Fixed Term Contracts Renewal and Ending

Susan Lavery
1 June 2010 - 11:13am
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Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations, employees have the right not to be treated less favourably than comparable permanent or full time employees because they are fixed-term, unless the different treatment can be objectively justified.

Which means, fixed-term employees have access to the same employment rights as their permanent equivalents.

Under the Regulations, any employee who has been on a fixed-term contract for four or more years will usually be classed in law as a permanent employee if their contract is renewed, or if they are re-engaged on a new fixed-term contract. Only service from 10 July 2002 is counted towards the four-year limit. So from 10 July 2006 any employee with a series of two or more fixed term contracts would be considered as a permanent employee. 

This is unless the employer can show a good reason why the employee should stay on a fixed-term contract, such as genuine business aim that can be objectively justified. The four-year limit was introduced to prevent employers abusing the use of successive fixed-term contracts to limit employees' employment rights. The limit can be changed by employers and employees agreeing a 'workforce' or 'collective' agreement.

No right of conversion to permanency arises where the employee has a single fixed-term contract lasting four years or more (as opposed to a series of contracts).

The expiry of a fixed fixed-term contract, generally requires no notice of the contract reaching its end date. However, failing to renew a fixed-term contract is considered to be a dismissal, and the employee have the right:

• not to be unfairly dismissed (after one year’s service) and the employer should follow the current Dispute Resolution Proceedures and minimum three step approach (1. put in writting; 2. meet to discuss; 3. offer an appeal.)
• to a written statement of reasons for the dismissal (after one year’s service)
• to statutory redundancy payments (after two years' service)
• to a minimum notice period of the contract ending before the agreed end date.