Government publishes draft regulations covering the rights of employees
working to fixed-term contracts
About 4 per cent of the UK workforce are employed on fixed-term contracts.
The Government has published draft regulations that seek to provide protection
for those who may be treated unfairly as a result of their fixed-term status.
The draft regulations – Fixed-Term Employees (Prevention of Less Favourable
Treatment) – implement the EC directive on fixed-term work agreed on 28 June
Who do regulations cover?
The draft regulations currently refer only to employees. This is in contrast
to the directive, which refers to "workers". It remains to be seen
whether the Government will expand the regulations to cover workers, as was the
case with the Part-Time Workers (Prevention of Less Favourable Treatment)
regulations 2000. The latter also started life as applying only to employees,
but this was later changed to workers.
What will regulations do?
– Employees will have the right not to be treated less favourably due to
being employed on fixed-term contracts, unless the employer can justify the
treatment on objective grounds
– The right not to be treated less favourably will not apply to membership
of an occupational pension scheme or to the amount of pay under the contract.
This is another area where the regulations seemingly conflict with the
directive and the Part-Time Workers Regulations, which both suggest that pay
and pensions should be pro rata. This is an area that may be amended when the
regulations are finalised
– Employees who consider they have been subjected to less favourable
treatment can ask their employer for a written statement of the reasons for
such treatment. Written statements will be admissible as evidence in any
– Where employers want to renew a fixed-term contract and the employee has
already been employed continuously for four years or more on a fixed-term
contract or a series of fixed-term contracts, the contract will be regarded as
being of indefinite duration
– Employees will have a right to be informed of any suitable permanent
vacancies. The directive goes further and provides that employers should
facilitate access to training opportunities to enhance skills and career
development. This may be another area where the regulations will be amended
The regulations will not apply to apprenticeships or those on a government
training scheme. Agency workers are also specifically excluded.
Currently, employees on fixed-term contracts for more than two years can
waive their rights to statutory redundancy payments. It was anticipated that
this redundancy waiver would be removed, but so far the Government has chosen
not to do so. The costs of removing the redundancy waiver could be between £37m
and £76m a year. This is yet another area that may be changed when the
regulations come into force.
The message must be: don’t panic! The regulations were supposed to be in
force by 10 July 2001. But the Government claims that the consultation period,
which ended on 31 May 2001, has revealed particular problems and it is keen not
to interfere with normal and acceptable employment practices. Some of the
concerns are that the regulations may discourage employment or have the effect
of levelling down benefits for all employees.
The Government has a further period of one year before the regulations must
be implemented. Hopefully this time it will fulfil its promise to give
businesses ample time to prepare, rather than rushing through the legislation.
Jason Smith is an associate at Palser Grossman solicitors