Covers the use of fixed term contracts, definitions of the relevant terms used in the legislation, why employers cannot use successive fixed term contracts, access to pension schemes, training and facilities by fixed term employees, the consequences of non renewal of a fixed term contract and the remedies available.
A fixed term contract is an employment contract for a definite time duration or for a specific purpose. Generally such contracts can have great benefits for employers and can be very suitable for use in various situations including:
- Replacing employees on temporary leave such as maternity or parental leave.
- For temporary situations where the employer has a specific operational need for an employee for a limited period only and is unlikely to seek to extend such employment.
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The law regulating fixed term employees in Ireland is the Protection of Employees (Fixed-Term Work) Act 2003. The protections contained in the Act are in addition to the provisions in the Unfair Dismissals Acts 1977-2015.
The following categories of workers are exempt from the scope of the Act:
- trainee members of An Garda Siochana
- members of the Defence Forces
- nurses in training
- agency workers
- employees in initial vocational training relationships or apprenticeship schemes, and employees with a contract of employment which has been concluded within the framework of a specific public or publicly supported training, integration or vocational retraining programme
It may appear that the Act applies to fixed term employees only. However, Adjudication Officers (formerly Rights Commissioners) in Ireland are likely to follow the broader approach recently adopted by the CJEU. This may mean that they interpret the Act 'purposively' to permit a permanent worker to claim for less favourable treatment in respect of their previous employment as a fixed term employee.
Principle of non-discrimination
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.
Successive fixed term contracts
In addition to ensuring equal treatment, the Act seeks to guard against the abuse of successive fixed term contracts. Section 9(2) says that, where a fixed term employee is employed on two or more fixed term contracts, the aggregate duration of such contracts cannot not exceed four years. Where section 9(2) is contravened, the contract will be deemed to be a contract of indefinite duration, unless there are objective grounds justifying such a renewal.
Renewal of fixed term contracts
Section 8(2) of the Act says that, where an employer proposes to renew a fixed term contract, the fixed term employee must be informed in writing of the objective ground or grounds justifying why they are being given another fixed term contract rather than a contract of indefinite duration by the date of renewal at the latest. If an employer fails to do this or the grounds given are evasive or equivocal, the Workplace Relations Commission (WRC) or the Labour Court may draw any inference it considers just and equitable in the circumstances.
Section 8(2) is a mandatory requirement and a failure to comply will not be overlooked or excused. The purpose of Section 8(2) is not only to inform the employee of the reason for the renewal of the fixed term contract as opposed to the granting of a contract of indefinite duration but also to ensure that the employer commits, at the time that the contract is being renewed, to the grounds upon which it will rely if it wants to avail of the objective justification defence under Section 9(4) at a later stage, namely that there were objective grounds justifying a renewal beyond the four year period. Section 8(2) in other words requires the employer to nail their colours to the mast in relation to objective justification at the renewal stage.
Access to pension schemes, training and facilities
It is not less favourable treatment to deny a fixed term worker who works less than 20% of the normal hours of work of a comparable permanent employee access to any pension scheme or arrangement.
Training and facilities
Fixed term workers should also be given the same opportunities to receive training and access to facilities as comparable permanent employees, unless this can be objectively justified.
The non-renewal of a fixed term contract can constitute a redundancy situation if the employee is not replaced. Accordingly if the fixed term employee has sufficient service (104 weeks) and fulfils other criteria they may be entitled to a statutory redundancy payment at the end of the contract. An employee may also be entitled to any ex gratia redundancy payment offered to permanent employees.
In the case of Bushin v University College Cork  IEHC 76, the High Court held that ex gratia termination payments fall within the definition of conditions of employment as set out in section 6 of the Act. The case of An Post v Monaghan and Wade (Determination No FTD1231) elaborated on this line of thought when it confirmed that offering different voluntary severance or early retirement schemes to permanent and fixed term employees was contrary to section 6 of the Act.
Fixed term employees have protection from dismissal and other forms of penalisation under the Act. There is no length of service requirement for a penalisation complaint.
Fixed term workers may present a complaint to the WRC if they feel they have been treated less favourably than a comparable permanent employee (or have suffered a detriment). These claims must be presented within six months of the date of the alleged less favourable treatment or detriment taking place and can be extended by an Adjudication Officer if they feel there was reasonable cause for not for bringing the complaint within the six months.
The remedies that may be ordered are as follows:
- A declaration that the complaint is well founded.
- An order requiring the employer to comply with the provisions of the 2003 Act.
- An order requiring the employer to reinstate or reengage the employee or compensation of up to two years' remuneration.