Fixed-Term Contracts

Common Law Status of Fixed Term Contracts

A fixed term contract is one for a particular period or for the performance of a particular task that ends naturally, once completed, without a specific act of termination by the employer.  A contract may be fixed term, but be nonetheless capable of termination for cause or otherwise within that period. An employment contract may be for a fixed term, notwithstanding a notice clause or probationary provision

The position of fixed term employees at common law was usually very weak.  In the absence of statutory protection, the employment contract might be terminated in accordance with the contract of employment.  In the absence of specific provision otherwise, an employment contract is terminable on giving reasonable notice at common law.


Unfair Dismissals Act Issues

The Unfair Dismissals Act does not apply to an employment which covers maternity or other protective leave for another employee.  The employee must be given prior confirmation that the employment will terminate on the return of the employee who was on leave.  The termination must be for the purpose of allowing the other employee to return.

The Unfair Dismissals Acts does not apply to the dismissal of a statutory apprentice if the dismissal takes place within six months after commencement of the apprenticeship or one month after commencement of the apprenticeship or within one month after completion of the apprenticeship.  A contract of apprenticeship is not to be regarded as employment for the purpose of the Fixed Term Work Act.

The Unfair Dismissals Act does not apply to the non-renewal of a specified purpose or fixed term contract, provided that the contract is in writing, signed by the parties and provides that the Unfair Dismissals Act does not apply to its termination. Where these conditions are satisfied, and the dismissal consists only of the expiry of the term of the contract without renewal or of the cessation of the purpose, the Act does not apply.

Where there is second and/or further fixed term contracts, it may be held that they, in fact, comprise a continuous employment.  The courts and tribunals do not allow the use of a purported series of fixed contracts, to be used to circumvent Unfair Dismissals Act rights.


Protection againsts Unfair Dismissal

The original Unfair Dismissals Act position for fixed term employees was strengthened by amendments made in 1993 and 2007. It is now provided, that

  • where a dismissal consists of the expiry of a fixed term or fixed purpose contract without renewal;
  • the employee concerned is re-employed within three months under a subsequent contract;
  • the nature of the employment is the same or similar to that of the employment under the previous contract;
  • the employee is dismissed from the employment and the dismissal consists only of the expiry of the subsequent contract without being renewed; and
  • in the opinion of the courts or tribunal, the entry into the subsequent contract was wholly or partly in connection with or the purpose of avoidance of liability under the unfair dismissals legislation,

then the Unfair Dismissal Act does apply to the dismissal.


Calculation of Period of Service

The terms of the contract and previous contracts are added together for the purpose of determining the period of service for qualification purposes (one year service required). This includes

  • a previous contract of employment, the term of which expired not more than three months before the commencement of the later contract,
  • each of a series of contracts, the term of the last of which expired not more than three months before the commencement of the prior contract and
  • the term of the other and each of the contracts or series of contracts, where there are no more than three months between the contracts in the series

each being contracts between employer and employee who are parties to the prior contract, where the nature of the employment is the same or similar to that of the employment under the prior contract.


Directive and Legislation on Fixed Term Contracts

It is an implied term of most employment contracts that there is a right to terminate the contract on giving reasonable notice. The will generally coincide with the notice periods in the minimum notice legislation.   In the absence of an express or implied clause allowing termination by notice, an employee with a contract of indefinite duration, whose employment is terminated, may be entitled to salary for the full balance of the terms subject to an obligation to mitigate.

The EU Directive on fixed-term employment recognises that fixed-term employment contracts have become a feature in certain sectors.  The Directive sought to improve the quality of fixed-term work by ensuring the application of anti-discrimination legislation and by preventing the abuse of successive fixed-term employment contracts.

Fixed-term contracts cannot be used to undermine employment rights.  A fixed-term contract cannot be extended beyond four years unless there is a sufficient basis in objective necessity.  Where a contract purports to exceed the four years without this basis, it is deemed to be a contract of indefinite duration.

A fixed term worker should be treated in no less favourable a manner, than a comparable permanent employee, solely because he has a fixed term contract or relationship unless the different treatment is justified on objective grounds.  Where appropriate, they should enjoy the same benefits and terms as full-term workers, in proportionate to the time worked.


Implementation of Directive at National Level

The principles are to be implemented at the state level, after consultation with social partners, through collective agreements and /or legislation.  The periods of service qualification relating to conditions of employment are the same for fixed term worker, as for permanent workers, except where different lengths of service are justified on objective grounds.

States are obliged to introduce, in a manner which takes account of sectoral needs and categories of workers, one or more of the following types of measures:

·        provision for objective reasons justifying the renewal of such contracts and relationships;

·        the maximum total duration of successive fixed-term employment contracts or relationship;

·        the number of renewals.

States are to define and determine under what conditions; fixed-term employment contracts are deemed to be successive or to be of indefinite duration.

