Fixed-term employees

Q Can an employer treat fixed-term employees less favourably than it treats permanent staff?

A Not unless this treatment can be justified objectively. The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 state that fixed-term employees must not be treated less favourably, on the grounds of their fixed-term status, than comparable permanent employees, with regard to the terms of their contract, or by being subjected to any detriment by any act or failure to act of their employer.

In particular, this includes rights in relation to periods of qualifying service and the chance to receive training or secure any permanent position within the company.

If, for example, a permanent employee gets more holiday entitlement after a certain amount of service, a fixed-term employee should also receive this increase after the same qualifying period.

To ensure that fixed-term emp-loyees are not treated less favourably with regard to securing a permanent position, employers must ensure that they are informed of any available vacancies.

Q Can an employee be employed indefinitely on fixed-term contracts?

A Under the 2002 regulations, an employee employed under successive fixed-term contracts with the same employer will automatically acquire permanent status once they have been employed for four years. For these purposes, any continuous employment before 10 July 2002 is discounted.

Q How is a fixed-term employee defined?

A For the purposes of the regulations, a fixed-term employee is one employed under a contract of employment that will: terminate on the expiry of a specific term; the completion of a particular task; or the occurrence or non-occurrence of a specific event other than the attainment by the employee of any normal and bona fide retirement age for the position.

Q Can an employer require a fixed-term employee to sign a redundancy waiver?

A No. Since 1 October 2002, a fixed-term employee working on a contract lasting or expected to last for two or more years is no longer able to waive their right to a statutory redundancy payment on termination of the contract. Any waiver signed before 1 October 2002 will still apply, although not where the contract has been renewed or extended after this date.

Q Can an employer balance less favourable treatment in relation to particular contract terms with more favourable treatment in relation to others?

A Less favourable treatment in relation to particular contractual terms will be justified if the terms of the contract taken as a whole are at least as favourable as the terms of a comparable permanent employee’s contract of employment. An employer will therefore be able to balance a less favourable term against a more favourable one, provided that it ensures the overall package is not less favourable than that of the permanent employee. For example, a fixed-term employee might be entitled to fewer days’ holiday, but receive the value of this extra holiday entitlement as increased salary instead.

Q If a contract can be terminated by notice, can it be a fixed-term contract?

A Yes. If in the normal course of events it will continue until the date specified, a contract for a fixed period that can be terminated earlier by notice is still a fixed-term contract for the purposes of the fixed-term regulations.

In Allen v National Australia Group Europe Ltd [2004] IRLR 847 EAT, the employee was employed on a fixed-term contract with an expiry date of July 2003 and an additional clause stating that, during the first six months of service, either party could terminate the contract by giving one week’s notice.

When the employer dismissed Allen on the grounds of competence in January 2003, without giving him the chance to access the performance improvement procedure, he claimed that he had been discriminated against contrary to the regulations.

Although the tribunal dismissed his claim on the grounds that he was not a fixed-term employee, the Employment Appeal Tribunal held that the provision for earlier notice did not negate the fact that the contract’s original intention had been that it would be seen through to the end of the fixed term, unless an event occurred that was not in the normal course.



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