Summer is upon us and most employees will probably be looking forward to a well-deserved break. However in many industries, like hospitality and tourism, summer is the busiest period and often employers will need to recruit additional summer staff. Employers frequently use fixed-term contracts to achieve a workable, short-term employment relationship to cope with the increased seasonal demand. However, it is important for employers to understand the legalities of fixed term contracts to make sure that they are not opening themselves up to the risk of a claim from a disgruntled employee.
1. What is a fixed term contract?
A fixed term contact is a contract of employment for a fixed duration which will perhaps terminate after a certain period of time, or even on the completion of a particular project.
Employers are often mistaken in thinking that a fixed-term employee has no employment rights - this is not true!
2. What rights do fixed-term employees have?
a) Less favourable treatment than permanent employees
In addition to the usual basic rights like being paid the National Minimum Wage and receiving the minimum statutory holiday entitlement, fixed-term employees are protected against being treated less favourably than comparable permanent employees.
Employers should be careful not to give permanent employees higher pay or benefits, better prospects of promotion or greater access to training opportunities than equivalent fixed-term employees.
Employers can justify treating a fixed term employee less favourably than a permanent employee; however, the justification would have to be on the basis of a good reason, giving due regard to the needs and rights of the individual employees, balanced against the business objectives. This is a high bar to satisfy and treating permanent and fixed-term employees unequally should be approached with caution by any employer.
b) Unfair dismissal protection
Fixed term contracts of short duration are often attractive to employers as not only do they provide flexibility but employees often do not gain the necessary two years' qualifying service for unfair dismissal protection. Whilst this is often true of seasonal workers, employers beware!
Should you keep employing an employee on successive fixed term contracts beyond two years' continuous service, the employee may acquire unfair dismissal protection. Also, if an employee is employed for more than 4 years on a fixed term contract, the employer will have to justify its use over a permanent contract.
3. Terminating a fixed-term contract?
The summer often flies by and it is important for employers to know what their obligations are when terminating a fixed term contract.
Generally, an employer is not required to give an employee notice of a fixed-term contract coming to an end. However, if an employer wants the ability to terminate a fixed-term contract early, this should be set out in the contract of employment and proper notice should be given.
Similarly if an employer keeps a fixed-term employee on past the end of the fixed term, then they will be required to give notice to the employee in order to end the contract. Unless there is specific provision in the contract (often there is not), the amount of notice required would be the statutory minimum.
Fixed-term contracts can be incredibly useful tools to employers in reacting to peaks and troughs in demand, but employers should make sure that they fully understand their obligations to fixed-term employees.
If you need any assistance with fixed term contracts please contact firstname.lastname@example.org.