Our continuing series of guides to major employment legislation puts key
information at your fingertips and brings you up to date with the latest
developments. This week Marcus Rowland, a partner at Kemp Little, provides an
overview of the soon to be introduced regulations prohibiting less favourable
treatment of employees on fixed-term contracts
The Government has recently announced its intention to bring the Fixed-Term
Employees (Prevention of Less Favourable Treatment) Regulations 2002 into force
on 1 October 2002.
The aim 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
– Not to be treated less favour-ably 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, emp- loyees 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 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
If there is no such permanent employee at the same establishment, the
fixed-term employee is entitled to compare himself with someone based at one of
the employer’s other establishments.
What amounts to less favourable treatment?
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
However, the Government has decided that the regulations will go beyond the
requirements of the directive and prohibit pay and pensions discrimination.
Therefore, a fixed-term employee will be able to bring a claim under the
regulations if he receives inferior terms – such as a lower rate of pay or less
generous benefits – than a comparable permanent employee unless the employer is
able to justify the difference in treatment on objective grounds.
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
When will less favourable treatment be justified?
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 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 his 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.
From 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