Temporary Contracts

30-05-12

In these challenging times, many employers are considering more flexible employment options. The Protection of Employees (Fixed-Term Work) Act, 2003 is the protective legislation which applies to all fixed-term employees. A fixed-term employee is an employee who has a contract of employment directly with an employer where the end of the contract is determined by an objective condition such as:

• The arrival of a specific date (from X date to Y date)
• Completing a specific task (e.g. installation of a IT system or completion of a specific finite project)
• The occurrence of a specific event (the end of a maternity leave period where a fixed term employee has been covering for the role)

The Act does not apply to agency workers through an employment, apprentices, members of the Defence Forces, trainee Gardai or trainee nurses. However, the act does apply to agency workers employed directly by an employment agency (in otherwords the employment agency will be liable under this Act).

The purpose of the legislation is to:

• To provide for the improvement of the quality of fixed-term work by ensuring that fixed-term workers may not be treated less favourably than comparable permanent workers.
• To provide for the removal of discrimination against fixed-term workers where discrimination exists and the establishment of a framework to prevent abuse arising from the use of successive fixed-term contracts.

 

Dismissal

Where an employee is dismissed at the natural expiry of the fixed-term contract the Unfair Dismissals Legislation will apply as normal. However, an employee can be excluded from taking a claim for unfair dismissal, if the employer has included a specific clause written into the contract stating that the Unfair Dismissals Acts 1977-2007 will not apply where the reason for ending the contract is the expiry of the fixed-term or the completion of the specified purpose. This contract must be signed by the both parties. However, it is important to note that this exclusion cannot be absolutely relied upon where an employee has over 12 month’s service, however, it will certainly lessen any potential liability as there is clear expectations set at the outset of the employment relationship.

In addition, a clause can be included in the fixed-term contract which clearly allows by joint agreement, for the contract to be terminated prior to the natural expiry of the fixed-term on the provision of an agreed notice period. If such a clause is not included in the fixed-term contract the employee may be entitled to be paid for the entire contract period in situations of early termination.

Comparable Permanent Employees

A comparable permanent employee in relation to a fixed-term employee is an employee who is employed by the same or associated employer and one of the following conditions are fulfilled:

• Both employees perform the same work under the same or similar conditions or each are interchangeable in terms of work.
• The work performed by one the employees concerned is of the same or a similar nature to that performed by the other with minimal differences between the work or conditions.
• The work performed by the fixed-term employee is equal or greater in value due to skill, physical or mental requirements, responsibility or working conditions.

or

• Where the employees do not work for the same employer, but the employee is covered by a collective agreement, which assigns a comparable worker
  

or

• Where neither of the above applies, the employee is employed in the same industry or sector of employment as the fixed-term employee and one of the above conditions is met.

 

Principle of Non-Discrimination

The Act provides that a fixed-term employee shall not be treated in a less favourable manner in respect of his/her conditions of employment than a comparable permanent employee. However, less favourable treatment can occur if it can be justified on objective grounds.

A ground would be considered as an objective ground for treatment in a less favourable manner (including the renewal of a fixed-term employee’s contract for a further fixed term), if it is based on considerations other than the status of the employee as a fixed-term employee and the less favourable treatment is for the purpose of achieving a legitimate objective of the employer and such treatment is necessary for that purpose. If the treatment of a fixed-term employee is based on the fixed-term status of the employee then it is not an objective ground for less favourable treatment.

Employees engaged on a fixed-term contract may be treated less favourably with regard to any term of his or her contract as long as their conditions of employment, taken as a whole, are at least as favourable, as the terms of the comparable permanent employee’s contract of employment.

Fixed-term employees can legitimately be excluded from pension schemes if they normally work less than 20 per cent of the normal hours of the comparable permanent employee.

Where a condition of employment is dependent on the number of hours worked by the employee, the extent to which it is provided to a fixed-term employee shall be related to the proportion which the normal hours of work of that employee bears to the normal hours of work of the comparable permanent employee concerned.

Length of service qualification periods in respect of a particular condition of employment shall be the same for a fixed-term employee as for a comparable permanent employee, except where it is justified on objective grounds.

 

Successive Fixed-Term Contracts

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

Where an employee’s fixed-term contract commenced prior to the passing of the Act, on the 14th of July 2003, once that employee has completed 3 years continuous employment, their fixed-term contracts may be renewed one more time and that renewal may be for a period of no longer than 1 year.

Where an employee’s fixed-term contract commenced after the passing of the Act, once the employee has been engaged on two or more fixed-term contracts, the aggregate duration of these contracts may not exceed 4 years.

Where either of the above limits has been reached the next contract must be a contract of indefinite duration.

Any breach of this section of the Act will result in the contract being deemed one of indefinite duration.

 

Permanent Vacancies and Training

The Act provides that the employer must inform the fixed-term employee of the relevant vacancies which occur in order for them to have the same opportunity as other employees to secure a permanent position. This information can be provided by means of a general announcement in the employee’s place of employment. The Act also provides that, as far as is practicable, access to appropriate training shall be provided by the employer.

