End of Fixed Term Contract
We have recently let go a fixed term contract person and she is now claiming unfair dismissal. She had been with us for three years and a permanent vacancy arose which we have given to an internal candidate who was better qualified and performed better at interview. We talked immediately afterwards with her about another position, however because it was not quite as senior her role and it became a bit acrimonious. We did ensure that her contract was properly terminated when it came to the non-renewal time. She was given notice that her fixed term contract would not be extended. She is claiming that we should have appointed her to the permanent role and tried harder to find her another job, as some vacancies arose in her remaining period of employment. She has also blamed us for not giving her a right of appeal.
The expiry of a fixed-term contract constitutes a dismissal of the employee. You should therefore be mindful to dismiss the employee fairly, where they have sufficient continuity of service to bring an unfair dismissal claim, the same as with a permanent employee.
When a fixed term contract ends on the agreed end date; employers do normally not need to give notice. If the employment is beyond two years service, the employee will be entitled to the same redundancy rights as a permanent employee and a redundancy payment.
If the work ends before the agreed end date and the contract allows the employer to be dismissed, then the employer should give the appropriate notice period. An employer can be in breach of contract if they wish to end the contract and there is no provision to do so in the contract of employment.
Just because you are complying with the Fixed-term Employees Regulations does not mean you will have acted fairly when a decision is made not to renew a fixed-term contract. The law on unfair dismissal applies to dismissals which arise from non-renewal of a fixed-term contract. The question of fairness of a dismissal depends in the normal way on the facts of the case and the application of the fairness test in the law on unfair dismissal. Dismissals by non-renewal of a fixed-term contract will often be potentially fair for “some other substantial reason” or depending on the facts, have some features in common with a redundancy dismissal.
The Regulations enact an anti-discrimination regime whereby, broadly, unless there is objective justification, means they must not be less favourably treated compared with staff not employed on fixed-term contracts.
The effect of the law is that possible alternatives to dismissal will need to be discussed as a matter of fairness, where such alternatives are or may be available.
The Regulations include an obligation on the employer to give the employee opportunities for alternative employment, in the sense that the employer is required to notify the employee of all available vacancies for substantive posts. Specifically the legislation refers to “the opportunity [of the fixed-term employee] to secure any permanent position in the establishment”.
Whilst most non-renewals of fixed-term contracts will fall under the “some other substantial reason” category, as being a potentially fair reason for dismissal, this is not automatically the case.
- You therefore need to arrange a full thorough appeal as quickly as possible.
- Review your manpower requirements to establish whether suitable alternative employment can be found.
- If it cannot, then be prepared to show what you have done to reach that conclusion.
- Be prepared to settle rather than go to Tribunal.
- Learn from the experience and do not repeat.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.