Letter of the law: Fixed Term Employees Regulations 2002

On 1 October 2002, the Fixed Term Employees Regulations 2002 came into force. Fixed-term workers now have in general a right to be treated no less favourably than comparable permanent employees, unless that less favourable treatment can be objectively justified. Many employers are only now beginning systematically to look at this issue, and a number of our clients have asked us to set out clearly what their responsibilities are, and how to tackle this issue. The following stage-by-stage checklist may help:

Is the complainant an employee? The regulations only cover the narrow definition of 'employee'. Those individuals who are agency workers, apprentices, freelancers or genuinely self-employed, among others, will not be able to seek protection.

Is the complainant working for a fixed term? The concept of a fixed term is defined in the regulations and includes contracts which expire on a particular date, on the completion of a particular task, or on the happening or non-happening of a specific event. This excludes, of course, the normal retirement age. If the fixed term does not fit into any of the above categories, it is not covered by the regulations.

Is there an actual comparable permanent employee? The complainant must point to an actual comparable permanent employee. That employee must be doing the same or broadly similar work as the fixed-term complainant. The skills and qualification levels must be similar. The comparator must also be based at the same establishment as the complainant, unless there are no comparable permanent employees there, in which case another establishment can be used. The comparator cannot be a predecessor or successor, and cannot be hypothetical.

Is there less favourable treatment? The complainant must point to and evidence less favourable treatment in respect of a specific term of the contract of employment, or in the way they have been treated. It must be treatment 'on the ground' that the complainant is a fixed-term employee. Any other reason for the treatment will enable the employer to defend a claim.

Is there objective justification for the less favourable treatment? The employer will not be acting unlawfully if it can objectively justify differences in treatment in all the circumstances. The test is likely to be strict - the less favourable treatment must be shown to correspond to a real business need, be necessary to achieve the objective in question, and be proportionate to it. Very usefully, however, the regulations expressly state that if the terms of the fixed-term employee's contract, taken as a whole, are at least as favourable as the terms of the comparable permanent employee's contract of employment, then objective justification is made out. That clarification is extremely helpful to employers, and allows employers to look at the overall 'value' of a contract, rather than having to replicate every last benefit in kind for fixed-term employees.

Remedial action, where necessary, should be taken swiftly in order to ensure that the employer is fully compliant with the law now in place.