Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002

The Regulations apply to employees who work under fixed term contracts, notably a contract which states that the arrangement will expire on a fixed term or on the completion of a specific task or event. It is common for businesses to use fixed term contracts to provide certainty and/or flexibility but it is also important that they are aware of the potential obligations. If they do not have appropriate notice clauses for example, then a termination could result in payment for the entire fixed term period.

The regulations were bought in to ensure that fixed term employees cannot be excluded from the contractual benefits offered to permanent staff and thus less favourable treatment.

The regulations do not apply to the following:

•  The Armed Forces;

• Students and work experience up to a year as part of their course;

• Agency workers attracted to perform through a temp company (employment business);

•  Apprentices; and

• People on government funded or sponsored training work experience.

The basic rights provide that a fixed term employee should not be treated less favourable than a comparable permanent employee. This relates to the terms of employment and will include things such as:

•  Regulation 3(2)(c) the opportunity to secure any permanent position in an establishment;

• Regulation 3(2)(b) the opportunity to receive training;

• Regulation 3(2)(a) any period of service qualification relating to any particular condition of service.;

• Regulation 3(1)(a) as regards to the terms of their contract;

• Regulation 3(1)(b) are being subjected to any other detriment by any act or deliberate failure to act of their employer.

Reviewing a comparable permanent employee would involve comparing the conditions of both workers to ensure that they are doing the same or broadly similar work.

Fixed term employees have also the right to receive a written statement from their employer setting out the reasons for less favourable treatment. If fixed term employees have worked successfully under a contract for more than four years, then their status will be deemed to be permanent. They also have the right to qualify the statutory redundancy payment if they are employed for the maximum period as well as sick pay. This includes employees on a fixed term contracts of 3 months or less.

If an employee has been employed on a fixed term contract or less than 3 months they have right to receive one weeks notice after one month’s continuous service. This is reciprocal.

Fixed term workers also have a right to access occupational pension schemes unless it can be denied on objective grounds.

It is up to the employer to show the reason for any less favourable treatment. They would need to objectively justify it in order not to fall foul of the regulations. When considering whether such measures are objectively justified, the Tribunal will consider whether it was to achieve a legitimate aim, necessary to achieve that aim and an appropriate way to achieve that aim.

An employer may be able to justify it by demonstrating a good business reason for the less favourable treatment in showing that it has acted proportionately or by showing that the fixed term employee’s package is no less favourable when considered as a whole to that of the permanent employee’s total package.

Problems that employers generally face are when dealing with pensions, permanent vacancies and redundancies.

When undertaking a redundancy process they still must consider the rights of fixed term employees. Bearing in mind that fixed term employees whose contract runs for a year can be entitled to bring a claim for unfair dismissal. In the circumstances employers need to ensure that they consult properly with fixed term employees before expiry. They should write to them setting out a list of issues and reason for the expiry of the contract if it is plus one year and that should also state or request a further meeting at which parties will discuss the issue. There should be some consultation with the employee and both sides should outline their views and review any possible alternatives. The employee should also be told of their right to appeal the decision within a reasonable timeframe. If they do it on an appeal, an appeal hearing should be held, and they have the right to be accompanied by a colleague or a trade union representative.

It is not therefore lawful to select fixed term employees simply on the basis of their status unless this can be objectively justified.

Employers must also offer fixed term employees the right to occupational pension schemes on the same criteria as permanent staff unless such treatment can be objectively justified. Employers should take advice in this regard.

Fixed term workers will also have the right to be informed of any permanent vacancies in the same manner as permanent employees.

This article courtesy of Ben Jones of Darlingtons Solicitors.