Employment law SOS: Fixed term contracts

Fixed-term contracts can offer certainty and flexibility in certain circumstances, such as where the longevity of future work is unknown. However, employers should not be fooled into thinking that this type of contract will offer any more freedom over employment terms, and termination, than a permanent contract. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 give fixed-term employees the right not to be treated less favourably than comparable permanent employees because of their fixed-term status, unless such treatment can be objectively justified. Less favourable treatment can occur in a variety of circumstances – from excluding fixed-term employees from a pension or bonus schemes because of their fixed-term status, to selecting them for redundancy on the basis of their fixed-term status. Furthermore, although non-renewal of a fixed-term contract does not amount to less favourable treatment, non-renewal is regarded as a "dismissal" for the purposes of unfair dismissal law. This means a fixed-term employee may be able to claim unfair dismissal. (Having a fair reason for non-renewal – some other substantial reason/redundancy are the most common ones – and following a fair procedure will clearly be important here.) And remember that a fixed-term employee is entitled to a statutory redundancy payment in exactly the same way as a permanent employee. Finally, an employee who has been continuously employed on a succession of fixed-term contracts for four years or more is automatically deemed to be a permanent employee, unless the continued use of a fixed-term contract can be objectively justified. And so, while employing individuals on fixed-term contracts does offer a degree of flexibility, it is important to remember that such employees have the same (potentially more) legal protection as those employed on permanent contracts.