FIXED TERM CONTRACTS AND CONTRACTS OF INDEFINITE DURATION:
Given the current economic climate where almost every sector of employment has been affected by the Covid Pandemic, there has been increasing reluctance on the part of employer’s to offer permanent positions of employment. The current climate means that it is increasingly important for employers and employees to be fully aware of the law in relation to fixed term contracts and contracts of indefinite duration.
Under Section 9(2) of the Protection of Employees (Fixed Term) Work Act 2003, unless the employer has objective grounds justifying renewal on a fixed term basis, once an employee, under a fixed term contract, has been employed on two or more continuous fixed-term contracts, the aggregate duration of the contracts should not be more than 4 years. Under Section 9(3) of the Act, any term of a fixed-term contract which purports to contravene this rule will have no effect and the contract concerned will be deemed to be a contract of indefinite duration, i.e. a permanent contract of employment.
“Objective grounds” are difficult for an employer to establish. The Labour Court has previously made clear it’s interpretation of ‘objective grounds’ from it’s decision in Diageo v. Rooney PTW/03/7, which related to the identical provision pertaining to part-time workers under the Protection of Employees (Part-Time Work) Act 2001, where it held that:
“Objective justification can only arise where the less favourable treatment is for the purpose of achieving a legitimate objective of the employer and such treatmen
t is appropriate and necessary for that purpose. In the normal course, an employer would be expected to have considered alternative means of achieving the objective being pursued which might have a less detrimental effect on the part-time worker concerned. It is only if it can be demonstrated that there are no viable, less discriminatory means of achieving the objective being pursued can the defence of objective justification succeed.”
If the employer has appropriate objective grounds for the fixed-term contracts, it may provide another fixed-term contract at the end of contracts which exceed 4 years’ service of employment, if there are suitable objective grounds. The employer must follow procedures for renewal of Fixed Term contracts in such circumstances.
PROCEDURES FOR THE RENEWAL OF FIXED TERM CONTRACTS:
The relevant provisions regarding the procedure for renewal of fixed term contracts are underpinned by Sections 8(1) and 8(2) of the Protection of Employees (Fixed Term) Work Act 2003.
Section 8(1 ) provides that where an employee is employed on a fixed-term contract, the fixed-term employee shall be informed in writing as soon as practicable by the employer of the objective condition determining the contract, whether it is: (a) arriving at a specific date; (b) completing a specific task; or (c) the occurrence of a specific event.
Section 8(2): Where an employer proposes to renew a fixed-term contract, the fixed-term employee shall be informed in writing by the employer of the objective grounds justifying the renewal of the fixed term contract and the failure to offer a contract of indefinite duration, at the latest by the date of the renewal.
EQUAL TREATMENT OF FIXED TERM WORKERS IN COMPARISON TO PERMANENT EMPLOYEES:
Pursuant to S.6 of the said Act, a fixed term employee must not, in respect of his or her conditions of employment, be treated in a less favourable manner than a comparable permanent employee unless the employer can cite objective grounds which necessitate such less favourable treatment.
Thus appropriate training opportunities, for example, within a workplace should not exclusively be offered to Permanent members of staff, at the exclusion of fixed term employees. Failure to treat Fixed Term Employees equally, leaves employers exposed to potential legal action against them from aggrieved employees.
Claims under the Act are within the jurisdiction of the Workplace Relations commission (WRC). Applicable claims must be made within six months of contravention of the legal obligations by the employer, which time limit may be extended to 12 months where reasonable cause exists. The WRC may order reinstatement/reengagement and/or compensation of such amount (if any) as is just and equitable having regard to all the circumstances, but not exceeding 2 years remuneration.
Should you have any queries in relation to this area of law, please do not hesitate to contact this office, where we will be more than happy to assist you.
About the author: Kevin Sherry is an Associate Solicitor in our Employment Law Unit and can be contacted at firstname.lastname@example.org