Fixed term employees are not to be treated in a less favourable manner than comparable permanent employees in relation to their conditions of employment because they have a fixed term contract unless the different treatment is justified on objective grounds.
Who is a comparable permanent employee?
A comparable permanent employee usually has to be employed by the same employer as the fixed term employee or an associated employer. Where there is no permanent employee employed by the same employer or an associated employer then the comparator can be an employee employed in the same industry or sector of employment as the fixed term employee. In some cases, the comparator can be set out in a collective agreement.
In addition, one of the following three conditions must be met:
- Both employees perform the same work under the same or similar conditions or each is interchangeable with the other in relation to the work.
- Both employees perform the same or similar work and any differences are of small importance or occur with such irregularity as not to be significant.
- The work performed by the relevant fixed term employee is equal or greater in value to the work performed by the other employee concerned.
Who chooses the comparator?
The person bringing the claim chooses their comparator subject to the comparator meeting the statutory criteria above.
What are conditions of employment?
Conditions of employment are terms or conditions which one would expect to find in the contract of employment between an employer and an employee.
For more information on terms and conditions of employment, see our factsheet on employee contracts and handbooks.
What are objective grounds?
An objective ground has to be based on considerations other than the status of the employee. The less favourable treatment has to be for the purpose of achieving a legitimate objective of the employer and the means chosen to achieve the objective have to be appropriate and necessary for that purpose.
To objectively justify less favourable treatment, an employer needs to show that they have done this for a legitimate business reason and that the measures they have taken are appropriate and necessary, not merely desirable. This requires the employer to show that there was no alternative means with a less discriminatory effect by which the objective could have been achieved.
In the case of Catholic University School v Dooley (FTD094) the Labour Court found that an employer cannot rely on upon costs reasons as grounds for not providing a contract of indefinite duration.
In another case, the High Court held that, in excluding fixed term employees from a voluntary severance scheme, an employer had not subjected those employees to minimally less favourable treatment in order to achieve its 'legitimate objective'. Rather the employer should have included fixed term employees in the scheme and offered to buy out the unexpired term of their contracts.
A useful provision for employers is section 7(2) of the legislation. Section 7(2) says that where some of an employee’s terms in a fixed term contract are less favourable than those of a permanent worker, the less favourable terms can be 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. Essentially this allows the employer to compare the contract in the round rather than term by term.