Given that the expiry of a fixed-term contract constitutes dismissal, what will usually be a fair reason for dismissal?

 

The expiry of a fixed-term contract without renewal is a dismissal for the purposes of claiming unfair dismissal. There is no hard and fast rule on what the reason will be for dismissal.

The qualifying service required to claim unfair dismissal reduces from two years to six months for dismissals on or after 1 January 2027. If an employee has the required service, regardless of whether some or all of the service is on a fixed-term contract, they have acquired the right not to be unfairly dismissed.

The employer must have a potentially fair reason for not renewing the contract (eg redundancy, conduct, capability or "some other substantial reason").

Often, a fixed-term contract has been used because there is a set piece of work to do. If that set piece of work has come to an end, the reason for non-renewal is likely to be redundancy, on the basis that the requirement for an employee to do the work has ceased or diminished.

In the case of an individual employed to cover an employee's maternity leave or other family leave, it could be that the expiry of the fixed-term contract constitutes some other substantial reason for dismissal. This will automatically be the case if:

  • at recruitment, the employer informs the employee in writing that their employment will end when the employee they are covering returns from absence because of pregnancy, maternity leave, adoption leave or shared parental leave; and
  • the reason for the dismissal is to make it possible to give work to the returning employee (s.106 of the Employment Rights Act 1996).

Where the employer can show it has a potentially fair reason for dismissal, it must also follow the correct procedures to ensure that the dismissal is fair. For example, this would include considering alternative employment.

Regardless of the employee's length of service the employer must ensure that the reason for non-renewal is not an unlawful ground such as pregnancy or asserting a statutory right.