Wake-up call – The rights of fixed-term staff

02 September 2011
Wake-up call – The rights of fixed-term staff

Fixed-term employees are entitled to the same treatment as permanent staff engaged in similar roles, as solicitor Katee Dias explains

THE PROBLEM Someone told me that employees who are engaged on fixed-term contracts of employment have less employment law protection. Is that true?

THE LAW In a word, no. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 exist to ensure that fixed-term employees are not treated any less favourably than comparable employees who are engaged on an indefinite basis. However, the difference in treatment is only unlawful if it is because of the employee's fixed-term status and is not objectively justified.

Less favourable treatment can take many guises. It may be that, for example, a fixed-term employee is excluded from the employer's pension or health insurance scheme or is selected for redundancy over permanent employees.

To show that the less favourable treatment is justified, the employer would need to demonstrate a legitimate aim for treating the fixed-term employee differently and, having regard to the specific circumstances, prove that the different treatment was proportionate. By way of example, a small employer may be able to justify excluding an employee engaged on a two-month contract from joining their company pension scheme by showing that a large administration fee would be required and instead paying any pension contribution directly into the employee's own personal pension scheme.

The above regulations are not the only piece of legislation governing the rights of fixed-term employees. It should be remembered that fixed-term employees fall within the scope of the Equality Act 2010, so are protected from discrimination and harassment on the grounds of their sex, race or disability. Furthermore, if their employment lasts for one year or more, they are protected from being unfairly dismissed, just like permanent employees. They are also entitled to benefits such as statutory sick pay, maternity pay and holiday pay as well.

EXPERT ADVICE It is a common misconception that fixed-term employees have fewer employment rights than permanent employees. As a general rule, they should be treated in exactly the same way as employees who are employed on an indefinite basis, both in relation to their contractual terms, their treatment during the employment relationship and their dismissal.

Employers do not always realise that when a fixed-term contract expires and is not renewed on the same terms, this is treated as a dismissal, so there needs to be a fair reason for the non-renewal (such as performance, misconduct or redundancy) and a fair process must be followed (which will involve consultation with the employee).

CHECK LIST Some important reminders about fixed-term employees:

â- A gap between two fixed-term contracts does not always break the employee's continuity of service.

â- The expiry of a fixed-term contract is considered a "dismissal" in the eyes of the law. Employers must have a fair reason for not renewing the contract and ensure that a fair termination process is followed.

â- If a fixed-term employee is dismissed by reason of redundancy and has two or more years' service, they are entitled to a statutory redundancy payment.

â- Fixed-term employees have the right to be notified of permanent job vacancies.

â- It is important to ensure that fixed-term employees and comparable permanent employees are treated in the same way or, if there is a difference in treatment, that the difference can be justified.

â- Remember that just because an employee is engaged for a fixed-term period does not mean that notice provisions are not also needed. If these are not included, you might not be able to end the contract until the end of the fixed term.

BEWARE If an employee has been treated less favourably because of their fixed-term employment status, they can bring a claim in the employment tribunal. There is no limit on the amount of compensation that can be awarded if they are successful, but the sum should be just and equitable taking into account the less-favourable treatment to which they have been subjected.

CONTACT Katee Dias is a solicitor at Goodman Derrick

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