Fixed-term employees regulations – a practical guide

The
Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
come into force today (1 October 2002). Marcus Rowland, a partner at Kemp
Little, provides an overview of the regulations prohibiting less favourable
treatment of employees on fixed-term contracts

The
regulations

The
aim of the regulations is to prevent employers treating employees on fixed-term
contracts less favourably than similar permanent employees and to impose limits
on the use of successive fixed-term contracts.

When
implemented, the regulations will give fixed-term employees the following
rights:


Not to be treated less favourably than comparable permanent employees unless
the treatment can be objectively justified
– To be informed of any "available vacancies" so that they have the
opportunity to secure permanent employment
– To be regarded as employed on a permanent contract after they have been continuously
employed on successive fixed-term contracts for four years unless certain
conditions are satisfied
– To receive written reasons for any suspected less favourable treatment within
21 days of making a request
– To bring a claim for compensation to an employment tribunal for any breach of
the regulations, and to claim automatic unfair dismissal if they are dismissed
for exercising their new rights

In
addition, the regulations will repeal the sections in the Employment Rights Act
1996, whereby fixed-term employees may waive their right to receive a statutory
redundancy payment. This will apply to contracts signed, extended or renewed
after the regulations come into force.

Which
employees are covered by the regulations?

Unlike
the regulations relating to part-time workers, the regulations only apply to
employees. Agency workers, employees on apprenticeships or government training
schemes and students on work placements of up to one year, are specifically
excluded.

The
individual must also be employed on a contract which is for a specific term or
which terminates automatically on the completion of a specific task or upon the
occurrence or non-occurrence of a specific event.

Who
is a comparable permanent employee?

When
deciding the question of whether a fixed-term employee has been treated less
favourably, it is necessary to compare his/her treatment with that afforded to
a comparable, permanent employee.

This
is defined as an individual employed on a permanent contract by the same
employer who works or is based at the same establishment as the fixed-term
employee and who is engaged in the same or broadly similar work having regard,
where relevant, to whether they have a similar level of qualification, skills
and experience.

If
there is no such permanent employee at the same establishment, the fixed-term
employee is entitled to compare themselves with someone based at one of the
employer’s other establishments.

Are
remuneration and pensions covered by the regulations?

It
was initially thought that the regulations would not apply to pay and pensions
on the basis that these fell outside the scope of the EC Fixed-Term Work
Directive.

However,
the Government decided that the regulations will go beyond the requirements of
the directive and prohibit pay and pensions discrimination.

What
constitutes "less favourable treatment"?

Less
favourable treatment may take any number of forms.  The most common examples are likely to be where a fixed-term
employee receives inferior terms – such as a lower rate of pay or less generous
benefits – than a comparable permanent employee.  In addition, the regulations provide the following specific
examples of what will constitute less favourable treatment:


Requiring fixed-term employees to accrue a longer period of service to qualify
for benefits
– Not providing fixed-term employees with the same training and permanent
employment opportunities

Can
less favourable treatment ever be justified?

Less
favourable treatment of fixed term employees will not be unlawful if it can be
objectively justified.  Whether it can
be justified will depend on the nature of the treatment.  For example, an employer may be justified in
not giving a fixed term employee a season ticket loan if it is expected that their
contract will end before the loan is repayed.

Importantly,
the regulations provide that when looking at the question of whether a
fixed-term employee receives less favourable treatment in relation to any term
of his or her contract, it is necessary to look at the package as a whole,
rather than the individual terms.

Therefore,
it will be permissible to deny a fixed-term employee certain benefits provided
that the overall package is just as good.

Although
this provision is sensible, there is obviously scope for dispute over the issue
of whether the overall package is comparable in the event that fixed-term
employees are offered different benefits to permanent employees.

Information
about available vacancies

Since one of the aims of the regulations is to make it easier for employees on
fixed-term contracts to move into permanent employment, they contain a
provision requiring employers to inform all fixed-term employees of
"available vacancies" in the establishment where they work. This may be
done by including the vacancy in an advertisement which the employee has a
reasonable opportunity of reading, or giving notification in some other way.

Key
points

From
1 October 2002, unless different treatment can be justified, ensure that
fixed-term employees receive:
– the same overall package as comparable permanent staff
– access to the same training and permanent employment opportunities
– information about available vacancies

What
does HR need to do to comply?

  1. Review the contracts of any
    fixed term employees – are any of the terms inferior to those of a
    permanent employee doing similar work?
  2. If so, review whether the
    inferior term(s) be justified by the fact that the overall package is just
    as good or by some other reason
  3. If the difference cannot be
    justified, vary the fixed term employees’ terms so that they are as good
    as those of the permanent employee
  4. Review procedures to ensure
    that fixed term employees are not unjustifiable denied the same level of
    training as comparable permanent employees
  5. Review procedures to ensure
    that fixed term employees are given the same opportunity to apply for
    permanent positions.  In
    particular, ensure that they are notified of any available vacancies
  6. Respond within 21 days to
    any request for written reasons for suspected less favourable treatment
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