According to section 57, a person to be appointed as the municipal manager of a municipality and a person to be appointed as a manager directly accountable to the municipal manager, may be appointed to that position only in terms of a written employment contract with the municipality complying with the provisions of this section and subject to a separate performance agreement concluded annually.

• The performance agreement must be concluded within a reasonable time after a person has been appointed as the municipal manager or as a manager directly accountable to the municipal manager and thereafter within one month after the beginning of the financial year of the municipality. The employment contract must include, subject to applicable labour legislation, details of duties, remuneration, benefits and other terms and conditions of employment and the performance agreement must include:
• performance objectives and targets reflected in the annual performance plan which forms an annexure to the performance agreement that must be met,
• time frames within which those performance objectives and targets must be met;
• performance objectives and targets that must be practical, measurable and based on the key performance indicators set out in the municipality integrated development plan;
• standards and procedures for evaluating performance and intervals for evaluation; and
• the consequences of substandard performance.
• The employment contract for a municipal manager must:
• be for a fixed term of employment not exceeding a period ending two years after the election of the next council of the municipality;
• include a provision for cancellation of the contract in the case of non compliance with the employment contract or, where applicable, the performance agreement;
• stipulate the terms of the renewal of the employment contract, but only by agreement between the parties; and
• reflect the values and principles referred to in section 50, the Code of Conduct set out in Schedule 2, and the management standards and practices contained in section 51 of the same act (Act no. 32 of 2000).

A municipality may extend the application of the employment contract and/or performance agreement for a municipal manager to any manager directly accountable to the municipal manager according to the agreement between the parties.