In this edition we look at the rights of staff on fixed-term contracts (FTCs) when the employer is planning to make employees redundant.

A FTC is a contract of employment which terminates:

This depends on the terms of the contract. If it does not provide for termination before the end of the fixed term, an employer will be acting in breach of contract if they terminate it early, and the employee can claim damages up to the end of the contract.

If the contact provides for early termination with notice, the employer must give the required notice before dismissal. If the employee has two years’ continuous service or more, the employer must give the reason for dismissal and act ‘reasonably’—by consulting with the employee and considering alternative employment, for example. But an employee with less than two years’ service may still claim that their dismissal amounts to less favourable treatment in comparison to permanent staff doing broadly similar work and with a similar level of skills and experience.

Non-renewal of an FTC will be treated as dismissal in law, and an employee with two years’ service or more may be able to claim unfair dismissal. Staff are entitled to written reasons for their dismissal—which in most cases will be redundancy or ‘some other substantial reason’ (SOSR). 

If the FTC is not renewed because the need for work of a particular kind has reduced, redundancy will be the reason given. To rely on SOSR, the employer must show that the FTC was for a genuine purpose, which was known to the employee when they were employed and that that purpose has ceased to apply. A common example would be a fixed-term employee covering for someone on maternity leave.

Generally, no. Under Regulation 3 of the Fixed Term Employee Regulations 2002, employees have the right not to be treated less favourably than comparable permanent employees just because they are on a fixed-term contract—unless the different treatment can be objectively justified.

Employers risk a claim for discrimination if fixed-term employees are selected for redundancy first.  In Whiffen v Milham Ford Girls School, the Court of Appeal upheld a claim for indirect sex discrimination when the employer selected staff on FTCs first for redundancy. Whiffen successfully argued that the requirement to be a permanent employee in order not to be selected for redundancy first was not justified and amounted to ‘a provision, criterion or practice’ which put women at a disadvantage— because women were more likely to be employed on FTCs.

Yes, an employee on a fixed-term contract will be regarded as permanent provided they have four years’ service or more on a series of  FTC’s, and this could not be justified objectively at the time of the most recent renewal. This provision is intended to encourage secure employment by preventing the abusive practice of keeping staff on successive FTCs.

The employee can request written confirmation that their contract is no longer fixed term. The employer must reply within 21 days, either accepting the request or giving concrete and precise reasons for refusing.

This depends on all the circumstances. In one case an employee was held not to have unreasonably refused a job which would only have lasted two months, while in another, the employee was held to be acting unreasonably by refusing a job which was expected to last between 12 and 18 months.

In conclusion, selecting employees for redundancy simply because they are on an FTC is likely to be unfair unless it can be objectively justified. Employers should consult with staff on FTCs and consider suitable alternative employment where they are at risk of redundancy, just as they should for comparable permanent employees. //