment and lots of rules and regulations. In SA we're very much on the latter side of the scale.

When it gets unfair though, is when one side chooses to have the advantages of both sides of the system. Its currently a bit like that in SA for the employee. They want job security and a complex retrenchment or firing system, but then they still have the ability to walk out of a job without notice, or perhaps 30 days at most.

In your situation (NEO), the employer is treating you as an independant contractor and then also trying to control who you do business with. He can't have his cake and eat it. We can't control who else our plumbers do business with, or our accountants, or our doctors, or our ... you get the idea. They are independant.

So on this very rare occasion I am siding (in sympathy) with you the "employee".

I would be very surprised if your employer could have enforced a restraint of trade against you. A confidentiality clause yes, but not restraint of trade. In any event, you are normally reimbursed for being restrained. However I'm no labour lawyer. That doesn't help you much though as that window of oportunity has now passed.

Your issue now is trying to be declared an employee. My understanding is that once contracts with individuals start getting renewed, then the employer is on thin ice. I suspect that you could make your employers life very difficult with the CCMA. So I eagerly await for a report back on how this all turns out.

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Dave A (08-Feb-11), Retha (08-Feb-11)

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## Retha

I also want to offer you my support - while I am very much in the same position as BusFact, with unpleasant experiences of employee protection gone overboard, yours are clearly unfair treatment.
So yes, I will also be waiting in suspence for the outcome!

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## adrianh

Neo - getting bitten by a bit of having your cake and wanting to eat it too. 

Contractors generally earn higher salaries than their permanently employed counterparts and also get tax directives to pay only say 23% tax. I spent many years contracting and I made good money. The contact coming to an end is part of the risk you take. Seen from the employers point of view - what do you do as an outsource company if you get a 5 year contract to replace a system. You bring in contractors to do the work and when the work is done those contractors are no longer needed - you can't keep them...What to do with the highly specialized C++ microcontroller programmer when the next 5 year contract is to build a Joomla site?

People seem to think that IT is a special place that has special rules. Look at a building project - The project manager hires various contractors and when the building is complete they all leave.

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## fuad

Hi Neo

I think the first thing you should do is see an attorney who specialises in labour law. The fact that there are 25 people with similar issues could be a a strong point and if you so wish, all 25 can be represented by the same person, thereby potentially reducing costs.

(P.S. it just so happens that I am an attorney, but not a labour expert. My firm does ,however, practice in that field and you are welcome to message me privately should you want further assistance.)

but please, whatever you do, please see an attorney first, they aren't as scary as they sound!

Fuad

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## AndyD

I think restraint of trade agreements need to fall within very strict guidelines to even be worth the paper they're written on. In your case there's no way it will stand up in the case of a dispute. If the client does offer you a job and you accept it then the onus would be on your previous employer to take that restraint of trade clause to a court and the chances of it being upheld are very slim.

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## adrianh

> but they have blocked it many times threatening us with action as we have clauses in our contracts saying we cant work for any other company or directly for this client.


And you happily signed the contract every year without reading the fineprint I take it?

I don't get it, you work for a number of years and every year you accept an extension to your contract knowing full well (ok, you should know full well) the terms of that contract, yet now when the contract comes to an end you are up in arms...

If you didn't like the terms of the contract why didn't you resign?

Lets look at it practically, the outsource company wins a tender to write a system called eNatis. They claim that it will take a year. They bring the independent contractors in and they start coding. A year later the program is nowhere near finished. This lot carries on for 5 years and then eventually the goverment tells the outsource company to stuff off because they don't know what they are doing. The outsource company had all its contractors sign a clause stating that the contracts could end with one months notice and all the contractors accepted this. So what does the outsource company do; they give the contractors 1 month notice as per the agreement and they look for a different client. Now how complicated is that to understand?

I don't know about the restraint of trade given that you plan to work for the existing client directly. As far as I am concerned there is no conflict of interest considering that the outsourcer is no longer involved with the client. I think that they wanted to stop you from working directly for the client whilst they were supporting the client. The reason for that would have been that they would have lost income because they wouldn't have been able to charge you out at their hourly rate (Which makes sense).

My view is that you should organize yourself a job at the client and simply go work for them a month or two after you leave your current employer. Your existing employer would be so busy trying to save their own butts that they wouldn't care if they did find out. And as Andy said, if they want to make an issue then they are welcome to take you to court. (Which they won't bcause it serves no purpose getting involved in such nonsense when they have a new client to keep happy). I also think that you should chalk the past couple of years up to experience and learn that you have to read the fine print.

