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Using Fixed Term Contracts Effectively

CONTRACT CLAUSES – FIXED TERMS

It is a requirement of Article 33 of the Employment Rights (Northern Ireland) Order 1996 that any terms of employment confirms the duration of that employment. This is particularly important where any appointment is temporary or for a fixed term. Contracts should set this out clearly to avoid later dispute. A fixed term contract starts on a specific date and ends on a specific date.  Employers may wish to use fixed term contracts when:

·       short-term funding for the job is not likely to be renewed;

·       cover for specific absences is required e.g. sickness, maternity leave; or

·       there is a particular need for temporary workers e.g. seasonal work.

Any fixed term clause should be carefully drafted to allow an employer to give appropriate notice before the end of the fixed term. The failure to include the right to terminate in certain circumstances could lead to the employer having to pay the employee/ worker for the full period even if they are not needed or wanted.

Regulations

The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2002 was brought in to improve the rights of fixed-term workers by ensuring that they are not discriminated against and that employers do not use fixed term contracts successively. Fixed term clauses / contracts are lawful but there are certain issues that need to be borne in mind when using them.

Non-discrimination

Regulation 3 of the Fixed-term Employees regulations provides fixed-term employees with the right not to be treated less favorably by their employer than a comparable permanent employee with regards to:

·       the terms of their contracts; or

·       by being subjected to any other detriment by any act, or deliberate failure to act, of his employer.

If an employee considers that they may have been treated in a manner which infringes Regulation 3, they may ask their employer for a written statement explaining the reasons. A statement must be given within 21 days of the request. In order to avoid issues employers should monitor the terms of fixed terms workers to ensure they are not in breach. An employee who is subject to a fixed term and is dismissed by reason of asserting a right under the regulations (as specified in regulation 6(3)) does not need any minimum qualifying period of employment to bring a claim for unfair dismissal or other detriment.

Preventing abuse

If the employee has been hired on two or more successive fixed-term contracts, irrespective of whether the contract has been renewed or the employee re-engaged on a new fixed-term contract, they will be deemed as a permanent employee if:

·       they have been continuously employed for 4 years or more; and

·       there were no objective grounds to justify the use of the fixed-term contract either when the contract was renewed or not renewed.

An employee may however still be entitled to permanent employment even if there has been a break between the extension or renewal of their contract. It is important to note that a person must be an employee to avail of these regulations. They do not apply to workers, including Agency Workers even if they have worked for the organisation in question for a long time (regulation 19). However, it is important to keep a check on where the worker potentially ceases to be a worker and becomes an employee. See the case of  Fitzpatrick; Ambrose and Hetherington –v- DOE (1103/06,1106/06,1107/06) where the question was whether the Claimants were employees of the DoE’s Environment Heritage Service and therefore entitled to the protection of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2002. All the claimants worked at EHS properties for considerable periods of time without any break in service and at all times had a contract with the relevant agency with whom the DOE had a contract to supply such staff. One of the claimants had been in the position since 1996.


The contracts stated that the Claimants were not employees of the agency or the DOE. The Tribunal chair was satisfied that if a claimant had decided that she did not like a particular manager she could “walk away” and look to the recruitment agency to obtain her other work. Similarly, if the EHS had been dissatisfied with the work of any of the Claimants at any time it could have requested the agency to replace her. Paperwork in relation to hours of work was sent to the Agency for payment. Annual leave requests were sent to the agency. Day to day the Claimants carried out their duties at the EHS property, co-operated with EHS management and accepted relevant supervision, direction and control from the EHS. The EHS trained the claimants although there was a distinction between training given to agency staff and employees of the EHS.
Based on these considerations and the case of James –v- Greenwich Borough Council the Tribunal decided that they were not employees of the DOE.

Employers wishing to use agency workers on a long term basis should review their arrangements in comparison to the findings of the tribunal to see whether issues of employment status and the regulations apply. Employers should also review the contents of any collective or workforce agreements to ensure they are not in breach of its terms. These agreements can be used to agree limits for the amount of time which an employee may be continuously employed, how many successive fixed-term contracts and renewals may be used and objective reasons for the renewal/non-renewal of the contract.

Termination

When terminating a fixed term contracts this amounts to a dismissal and there will be a need to follow statutory procedure and to have a fair reason for that dismissal eg the task for which they were employed has been completed. If the employee has 2 years continuous service at the date of termination then they may be eligible to claim a redundancy payment from the employer if the reason is that the requirement for the work has ceased or diminished.

For any queries in relation to this article or for further advice on employment law, please contact Kiera Lee, Director and Head of Employment at Mills Selig.

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