Jim Young of KLegal outlines how the fixed term
employee regulations will impact on business.
Background
The
EC Fixed-Term Workers Directive (99/70/EC) is designed to stop fixed-term
workers from being discriminated against. It also intends to stop firm's from
using a succession of fixed-term contracts to employ the same person.
Fixed-term workers will also get improved access to training and information on
permanent jobs.
The
Employment Act received Royal Assent on the 10 July 2002 and will transpose the
Fixed-Term Workers Directive into national law. Implementation will be effected
by the Fixed-Term Employees (Prevention of Less Favourable Treatment)
Regulations 2002 and these are likely to come into force on 1 October 2002.
The
regulations are not retrospective. Therefore, employees cannot use them until
that date for allegations of unfavourable treatment. However, when implemented,
it will not be possible to contract out of the regulations, so it is likely
that they will have a significant impact on employers in a number of areas.
Summary
of the Regulations
Fixed-term
employees will have the right not to be less favourably treated than comparable
permanent employees, unless the less favourable treatment is justified on objective
grounds. The right is in respect of any contractual terms, including pay and
pensions or being subjected to any detriment or deliberate failure to act by
the employer.
The
regulations will only apply to employees on fixed-term contracts. This is defined
as being an employee under a contract of employment which (a) is made for a
specified term, fixed in advance or (b) terminates automatically on completion
of a particular task or on the occurrence of a specific event.
In
determining whether a fixed-term employee has been treated less favourably than
a comparable permanent employee, the pro rata principle should generally be
applied. This means that "where a comparable permanent employee receives
or is entitled to pay or any benefits, a fixed-term employee is to receive or
be entitled to such proportion of that pay or other benefit as is reasonable in
the circumstances bearing in mind the length of his contract of employment and
the basis on which the pay or other benefit is offered". This would be relevant
for example in relation to participation in such things as bonus schemes.
The
fixed-term employee also has the right to be informed by the employer of
available vacancies. This can be satisfied by advertising the vacancy where the
employee has a reasonable opportunity of reading it.
Exclusions
from the regulations
Employees
working under contracts of apprenticeship, certain employees on
government-supported training or retraining programmes, agency workers and the
armed forces are specifically excluded from the regulations.
The
scope of the regulations is more limited than the directive intended and only
applies to "employees" rather than the extended provisions of the directive
that include "workers". The Government may be challenged about this at a later
date.
Continuous
fixed-term contracts
An
employee who has been continuously employed on fixed-term contracts for four
years or more, and who is then offered another fixed-term contract, will be
viewed as having a permanent contract under the regulations. The only exception
is when the firm can objectively justify its decision. Any prior service will
not count. The regulations also allow collective or workplace agreements to
vary these provisions.
Employees
on successive fixed-term contracts will also be entitled to request a written
explanation of why the contract remains fixed-term beyond the four-year
limitation. If it cannot do this the firm must confirm if the contract has
become open ended.
Redundancy
The
regulations will remove the voluntary opt-out provisions in relation to
redundancy. Fixed-term employees with employment contracts of two years or more
will no longer be able to waive their statutory right to redundancy payments if
they are made redundant at the end of their contract.
Enforcement
of the right
Employees
who attempt to enforce their rights under the regulations will be protected
against unfair dismissal or any other detriment.
If
a fixed-term employee considers that an employer has infringed their rights
under the new regulations, they may request a written explanation of the firm's
behaviour. The employee is entitled to receive this within 21 days. Tribunals
are likely to look down on employers that do not this.
The
employee must be able to point to a comparable permanent employee when
asserting that there has been unfavourable treatment.
An
employer will be able to defend a tribunal claim brought under the regulations
if it can show that the alleged discriminatory treatment is objectively
justified. For instance, if the terms of a fixed-term contract, taken as a
whole, are at least as favourable as the terms of a comparable permanent
employee's contract.
Jim
Young is national head of employment at McGrigor Donald Scotland, member of
KLegal International. E-mail: jim.young@mcgrigors.com