The Protection of Employees (Fixed-Term Work) Act 2003 implements EU Directives on fixed-term work.  As with most other employment rights, the legislation is mandatory and overrules any contract or provisions to the contrary.

The fixed-term employee must be treated no less favourably than comparable permanent employees without objective basis or justification.  The Labour Court, (which formerly determined disputes and complaints) has held that the non-renewal of a fixed-term contract is not of itself, discrimination.


Scope of Fixed Term Legislation

A fixed-term employee is one whose employment terminates on the fulfilment of a predefined condition.  This may be a predetermined end date, or the completion of a particular job, task or event.

The employers of fixed term employees are defined to cover group and associated employers.  Accordingly, successive contracts by employers in the same group may be deemed to be the same employer for this purpose.

The fixed-term employees legislation does not apply to

  • agency employees;
  • those in vocational training, apprentices and those employed under a supported training scheme for vocational retraining;
  • most other trainees;
  • Gardai;
  • nurses; and
  • members of the Defence Forces

Equal Rights for Fixed Term Workers

Fixed-term employees are entitled to equivalent pay, remuneration and employment conditions to those of comparable permanent employees. Where not exactly comparable, the equivalent entitlements are to be proportionate to those of the comparable permanent employees.

Remuneration includes all consideration in cash or in-kind, which the employee receives directly or indirectly from the employer in relation to employment.  It includes amounts which the employee will be entitled to receive on foot of any scheme or arrangement.

A fixed-term employee must not be treated less favourably than a comparable permanent employee without objective basis or justification.  The Labour Court, (which formerly determined disputes and complaints) has held that the non-renewal of a fixed-term contract is not of itself, discrimination.

Fixed term employees have rights to the same training opportunities, career development and mobility as permanent employees. Access must be facilitated to appropriate training opportunities on a non-discriminatory basis, in order to enhance their skills, career development and occupational mobility.

This right does not apply where the fixed-term employee’s normal working hours are less than one-fifth of those of a comparable employee.

Contracting out of the Act is not permissible.  Clauses which purport to contract out of the Act are void.


Comparator Required to Show Discrimination

As is the case with other anti-discrimination legislation, a comparator is required. A comparable employee in this context is a permanent employee employed by the same employer, who undertakes like work.  The comparator must be established in the context of the claim.

The claimant must choose the comparator in accordance with the statutory criteria.   A person who is “red circled”, (retained on particular salary or on the same terms and conditions, after a structural change) will not generally be an appropriate comparator.

An employee may be a comparator if he is employed by the same employer or by an associated employer.  Where such a person does not exist, an employee covered by a common collective agreement may be treated as a comparator.  Where no such direct comparator is available, an employee in the same industry or employment sector may be the comparator.


Comparable Work Must be Done

The work performed by the fixed-term employee must be equal to or greater in value than the work performed by the permanent employee, having regards to such matters as skills, the physical and mental requirements, responsibility and working conditions.

The claimant and comparator must undertake the same work under the same or under similar conditions. Alternatively, each may be interchangeable.  The work performed must be of the same or similar nature and the differences between them or the conditions applicable must of small importance or irregular, such as to be insignificant.


Permitted Discrimination / Exceptions

Fixed term contracts are not discriminatory in themselves.  Their non-renewal will not usually constitute less favourable treatment in itself.  The entry into or renewal of a fixed term contract may be shown to constitute less favourable treatment in some exceptional circumstances.

It may be legitimate to use fixed-term contracts in the circumstances.  They must be an appropriate means to meet the relevant objective. The objective reasons must be grounded in the particular circumstances.  They must be such as are capable in the circumstances of justifying fixed term, or successive fixed-term contracts.  They may result from the nature of the tasks or their inherent characteristics.

A fixed term employee must be treated no less favourably than a comparable permanent employee unless there is an objective reason or reasons, which justifies the discrimination.  Less favourable treatment may be justified if the terms of the contract, considered in their totality, are at least as favourable as the comparable permanent employees’ contract of employment.


Objective Grounds for Differentiation

An objective ground must be based on considerations other than the status of the employee concerned as a fixed term employee.  The less favourable treatment must be necessary for the purpose of achieving a legitimate object of the employer. The treatment must be appropriate and necessary for that purpose.

Where in relation to any term of his or her contract, a fixed-term employee is treated by his employer in a less favourable manner than a comparable permanent employee, the treatment in question shall be regarded as justified on objective grounds if the terms of the fixed-term employee’s contract of employment taken as a whole, are at least as favourable as the terms of the comparable permanent employee’s contract of employment.

The different treatment or measures must be required to meet a real need of the employer and must be appropriate and necessary to achieve that objective. There should not be an alternative means of achieving the same objective, which is not discriminatory or is significantly less discriminatory.  The position is judged at the relevant time and not in hindsight.

