What
action does a company take if it does not wish to renew the contract of a
fixed-term worker now the Fixed Term Employees (Prevention of Less Favourable
Treatment) Regulations 2002 have come into force? Jane Amphlett and Richard
Yeomans consider some of the legal and practical implications
Maternity
cover
Fred
is employed on a fixed term basis for 13 months to cover for Mary, an employee
who is taking a year’s maternity leave – her baby is due after 6 April 2003
when maternity entitlement increases to 52 weeks – with a month’s handover
before Mary leaves. Because Fred is not a permanent member of staff, the
company does not allow him to join the occupational pension scheme.
At
the end of Mary’s leave she decides not to return to work. The company is not
happy with Fred’s work and decides not to renew his contract when it expires,
but to recruit a permanent replacement for Mary.
JA
and RY comment Fred may request a written statement giving particulars of
the treatment, to which the company must respond within 21 days, and he can
bring a claim under the Fixed Term Employees Regulations because he has been
excluded from the pension scheme.
Unless
the company applies the same service qualification to Fred as to permanent
staff or it can objectively justify the exclusion, it will lose that claim and
be forced to compensate Fred and/or provide a pension.
The
justification may be that pension rights do not come into force for two years
but, if that is the case, the company should offer a cash alternative.
HR
departments should review the pay and conditions of fixed-term employees to
ensure they are no less favourable than those of permanent employees, unless
there is a good reason for the difference.
Companies
also need to ensure fixed-term workers receive details of all permanent
vacancies (not just those which would be suitable to the employee). So, unless
it has a generally published current vacancy list, the company must notify Fred
individually.
Fred
has more than a year’s service and is also eligible to bring an unfair
dismissal claim. If Mary’s job were disappearing, the company may be able to
fairly dismiss Fred by reason of redundancy, provided it carried out fair
selection and consultation procedures and considered Fred for alternative
employment. But, in this case, the job is continuing and redundancy will not be
a fair reason for dismissal.
Instead,
the real reason Fred’s manager wishes to dismiss him is that he is unhappy with
his performance. To avoid a claim for unfair dismissal, the company would need
to follow a full disciplinary procedure before dismissing which, unless Fred’s
performance is grossly incompetent, will require warnings to be given with a
reasonable opportunity to improve.
If
this happened after next autumn, the company would also have to bear in mind
the statutory disciplinary procedures set out in the Employment Act 2002.
If
these minimum procedures are not followed, the tribunal may, for example,
increase the compensatory award for unfair dismissal (which currently has a cap
of £52,600) by up to 50 per cent.
Jane
Amphlett is a partner and Richard Yeomans, a solicitor at Manches
Key
points of the legislation
–
The regulations cover employees under a contract which lasts for a specific
period of time or which ends on the completion of a particular task or on the
occurrence of a specific event
–
Where a fixed-term contract ends, this is classed as a dismissal
–
Fixed-term employees have the right to be treated no less favourably than
comparable permanent employees, unless the treatment can be objectively
justified. Employers can take either an overall package or a
contract-term-by-contract-term approach when looking at whether terms and conditions
are less favourable
–
Fixed-term employees must not receive less favourable treatment in respect of
training and the right to secure permanent employment
–
They can request a written statement from their employer setting out the reason
for any less favourable treatment, which is admissible as evidence in any
tribunal proceedings
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–
Fixed-term employees who believe they have been discriminated against may
complain to a tribunal, generally within three months of the date of the act
complained of. There is also protection from victimisation, dismissal and
detriment
–
The tribunal can make a declaration as to the rights of the complainant, award
compensation and/or recommend action for the employer to take to reduce the
adverse effect on the fixed term employee. Compensation will be calculated as
it is for sex, race and disability discrimination, except it will not include
compensation for injury to feelings.
