Fixed-term employment contracts are a popular tool amongst employers that want to maintain a flexible workforce.
Such contracts provide a solution to an array of situations where employment is required for a specified period, task, or event such as during busy seasonal periods. They can also be used to cover the absence of permanent employees; for example, during maternity leave, or even where an employer wants to trial a job role without yet committing to offering it as a permanent position.
Fixed-term employment contracts can also be desirable for employees from a financial perspective as such job roles often offer a higher rate of pay to compensate for the lack of security and they allow employees to avoid long-term commitment to a company.
Despite the popularity and prevalence of fixed-term employment contracts in the UK workforce, fixed-term employees are often unaware of their arguably extensive rights.
What is a fixed-term employee?
Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (“the Regulations”), a fixed-term employee is an employee that is employed under a fixed-term contract. A fixed-term contract is defined under the Regulations as a contract of employment that ends on:
a) the expiry of a fixed term,
b) the completion of a particular task, or
c) the occurrence or non-occurrence of a specific event other than the attainment by the employee of any normal and bona fide retiring age in the establishment for an employee holding the position held by him.
What rights are afforded to fixed-term employees?
Fixed-term employees have the same general employment rights as permanent employees such as protection from unfair dismissal and discrimination. However, fixed-term employees that fall within the ambit of the Regulations are afforded additional protection. It is important to note that the Regulations only apply to employees and the below summary of rights of fixed-term employees is not an exhaustive list.
Protection from less favourable treatment
The Regulations provide fixed-term employees the right not to be treated less favourably than a comparable permanent employee on the grounds that they are a fixed-term employee. Examples of less favourable treatment could be where a particular benefit is not provided to the fixed-term employee or that they are given less opportunity to receive training compared to a comparable permanent employee.
However, the employer has a defence if they can objectively justify why the fixed-term employee is being treated less favourably to the comparable permanent employee, which may be established if it can be shown that the treatment:
is to achieve a legitimate aim,
is necessary to achieve that aim, and
is an appropriate way to achieve that aim.
Once an employee has established that they have received less favourable treatment the burden of proof is then on the employer to show that they can objectively justify the treatment.
A fixed-term employee who believes that they have been treated less favourably than a comparable permanent employee due to their status as fixed-term can bring a claim in the employment tribunal. Where a tribunal orders compensation, the amount awarded shall be such as the tribunal considers just and equitable in all the circumstances and should have a connection to the financial loss suffered by the employee as a result of the treatment.
Automatically treated as a permanent employee
Employees who have been continuously employed for four years or more on a series of successive fixed-term contracts are automatically deemed to be permanent employees unless the continued use of a fixed-term contract can be objectively justified by the employer.
The fixed-term employee will not be deemed to be a permanent employee if the employer can demonstrate that the continued fixed-term appointment:
is to achieve a legitimate objective,
is necessary to achieve that objective, and
is an appropriate way to achieve that objective.
For example, it is common practice for sports professionals to be employed on fixed-term contracts and in such a case, continued fixed-term employment would likely be objectively justified by an employer.
The fixed-term employee can seek a declaration of permanent employment status from the employment tribunal provided that they are employed by the employer at the time they make the application and they have previously requested a written statement of permanent terms of contract from their employer.
Written statement of reasons
The Regulations provide fixed-term employees with the right to request a written statement of the reasons for any less favourable treatment that they have received from their employer.
The request must be made to the employer in writing and the employer must respond to the request within 21 days.
Protection from automatic unfair dismissal
The Regulations provide protection to fixed-term employees from automatic unfair dismissal. This means that a fixed-term employee that has not been employed continuously for at least two years can bring a claim for automatic unfair dismissal if they have been dismissed because they have, for example, brought a claim against their employer under the Regulations due to being treated less favourably than a comparable permanent employee or because they have requested a written statement of reasons for the less favourable treatment from their employer.
Protection from unfair dismissal
The expiry of a fixed-term contract without renewal of the contract is treated as a dismissal and fixed-term employees are given protection from unfair dismissal in the same way that permanent employees are, provided that they have been in continuous employment for two years or more (the qualifying period) when they are dismissed and subject to the usual principles regarding unfair dismissal claims. The employer would need to show that there is a fair reason for not renewing the fixed-term employee’s contract and that they have acted reasonably when carrying out the dismissal.
If you would like advice on any employment law matter, whether as an employee or employer, then please contact our expert employment law and HR team on 0845 287 0939 or submit your enquiry online.