Fixed Term
FIXED TERM CONTRACTS
Fixed term workers include:
1. Casual workers
2. Seasonal workers
3. Those on short-term contracts
4. Those employed for a specific task or project
5. Those on temporary cover contracts
6. Those on zero-hour contracts
A contract for a fixed period of time automatically terminates at the end of the period
If the employment is for less than 4 weeks there is no entitlement, as of right, to a statement giving the main terms of employment or to any period of notice terminating the employment.
If the fixed term is for one year or more and is not renewed then the employee is treated as having been dismissed and a claim for unfair dismissal might arise.
If the fixed term is for two years or more and not renewed then a claim for redundancy might also arise.
It follows therefore that to avoid possible claims a fixed term contract should always be for less than one year and not immediately renewed so as to give rise to a continuous period of qualifying employment for more than one year.
It also follows that the employment should not simply be allowed to continue after the end of the fixed period as the employee will be considered to be working under the same terms and conditions as before with the implied term that either party may terminate the employment upon reasonable notice. Again the situation could easily drift into one where the employment has been for more than one or two years and thus give rise to subsequent claims for unfair dismissal or redundancy.
Obviously any intention to use fixed term contracts as a means of avoiding the employment legislation will be carefully scrutinised by the Tribunals. Such a purpose would be against the spirit of the legislation and these contracts should not be considered other than for genuine fixed term arrangements.
These might arise for example in the following circumstances:
1. The business has specific but limited skill shortages (e.g. computers, engineering or other specialised services).
2. Seasonal staff required in particular industries (e.g. travel, leisure, agriculture).
3. The business has fluctuations in demand (e.g. in manufacturing or services).
4. There are uncertainties in demand (e.g. at the start of the business).
5. There are staff absences requiring cover (e.g. because of maternity/parental leave, illness, holidays, etc.).
Possible alternatives to fixed term contracts might be to engage the services of a self -employed contractor or use agency ‘temps’. However it should be noted that on the 10th June 2008 it was agreed at the EU Employment Council that agency workers will be given equal treatment on pay and conditions as permanent staff after being employed for 12 weeks in a given job.( Not yet implemented into UK Law) It should also be noted that from the 27 October 2008 agency workers who have a contract or series of contracts for a period of three months or less and meet the necessary qualifying conditions will have the same rights to SSP as other workers.
It is no longer possible to avoid a fixed term contract by having a contract for a specific task or project. Employees on these contracts have the right not to be unfairly dismissed, the right to a written statement of reasons for dismissal and the right to statutory redundancy payments. (Fixed Term Employees (prevention of less favourable treatment) Regulations 2002)
The said Regulations came into force on 1 October 2002 and prevent discrimination against workers on fixed term contracts requiring them to be treated the same as permanent members of staff with regard to terms and conditions of employment, pay and access to training unless different treatment is justified on objective grounds. The Regulations also prevent continual renewal of fixed term contracts and remove the power of an employer to require a fixed term worker to waive redundancy rights.
Regulation 8 of the Regulations provides that from 10th July 2006, any employee who has been on a fixed-term contract (or a series of fixed-term contracts) for four years will have to be treated as a permanent employee. There is an exception if the employer can objectively justify the fixed-term nature of the contract at the date of the last renewal.
An employee who considers that he or she is a permanent employee can make a written request for a written statement confirming that their contract is no longer fixed-term or that they are now a permanent employee. They must receive a written response to this request within 21 days.
Although the dismissal of an employee on the expiry of a fixed-term contract is treated as a dismissal, for employment law purposes, technically, the employer must (within one month of the fourth anniversary) give the employee a statement of changes to his terms and conditions of employment - so as to provide information as to the length of the relevant notice periods rather than the date of expiry under a fixed term contract. Failure to do so can result in an award of two or four weeks' pay under the Employment Act 2002.
In certain circumstances a fixed term contract can be terminated on the grounds of “frustration” because of the employee’s inability to carry out his obligations under the contract, e.g. because of long term incapacity or ill-health or, perhaps, imprisonment. Please consult the Helpline for further advice.
All PBS Information Sheets are designed to provide the detail you need to implement best business and employment practices. They are not a detailed commentary on the current law and where advice is needed in a specific case you should contact PBS for expert consultation
fixed term contracts