Rights of fixed-term employees
Fixed-term contracts can be very useful to cover a period of maternity leave or long-term sick leave, to do a job where funding has been provided to undertake a specific task, or to do some seasonal work.
However, employers often aren’t aware that fixed-term employees have a lot more rights and protections than they may first realise, which can lead to some nasty surprises.
With many misconceptions around fixed-term contracts, take our test and see how much you know about fixed-term employees’ rights.
Are the following statements true or false?
1. Fixed-term employees are not entitled to the same rights as those given to permanent employees
The main protection provided under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 is that fixed-term employees have the right to not to be treated less favourably than comparable permanent employees.
Less favourable treatment would include not receiving employee benefits available to permanent employees (for example, being excluded from a bonus or free gym membership because of their fixed-term status).
Additionally, they cannot be subjected to any detriment by their employer due to the fact they are on a fixed-term contract (for example, the employer gives permanent employees better promotion or training opportunities, but does not do the same for fixed-term employees).
The only exception is if the employer has a good business reason to justify not giving the fixed-term employee a particular benefit, or if they can show that the value of the fixed-term employee’s total package of terms and conditions is at least equal to the value of that of the comparable permanent employee.
So, if an employee is on a very short contract, the employer may choose not to offer them a certain benefit, such as a company car, even though a permanent employee doing the same type of role does have this benefit. The employer may decide that the cost is too high and there are other ways for them to travel. The employer may decide to compensate a fixed-term employee for not receiving this long-term benefit by paying them a higher salary.
If the employee believes that they have been treated less favourably, they may submit a claim to an Employment Tribunal.
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2. Fixed-term employees are entitled to request a written statement of the reasons why they are treated less favourably
Fixed-term employees are able to submit a request in writing and the employer must respond within 21 days. The employer will need to explain clearly the reasons for the difference or refute the employee’s claims that there is any difference.
3. The worker can be kept on fixed-term contracts indefinitely, without any risk that they will become permanent
An employee employed for four or more years on a series of successive fixed-term contracts may automatically become a permanent employee unless the employer can demonstrate a good business reason to not do so or there is a collective agreement which eradicates this right.
If, however, an employee was engaged on a single contract for four years without it ever being renewed or extended, there would be no automatic right to convert it into a permanent contract.
4. Fixed-term employees cannot claim unfair dismissal
Remember that the non-renewal of a fixed-term contract constitutes a dismissal in law.
This means that the fixed-termer may be able to claim unfair dismissal if they have over two years’ service. They may be able to succeed in their claim if they show that the employer failed to renew their contract for a fair reason or for not following a fair procedure.
As is frequently the case, the non-renewal of a fixed-term contract will be potentially fair on the basis of redundancy – there is not enough work for the employee.
Sometimes, the reason may be fair for “some other substantial reason” (for example, the fixed-term employee has been clearly recruited to cover maternity leave and their employment will therefore be terminated when the other employee returns).
5. Fixed-term employees may be entitled to a redundancy payment
Fixed-term workers may be entitled to a redundancy payment if they have worked continually for two years or more and the reason for the non-renewal is redundancy.
Employees on fixed-term contracts should not be selected for redundancy purely because they are fixed-term employees, unless the employer can objectively justify this.
6. Fixed-term employees have the right to be informed by their employer of available vacancies
All available vacancies should appear in an advertisement which the employee has a reasonable chance of reading in the course of their employment or the employee should be alerted to the vacancy in some other way. This includes roles that are not necessarily suitable.
Need advice and support?
As you can see, employees on fixed-term contracts have various rights and protections. Avoid costly mistakes by taking advice from our Employment Law and HR specialists before recruiting or dismissing a fixed-term employee, plus get peace of mind by having us draft all kinds of employment contracts for you to ensure they’re robust, compliant and fit for purpose.
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