Fixed-term Employment Contracts - Get the basics right
Michelle McDonagh, Consulting and Client Relationship Manager, Adare Human Resource Management
This year alone we have seen changes in the Sick Leave Act 2022 bringing in an entitlement to statutory sick pay, an increase in Parent’s Leave to 7 weeks and new Gender Pay Gap Reporting requirements. Given the number of new pieces of legislation, employers could be forgiven for not ensuring they are fully compliant. However, if found in breach, they face significant implications.
One particular issue that we have seen occur is in relation to employment contracts and specifically, fixed term contracts where there appears to be some confusion.
Fixed Term ContractsEmployers have specific obligations under legislation relating to the commencement of a new employee. Download our handy Contracts of Employment Checklist.
Fixed term contracts are used by employers who need to hire someone either for a certain period of time or to carry out a specific task or project. For a subsequent fixed term contract to be legally compliant, there must be a written agreement that outlines the objective justification for only offering a fixed term contract instead of a permanent contract.
Under the Protection of Employees (Fixed Term Work) Act, 2003, there is significant protection for workers on fixed term contracts. Employers cannot treat those on fixed term contracts any less favourably than those on permanent contracts. For e.g. if a company day off is given to permanent staff as an additional employment benefit but not given to staff on fixed term contracts, this could be seen as less favourable treatment under the Act. Employers are also prevented from abusing workers by employing them on successive fixed term contracts. If you are an employer who relies on fixed term contracts for your teams, there are a number of specific considerations that employers should seek advice on to ensure they are compliant.
Through our Partnership Programme, Adare Human Resource Management provides Chamber members with the peace of mind that all employee related documentation is fully compliant with the latest legislation. Your dedicated client account manager will answer your specific questions and conduct an audit for all new clients to review collateral such as Contracts of Employment and Employee Handbooks ensuring updates are made where required.
Fixed term contracts can be very useful when used correctly. The right to claim under the Unfair Dismissals Act does not apply to fixed term employees in situations where the employment contract is in writing, signed by both parties and comes to its naturally specified end. However, it is important to note that fixed term contracts of employment must state that the Unfair Dismissals Act will not apply to any dismissal that occurs as a result of the contract coming to its agreed end date.
Did you Know? You Should Know!
- Employers are obliged to keep fixed term employees aware of vacancies and training opportunities, particularly related to permanent jobs.
- Where a fixed term contract is terminated during the term of the contract or for reasons ‘other’ than the natural expiry, the exclusion from the Unfair Dismissal Act does not apply, provided the employee has the necessary period of continuous service – 1 year. Employers are expected to manage situations such as poor performance, redundancy etc. in line with their normal legal obligations.  1 JIEC 1102 - Limerick City and County Council v Moran
- Employees who have worked at least 104 weeks (2 years’ service) are entitled to claim statutory redundancy if their position is terminated.
Successive Fixed Term Contracts – what employers need to know
If an employer wants to renew an employee’s fixed term contract, they must inform the employee in writing of the offer of renewal no later than the date of renewal. The new contract must specify the objective condition (reason for) the renewal and for not offering the employee a permanent contract.
There is a limit of four years on the length of successive fixed term contracts with the same employer, which is referred to as “continuous employment” in fixed term contracts. Short breaks in service between contracts can be problematic and may still result in the full period being regarded as continuous service.
In the event that an employee on a fixed term contract is treated less favourably than a permanent employment on the basis of one term of the contract, employers must demonstrate objective justification. This justification must relate to the difference arising from a need of the employer, appropriate to achieve the objective or necessary to achieve the objective.
Peace of Mind
If your business requires support or advice on any HR or Employment Law matter, we can develop tailored solutions specific to your need. Our Partnership Programme has been designed to meet the needs of businesses of all sizes and from all sectors, offering you peace of mind.
Adare Human Resource Management is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. If you would like to discuss this topic in more detail with a member of the Adare Human Resource Management team, we recommend you book a call here or email email@example.com
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