A ‘Fixed-term contract’ is defined as a contract of employment that terminates:-
- on the expiry of a fixed term;
- on the completion of a particular task; or
- on the occurrence or non-occurrence of any other specific event.
Why use a fixed-term contract?:-
- Specific task or project.
- Funding comes from an external source and may not be renewed.
- Where demand for a particular post is not clear and the employer wishes to carry out a trial period before committing themselves to offering a permanent position.
- To provide maternity cover, or to cover for someone on sabbatical or long-term sick leave.
There is a common misconception that fixed-term employees have fewer rights. This is not the case due to the following:
- If more than two years’ service fixed-term employees are protected from unfair dismissal.
- The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034) – fixed-term employees cannot be excluded from the contractual benefits and facilities offered to permanent staff since they are entitled to complain of less favourable treatment.
A fixed-term employee has the right not to be treated less favourably than a comparable permanent employee:
- As regards the terms of their contract – regulation 3(1)(a); or
- By being subjected to any other detriment by any act, or deliberate failure to act, of their employer – regulation 3(1)(b).
‘Comparable permanent worker’ is ‘a worker engaged in the same establishment, in the same or similar work/occupation, due regard being given to qualifications/skills’.
Less favourable treatment compared to permanent employee:-
- Any term and condition of employment.
- Any period of service qualification relating to any particular condition of service – regulation 3(2)(a).
- The opportunity to receive training – regulation 3(2)(b).
- The opportunity to secure any permanent position in the establishment – regulation 3(2)(c).
Regulation 8 says employees who have been continuously employed for four years or more are automatically deemed to be permanent employees unless the continued use of a fixed-term contract can be objectively justified.
Employers also need to be aware of notice periods in fixed-term contracts.
Here are when a fixed term employees gain certain employment rights:-
- Unfair dismissal – Two years service
- Equality Act – day one
- Whistleblowing – day one
- Health and Safety – day one
In law, the expiry of a fixed-term contract is a dismissal. – Section 95 ERA 1996. This means if an employee has over two years service through renewals of fixed terms contracts and there have been no breaks between each contract, the employer will need a fair reason to dismiss the fixed-term employee. This would usually be via redundancy or ‘some other substantial reason’.