 

Penalisation and Redress

The Act prohibits an employer from penalising a fixed-term employee on the grounds that:

• He/she has invoked his/her rights in accordance with this legislation
• He/she has opposed, by lawful means, and act that is unlawful under the legislation
• He/she has given evidence in any proceedings under this Act, or has given notice of his/her intention to do so
• He/she has been dismissed from his/her employment and the dismissal is connected with the purpose of avoiding a fixed-term contract being deemed a contract of indefinite duration

Where an employee has less than one year’s service and is dismissed within the meaning of the Unfair Dismissal Acts 1977 to 2001 he/she may refer a case to a Rights Commissioner under the Protection of Employees (Fixed-Term Work) Act 2003.

Where an employee has more than one year’s service and is dismissed within the meaning of the Unfair Dismissals Acts 1977 to 2001, he/she may refer a complaint to a Rights Commissioner under the Protection of Employees (Fixed-Term Work) Act 2003 or under the Unfair Dismissals Acts 1977 to 2001.

However relief will only be granted to the employee under one of these Acts.

An employee may present a complaint to Workplace Relations Customer Services if it appears that their employer has failed to provide an entitlement to which the employee is due under the Act. Written notice of any complaints must be presented within 6 months of occurrence. This time limit may be extended by 12 months if the Rights Commissioner is satisfied that the complaint was not presented within the 6 month period due to reasonable cause.

The Rights Commissioner will decide one of the following:

• Declare that the complaint was, or was not, well founded.
• Require the employer to comply with the relevant provision of the Act.
• Require the employer to re-instate or re-engage the employee, (including on a contract or indefinite duration)
• Require the employer to pay the employee compensation not exceeding 2 years’ remuneration
• In a situation where ownership of the business has changed after the contravention to which the complaint relates, the new employer will be considered as the employer with reference to the above decision.

Either party may appeal the Rights Commissioner’s decision to the Labour Court within 6 weeks from the date it was communicated to the parties.

Where a Right’s Commissioner’s decision has not been implemented the employee may make a complaint to the Labour Court 6 weeks after the date on which the decision was communicated to the employee. The Labour Court will issue a determination to the like effect of the Right’s Commissioner’s decision. Either party to the proceedings in the Labour Court may appeal the decision to the High Court on a point of law and this determination will be final and conclusive.

 

Recent Cases

In the case of Trinity College Dublin and an Individual the complainant was employed on successive fixed-term contracts.

The complainant did not receive a written statement detailing the objective grounds justifying the failure to provide her with a contract of indefinite duration and the renewal of her fixed-term contract. The complainant was then told that she would be made redundant the following year. It was accepted by the complainant and the respondent that the complainant had been entitled to a contract of indefinite duration 4 years previously on April 1, 2005. However the parties were not in agreement in relation to the terms of the contract. The complainant claimed that she had been working on a more favourable salary and had more favourable terms and conditions of employment for the last four years in comparison to when she became entitled to a contract of indefinite duration. The complainant claimed that she was entitled to a new contract of indefinite duration after working those four years on successive fixed-term contracts.

The Rights Commissioner found that the respondent had breach section 8 of the Protection of Employees (Fixed-Term Work) Act 2003. The complainant was awarded €15,000 compensation. In relation to Section 9 of the Act the Rights Commissioner found against the complainant due to the fact that the respondent had acknowledged her entitlement to a contract of indefinite duration with retrospective effect to April 1, 2005. This decision was appealed to the Labour Court where the decision in relation to section 8 was upheld and the complainants appeal against the decision under section 9 was also upheld. The Labour Court determined that the contract entered into between both parties on April 1, 2005 was a “contract of indefinite duration”. However, because there was no written statement of this the Court was not in a position to determine the details of the contract. The Court determined that the parties try to agree the details of the mutual obligations entered into at the time. If they fail to reach an agreement the issue can be referred back to the Labour Court for determination of the relevant terms.

In the case of Brothers of Charity and an Individual the complainant was employed in a locum relief capacity from on an “if and when required” basis. After 5 years she was offered a contract of indefinite duration which was backdated to October 10, 2005 with variable working hours. The complainant retired two years later. The complainant claimed that she actually worked an average of 35 hours per week and should be entitled to a contract which takes account of those hours and that because of this she was being treated less favourably than a permanent employee. The respondent argued that the complainant was no longer a fixed-term employee and had legal standing to pursue this complaint. The respondent also argued that the fact that the fixed-term contract was an “if and when required” contract did not mean that she was entitled to a contract that guaranteed her hours when she became entitled to a contract of indefinite duration. This would be a new contract that had never existed between the complainant and the respondent.

The Rights Commissioner found in favour of the complainant. He held that her contract of employment should be amended to include a set number of hours (at least the average number of weekly hours worked using a reference period). He also awarded compensation in the amount of €2,000.

It is clear to be seen from the cases above that it is extremely important for employers to abide by the regulations under the Protection of Employees (Fixed-Term Work) Act, 2003. It is important to be aware that objective justification must always be provided as to why an employee is being engaged on a fixed-term contract and why their fixed-term contract is being renewed rather that giving them a contract of indefinite duration. It is essential for employers to ensure that an employee on a fixed-term contract is never treated less favourably than a comparable permanent employee.

 

If you would like further information in relation to fixed-term contracts or managing temporary employees call your HR Consultant at HRP Group on 01 676 0006.

Please note: ©HRP Group. This document is intended to be a general guide only. It is recommended that professional advice is sought for specific queries.  

- Back to: News Article