Fixed-term Contracts – Handle with CarePosted in : Quarterly Education Law Updates on 14 March 2019
Increasingly, the education sector is having to deal with requests for teachers on temporary contracts to be made permanent.
The following situation is all too familiar to many Principals – teacher X is employed on a fixed-term contract, to cover a maternity leave, for an academic year. The following year, teacher X covers a sick absence on another fixed-term contract for an academic year. In year 3, teacher X covers a further maternity for an academic year and, in year 4, teacher X is employed on what was supposed to be a two-week absence but became a long-term sick absence for the academic year. At the end of year 4, teacher X exercises his/her right to be made permanent. What should a school do as they have no permanent job for this teacher?
The Legal Position
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (NI) 2002 (“the Regulations”) apply in such a scenario. Regulation 8 limits the use of successive fixed-term contracts to 4 years. The legislation states that employees who have been continuously employed for 4 years or more, on a series of successive fixed-term contracts, are automatically deemed to be permanent employees unless the use of further fixed-term contracts is justified on objective grounds. The Regulations also specify that service accumulated after the 10th July 2002 counts towards the 4-year limit.
In general, fixed-term contracts covered by these regulations may include the following scenarios:
- Temporary contracts with a specified end date.
- Temporary contracts to cover maternity, absence, secondments, career breaks etc. which are due to terminate on the return of the permanent teacher.
- A temporary contract linked to special funding or a particular piece of work.
It should be noted that Regulation 8 only applies were there have been successive fixed-term contracts. If an employee was employed on a single contract for 4 years, without it being renewed, there would be no obligation to convert it. This is a point often overlooked in the legislation.
Also, under the Regulations, an employee (i.e. teacher) has the right to ask for a written statement confirming that their employment is permanent or a statement setting out the reasons for the use of a fixed-term contract beyond a 4 year period (Regulation 9).
In determining a teacher’s eligibility for permanent status, each case needs to be considered on an individual basis. The nature of the employment contract should be considered in any request made for permanent status.
What is Objective Justification?
Objective justification is a question of fact and degree which must be determined on a case by case basis. To establish objective justification, you must show that the treatment in question:
- Is to achieve a legitimate aim.
- Is necessary to achieve that aim.
- Is an appropriate way to achieve that aim.
The standard test for objective justification in discrimination cases was set down by the ECJ in the case of Bilkha–Kaufhaus Gmbh v Weber von Hartz (1986) IRLR 317. The case demonstrates that, where discrimination has been established, to benefit from the justification defence it is for an employer to identify a legitimate objective for treating a fixed-term employee or employees disadvantageously compared to permanent employees and to show that the measures chosen correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objectives pursued and are necessary to that end.
As set out in the judgment of the case at paragraphs 35-37:
“35 According to the Commission, in order to establish that there has been no breach of article 119 it is not sufficient to show that in adopting a pay practice which in fact discriminates against women workers the employer sought to achieve objectives other than discrimination against women. The Commission considers that in order to justify such a pay practice from the point of view of article 119 the employer must, as the court held in its judgment of 31 March 1981, put forward objective economic grounds relating to the management of the undertaking. It is also necessary to ascertain whether the pay practice in question is necessary and in proportion to the objectives pursued by the employer.
36 It is for the national court, which has sole jurisdiction to make findings of fact, to determine whether and to what extent the grounds put forward by an employer to explain the adoption of a pay practice which applies independently of a worker's sex but in fact affects more women than men may be regarded as objectively justified economic grounds. If the national court finds that the measures chosen by Bilka correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objectives pursued and are necessary to that end, the fact that the measures affect a far greater number of women than men is not sufficient to show that they constitute an infringement of article 119 .
37 The answer to question 2 (a) must therefore be that under article 119 a department store company may justify the adoption of a pay policy excluding part-time workers, irrespective of their sex, from its occupational pension scheme on the ground that it seeks to employ as few part-time workers as possible, where it is found that the means chosen for achieving that objective correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objective in question and are necessary to that end.”
What steps should a school take at the end of a fixed-term contract?
If a school has determined that there is no need to renew a fixed-term contract, this will amount to dismissal if the reason for the termination can be objectively justified. Under the Employment Rights (Northern Ireland) Order 1996, in order for a dismissal to be potentially fair, Article 130 must be satisfied – i.e. the dismissal must be on the grounds of either capability, conduct, redundancy, breach of statutory enactment or some other substantial reason (sometimes referred to as SOSR).