The ground or basis of differentiation is not objective unless

  • it is based on considerations other than the status of the employee concerned as a fixed-term employee;
  • the less favourable treatment of that employee is for the purpose of achieving a legitimate objective for the employer, and
  • such treatment is appropriate and necessary for that purpose.

The WRC determines whether the justification has an objective basis.


Required Notification by Employer

Where an employee is employed on a fixed-term contract, the fixed-term employee must be informed in writing as soon as practicable by the employer of the objective condition determining the contract whether it is

  • arriving at a specific date,
  • completing a specific task, or
  • the occurrence of a specific event.

Where an employer proposes to renew a fixed-term contract, the fixed-term employee shall be informed in writing by the employer of the objective grounds justifying the renewal of the fixed-term contract and the failure to offer a contract of indefinite duration, at the latest by the date of the renewal.

Where an employee has completed his third year of continuous employment with the employer or associated employer, the contract may be renewed on one further occasion. This shall be a fixed term contract of no more than one year.


Four Year Limit of Fixed Term Contracts

Where a fixed-term employee is employed by his employer or an associated employer on two or more continuous fixed-term contracts, the aggregate duration shall not exceed four years.  Thereafter, the employee is entitled to a contract of indefinite duration. Provisions to the contrary in a fixed term contract, are of no effect.

Where a person fills a post while another is on a career break or otherwise, the extension of the career break, will not necessarily constitute a further contract or a renewal of the contract.  If there is a single contract providing for coverage during the absence, then this will be a single contract.  If, however, there is a renewal, then a right to a contract of indefinite duration may arise.

It appears that the Directive requires that breaks of weeks and months in the nature of layoffs do not preclude continuity of employment.  It has also been held that a break with the agreement of the employer for the purpose of participation in a training scheme, did not break continuity.


Indefinite Contract Right Acquired

The entitlement is to a contract of indefinite duration.  The contract of indefinite duration must reflect the type of work in which the person is employed.  It need not exactly replicate the previous fixed term arrangements. The terms of the contract of indefinite duration are to be agreed between the parties, or in default, is in effect to be determined by the Labour Court.

The right to a contract of indefinite duration applies unless there are objective reasons which necessitate otherwise. What constitutes an objective basis to refuse a contract of indefinite duration, depends on a range of factors.  These have been developed in Labour Court and WRC cases. An objective basis has been held to include industry restructuring, necessitated by economic requirements.

The contract of indefinite duration, to which a fixed-term employee becomes entitled after four years, is the standard (“permanent”) employee contract of indefinite duration, terminable on reasonable notice.  However, it is subject to the unfair dismissals legislation.

The contract of indefinite duration must reflect the type of work in which the person is employed.  It need not exactly replicate the previous fixed term arrangements. The terms of the contract of indefinite duration are to be agreed between the parties, or in default, is in effect to be determined by the Labour Court.

It appears that civil remedy may be claimed to enforce a contract of indefinite duration. A declaration may be sought as to the entitlement to and the terms of the contract.  An award of damages may be made if there is a breach of the contract.  Reinstatement may be ordered.  In the public sector, there may be a legitimate expectation that certain terms and conditions will be applicable.  They may be published in circulars.


Information Rights

Fixed-term employees are entitled to a statement of the terms of their employment as soon as practicable.  They must also be given details in writing of the objective basis, upon which their contract may be determined.

The statement is allowed as proof of its content in proceedings.  If no written statement is given, the WRC /Labour Court in hearing a complaint may draw an adverse conclusion. Failure to provide the statement is a breach of the legislation in itself.

Fixed-term employees are to be informed in relation to vacancies for permanent positions in the same way as other employees.  It may be by way of a general announcement at a suitable place in the business or establishment.  The placing of an advertisement in itself does not appear to meet the requirements of the Directive.


Enforcement of Fixed Term Legislation

A breach of the legislation may be the subject of a complaint to the Workplace Relations Commission made within six months.  This may be extended to 12 months for a good cause.  Complaints under the legislation are referred to a WRC adjudicator (formerly a Rights Commissioner) in the first instance.  The WRC may determine the matter and require the employer to comply.

The adjudicator may declare the claim to be well-founded or not.  He may require the employer to comply with the provision, reinstate to re-engage the employee including on a contract of indefinite duration.  It may require the employer to pay compensation of such an amount as is just and equitable in the circumstances, up to two years’ remuneration. The general rules of mitigation of damage apply in respect of awards of compensation.

Fixed-term employees may not be penalised for invoking rights under the legislation, acting in good faith in opposing unlawful action or for giving evidence in proceedings. They may not be dismissed wholly or partly for or connected with, the purpose of avoidance of a contract being deemed to be of indefinite duration.

Either employer or employee may appeal against the decision to the Labour Curt.  There is a further appeal to the High court on a point of law. As with other equivalent legislation, the decision of the WRC or Labour Court may be enforced through the District Court or Circuit Court, if it is not complied with.