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## NEO

Hi all,
Thanks for the advice/comments. the majority of people have agreed with my side and advised that a definite case of unfair labour practice exists due to the fact that we were incorrectly/knowingly INITIALLY labeled "independent contractors" by the company in order to avoid UIF, public holiday, sick and annual leave pay etc. we were in no way independent contractors as we were initially below the earnings threshold and met ALL conditions of section 200A of the LRA or dominant impression test..they also deducted PAYE, made us fill in timesheets and take instructions, threaten sueing us when we wanted to resign to move to another outsource company due to restraint of trade and not allow us to do any other work(its in our contract).  WHEN we did challenge and threaten all of the above then ONLY did they at the last minute (out of fear of losing the contract) then make us Fixed term employees with UIF, public hol pay, annual and sick leave.(after 3 years of fighting and 5 contracts signed/rolled over). now we are FTE's and have been for 3 years or so and signed/rolled over 3 contracts as FTE's. whenever we tried to take other jobs we were threatened with legal action so we stayed on. Now the client has given the contract to the competitor onsite DUE TO THESE ISSUES of bad management.

Adrian, with regards to your comments. i understand completely the scenario you are implying of contracting on project work. but in this case there was no project - the jobs were for ongoing daily IT support(such as desktop/network/hardware/helpdesk etc) a job that would never end upon completion of a task. also we were led on believing that we might get a permanent job if we proved ourselves as 3 other contractors got permanent jobs there! with regards to resigning we had no choice as we had no other job and were reliant on this income. remember we have signed in total 8 rolled over contracts over 6 years!! Other staff doing the exact same job were permanent staff of their outsourced company but not us with our employer. The contracts were always delayed as well between signing-sometimes up to 2 months of working we never got our new contracts due to bad management-when we questioned they would backdate it and send to us to sign. so does the expression of having their cake and eating it too actually apply to the broker? - in this case.

I think the below article explains my dilemma perfectly:
http://www.btimes.co.za/guide/labour/labour31.htm

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## Dave A

I think the "independent contractor" side of this discussion is long gone if you've been a fixed term employee for the past few years. But this situation does beg the question:

Neo, what are you expecting from your employer at this point?

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## adrianh

Look, I know exactly how you feel. I got screwed over 7 years ago in practically the same situation. The mistake that I made was to tell my colleagues that I was planning to move to the client. They told the outsource boss who in turn screwed up my relationship with the client to such a degree that I was forced to resign never to work for either company again. I would still love to work for the client and if I saw the MD of the outsource company I would still drive over him. This event was my exit from the IT industry and probably the biggest mistake I ever made. If I had kept my cool and planned the move properly without getting upset my life would have been far different today.

Bottom line - pick your battles - play your cards close to your heart and look after number one. Yes, I know you are pissed and that you want to get back at them, but don't waste your energy - keep your cool and keep your mouth shut (especially around the water cooler - you will be surprised at the stories that your so called colleagues carry around)

Decide what you want and go get it. If you want to work for the client then position yourself to do so, but don't waste your energy on chasing after a permanent job with your current employer that you don't want anyway!

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BusFact (10-Feb-11)

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## NTS2011

When I was a shop steward some time ago I faced a similar problem. The Municipality had a contract with a certain labour broker to provide certain services. After 4 years these workers were informed that their contract will no longer be renewed and was dismissed. I fought the case based on reasonable expectations and these workers were re instated. They were made permanent and are still working for the Municipality.

Just to let you know there is still hope at the end of the tunnel.

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## Retha

From all the participant's posts there have come a lot of perspective and I just want to say that I learn a lot from you.
I think you really need to consider whether you want to chase the retribution for being wronged, or you would rather build your career.  I really hear what people have been saying.
I knew a guy once who spent years fighting for his rights, building his case, tralala. He was bitter and just did not move on. Our emotions is sometimes a powerfull force in our own destruction. 
As an employer I will NEVER take on an employee if I know he has been to the CCMA before.  My perception is that it may well be a vindictive person, just trying to get what he can, by any means he can, and that I will not be able to trust him.
I agree, IT is such a higly paid environment with lots of opportunities, that you really can just move on.  Forget the restrict of trade, I agree, they will not chase it as they know they will get nowhere.  Build your professional image and concentrate on your future.

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wynn (10-Feb-11)

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## NEO

Well, I think we deserve in all honesty at least a retrenchment package of some kind as it is due to the bad management and "dodgy" labour practice from the broker that 25 people are unemployed. reinstatement is not an option for me due to the negative experience of dealing with this company after all this.

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## adrianh

It is such a difficult problem. The same company wanted to get rid of one of the guys. They did what they would refer to as "Preformance management" - This phrase meant that they would ride his butt and record how he (failed) performed. They did this for a while and gave him lots of warnings. Eventually they got to the point where they dismissed him based on "poor performance" - they did it by giving him work that he couldn't cope with. Anyway, he took them to the CCMA and after much to and fro the CCMA found that the dismissal was ok and that they had acted within their rights. It took the guy four years to find another job because everytime he applied for a job this lot came up. A lady phoned me for a reference one day and aked me about it. I explained to her how he had been "performance managed" out of the business.

I agree with Retha, its not worth the bother unless you stand to gain a hell of a lot. Rather cut your losses and move on.

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