| The Consultant | 
| A Quarterly Recruitment Report, Compliments of FCA Recruitment |
| Managing Employment Law Implications | |||
| Fixed term
contracts Differing work arrangements are part of the flexibility which employers increasingly demand in order to remain profitable in a globally competitive market. The use of fixed term contracts is just one such "work arrangement". This article looks at the rights and duties of the parties to fixed term contracts through the lens of the following example: Question: I was initially employed by my company as an Office Administrator on a 1 year contract. My job functions were primarily to set up systems for a new office to ensure its smooth running. However, at the time, it was made clear to me that it was only a 1 year position, as there would be no need for the position after the first year. It was envisaged that a post for a Financial Manager would then be created which would incorporate my other job functions. As it turned out, even though a Financial Manager was appointed after a year, my contract was renewed for a further year as it was considered that I was still useful to the business. I have recently had a disagreement with my boss, and he has now advised me that at the end of this year I will no longer be required as my contract expires. What rights do I have? The Labour Relations Act is to protect employees from unfair dismissal and in certain circumstances, the failure to renew a fixed term contract can also amount to an unfair dismissal. "Dismissal" is defined to include a situation where "an employee reasonably expected the employer to renew a fixed term contract of employment on the same or similar terms, but the employer offered to renew it on less favourable terms, or did not renew it". It should immediately |
thing as an "unfair dismissal". In other words, even if there were a reasonable expectation of renewal and the employer failed to renew a fixed term contract, the "dismissal" might still be fair, depending on the circumstances. The purpose of including non-renewals of fixed term contracts in the meaning of "dismissal" is to ensure that employers cannot treat certain employees, who are for all intents and purposes, "permanent" employees, despite being on fixed term contracts, as temporary employees. Some employers have been known to cut their liabilities by hiring employees on a temporary basis, renewing their contracts as it suits the company, but at the same time using the employee's temporary status as a reason to exclude him or her from "permanent" benefits, and then getting rid of the employee for no particular reason by allowing the contract to "expire" without any explanation. The law effectively says that if an employment relationship is in fact permanent in nature (even if it has only become so in the latter part of the relationship), then the termination of that relationship by the employer must be treated in the same way as any other dismissal. In other words, there must be a good reason for the dismissal (to do with the employee's misconduct or non-performance, or because the business needs to retrench employees) and the employee must be given a fair procedure in which to communicate his or her views and perspective. In the example, if the employee could show that she had effectively been incorporated into the business and that her position would not in fact fall away at the end of this year, she would probably be able to establish that |
her contract would be renewed. A disagreement with the boss is not necessarily a good reason to be dismissed and certainly needs to be explored through the proper channels in the company. It is not good enough for the company to use the employee's nominally "temporary" status as an excuse not to treat this employee fairly. In such a case, the employee is likely to have a good case to claim unfair dismissal. Where a company foresees a need for fixed term contractors this article does not intend to dissuade such companies as there are many benefits and sound reasons for doing so. We merely emphasize that, in order to comply with the Labour Relations Act, should a fixed term contract employee become a permanent employee for all intents and purposes, he or she should be treated as such and labelling a permanent employee as a fixed term contract employee will not assist the employer in a dismissal dispute. Helena Janisch/Michelle Rawlinson Telephone: (011) 530-5000 |
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