Employment Alert No. 120: What is the link between 10 July 2006 and Fixed Term Employees?
July 10, 2006
| Background |
The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (the “Regulations”), came into force on 1 October 2002.
Under the Regulations, where:
- a fixed term employee has been continuously employed on two or more successive fixed-term contracts for a period of four years or more, and
- the continued use of a fixed-term contract for the employee cannot be objectively justified,
then the employee shall be deemed to be a permanent employee, meaning that at the end of the existing fixed term contract employment will not terminate. However, under the Regulations, fixed-term contracts entered prior to 10 July 2002 (the “start date”) are disregarded for the purposes of calculating four years’ continuous employment for these purposes.
| What does this mean? |
The fourth anniversary of the start date is today, 10 July 2006. Therefore, employees hired on fixed term contracts on 10 July 2006 or on any later date (11 July 2006 onwards) will, once they have worked on successive fixed-term contracts for a period of four years or more now become permanent employees, unless the continued use of a fixed-term contract can be objectively justified.
Employees to whom this applies can make a written request for confirmation that they have become a permanent employee. If they do, then you must, within 21 days, provide written confirmation that they are either a permanent employee or provide objective reasons why they will remain a fixed-term employee. If the employee disagrees with your decision to maintain their fixed-term status, then they can apply to an Employment Tribunal for a declaration that they have become a permanent employee.
| What should employers do? |
Review all contracts for fixed-term employees and check both when they joined and the number of renewals since the start date. If there are employees whom this anniversary will affect, then you should carefully consider if you can objectively justify continuing the arrangement as a fixed-term contract or not.
If an employee has become a permanent employee, then this will result in a change to their terms and conditions of employment. As a permanent employee they must receive all terms and conditions open to permanent employees, (including benefits). In addition, they will also be entitled to a notice period (which can be no less than statute provides – i.e. one week per year of service up to a maximum of 12 weeks) as opposed to a date when their employment will terminate by expiry of the fixed term.
In such circumstances you must (pursuant to section 4 of the Employment Rights Act 1996) notify the employee of this change to their terms and conditions of employment no later than one month of the change taking effect. Failure to do so could entitle the employee to compensation of between 2 to 4 weeks pay. Pay for this purpose is capped at £290 per week.
