Fixed to be flexible

Many employers continue to use fixed term contracts (FTCs). FTCs allow businesses to directly employ staff on a temporary basis which lasts for a specified time (set in advance) or which ends on the completion of a task or the occurrence or non-occurrence of a specified event. FTCs are often used to cover for a permanent employee who is on maternity leave. FTCs provide employers with the flexibility to bring in specific skills and labour as and when they are needed. However, FTCs can also be an administrative burden for businesses.

It is important to remember that fixed-term employees must be treated the same as comparable permanent employees. They must be given the same pay and conditions, the same or equivalent benefits package, the same or equivalent pension scheme, and the same opportunity to apply for vacancies for internal permanent roles. Fixed-term employees also have access to the same employment rights as their permanent equivalents.

If your employee staff on FTCs then you need to be aware that failing to renew a FTC is considered to be a dismissal. If a fixed-term employee has one year’s service then they have the right not to be dismissed unfairly and therefore, you need to follow your dismissal procedure. This would involve providing the fixed-term employee with a written statement of reasons for the dismissal and a minimum notice period of their contract ending before the agreed end date. If the fixed-term employee has two year’s service then they would be entitled to redundancy pay.

An employee who has been on a fixed-term contract for four or more years automatically becomes a permanent employee. If you fail to renew a FTC and the fixed-term employee continues working past their contract end date then it is assumed that the contract has been made permanent.

Unless there is a limited liability clause in the contract of the fixed-term employee, if you end the FTC early you will be liable to pay the fixed-term employee to the end of their original contract end date. Where there is no limited liability clause and you do not pay the fixed-term employee to the end of their contract, you may be in breach of contract and the individual could make a claim for unlawful deduction of wages.

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Russell HR Consulting provides expert knowledge in the practical application of employment law as well as providing employment law training and HR support services. For more information, visit our website at www.russellhrconsulting.co.uk or call a member of the team on 0845 644 8955.

Russell HR Consulting offers HR services to businesses nationwide, including Buckinghamshire (covering Aylesbury, High Wycombe, Milton Keynes, Bedford, Banbury, Northampton, Towcester and surrounding areas), Nottinghamshire (covering Chesterfield, Mansfield, Nottingham, Sheffield, Worksop and surrounding areas) and Hampshire (covering Aldershot, Basingstoke, Reading, Farnborough, Fareham, Portsmouth, Southampton and surrounding areas).