25/06/2024   Wilkin Chapman - Employees rights under fixed term contracts

Employees are on a fixed-term contract if they have an employment contract with the organisation they work for, and their contract ends on a particular date or on completion of a specific task.

However, they are still classed as an employee, and they are entitled to certain rights. That said, the rights of a fixed-term employee differ, depending on their length of service.

Under two years' service

Employers must not treat workers on fixed-term contracts less favourably than permanent employees who are doing the same or largely the same job unless the employer can show that there is a good business reason to do so (known as ‘objective justification’).

Employers must ensure that fixed-term employees receive the following unless it can be objectively justified not to do so:

• the same pay, conditions, and the same or equivalent benefits as permanent staff
• information about permanent vacancies in the organisation
• protection against redundancy or dismissal

For example, if an employer offers permanent staff an annual bonus, the employer should pay an employee on a fixed term six-month contract 50% of the bonus, as they are entitled to the same or equivalent benefits - unless there is a particular reason why it is not appropriate to do so.

This can even happen with more simple benefits awarded by the organisation. If employees are provided with benefits for a specified period, for example, an annual gym membership, employers should consider whether it is possible or appropriate for them to offer the benefit to fixed-term employees in proportion to the duration of their contract.

Other examples of less favourable treatment include exclusion from a pension, pay rises, or private medical insurance schemes.

Over two years’ service

Anyone who has worked continually for the same employer for two years or more, whether on a fixed-term contract or not, has the following additional rights:

• the same redundancy rights as a permanent employee, including the right to statutory redundancy pay
• the right to bring an unfair dismissal claim when their employment ends. Employers will need to have a fair reason and follow a fair procedure before the contract expires

The ending of a fixed-term contract is not a fair reason to terminate an employment contract and an employer will have to rely on one of the other potentially fair reasons. Therefore, whilst fixed-term contracts are a good idea when there is a clear need for them, such as to cover short-term maternity, they should not be used as standard when a permanent contract could be used instead.

Furthermore, employees who have been continuously employed for four years or more on a series of successive fixed-term contracts are automatically deemed to be permanent employees, unless the continued use of a fixed-term contract can be objectively justified.

For more information on how Wilkin Chapman’s employment law team can assist you, contact Katie Davies on 01472 253917, email [email protected] or visit https://www.wilkinchapman.co.uk/business/employment-law