Also, the three-step statutory dismissal procedure must be followed in dismissing a teacher reaching the end of a fixed-term contract. These steps are as follows:
- Meeting and advise teacher of their right to be accompanied at this meeting.
- Notification in writing of the meeting and the outcome of the meeting and decision to dismiss.
- Notify the teacher of the right of appeal.
Note that the main purpose of the Regulations is to ensure that fixed-term employees are not treated less favourably than permanent employees. So, even though a teacher employed on a fixed-term contract in September, for nine months to cover a maternity leave, knows that their contract is coming to an end in May, the teacher must still be taken through the three-step dismissal procedure. Indeed, the case of Royal Surrey Hospital County NHS Foundation Trust v Drzymala  UKEAT/0063/17 confirms the position that a fair procedure must be followed when terminating a fixed term contract.
Principals should also be alert to the dangers of Article 6 of the Regulations - if dismissal is automatically unfair, there is no minimum period of qualifying service. Hence, fixed-term employees who believe they are being treated less favourably than permanent comparable employees, on the grounds of their fixed-term status, may bring claims to the Industrial Tribunal without having the one year qualifying service required for ordinary unfair dismissal. It is best to apply the 3 step procedure in every case unless advised to the contrary. Note, however, that an employee, on a fixed-term contract, cannot claim that he or she has been treated less favourably than a permanent employee simply because his or her contract has been terminated (see Department for Work and Pensions v Webley  IRLR 288. That said, if a Claimant with less continuous service than a male teacher (who was made permanent just prior to a redundancy) is displaced in favour of that male teacher, this could amount to less favourable treatment if, for example,
Principals should also give consideration to including a contractual provision for termination by notice. If no notice provision is included within a fixed-term contract, it means that the contract cannot be terminated before the end of the fixed-term duration.
Fixed-term workers and redundancy
A fixed-term employee may be entitled to receive a redundancy payment if they have the necessary 2 years qualifying service and if the substantive reason for the dismissal is redundancy. However, schools should be aware that you cannot automatically select someone on a fixed-term contract for redundancy simply on account of their fixed-term status, unless selection can be objectively justified. Hence, schools should not assume fixed-term employees are first on the list for redundancy.
In Hart and Others v Secretary of the State for Educations and Shills and Others ET/2304973/2004, an educational tribunal decided that four educational advisors working for the Department of Education and Skills, on fixed term contracts, were engaged in broadly similar work to a permanent advisor, and that their exclusion from the enhanced redundancy scheme enjoyed by permanent employees was not justified. The argument that their exclusion was justified because they had no expectation of job security was rejected by the Tribunal. They were therefore entitled to the same redundancy benefits as the permanent advisor if their contracts were not renewed on expiry.
At a local level, in a 2016 Tribunal case in Northern Ireland (Amy Montague v Board of Governors of St Patrick’s Primary School & CCMS 02326/IT), the Vice President noted, in an obiter remark as the Claimant had not pleaded statutory redundancy, that a teacher, whose fixed–term contract was terminated, was entitled to a statutory redundancy payment as the substantive reason for the termination of her employment was redundancy.
What Should A Principal/Board of Governors do?
The situation posed at the beginning of this article is not uncommon. In Northern Ireland, it is not unusual for Principals/Board of Governors to employ the same substitute teacher on repeated fixed-term contracts. Indeed, the issue is perhaps more prevalent in primary schools as primary school teachers do not have to teach a specific subject.
The advantages for a school in using the same substitute teacher are multiple – the teacher is very good at their job, the teacher is reliable, pupils and fellow staff like teacher. Essentially, a Principal/Board of Governors knows what they are getting as the teacher has been tried and tested in previous years on previous fixed-term contracts.
However, to ensure the Principal/Board of Governors do not fall foul of the law, the Board of Governors must comply with the three step dismissal procedure when terminating Teacher X’s contract. Indeed, they must do this at the end of every academic year. The Principal/Board of Governors must also give consideration to whether Teacher X is due a redundancy payment. Teacher X’s contract will not be deemed permanent if the school can show objective justification for not renewing the fixed-term contract.
Ford v Warwickshire County Council
The case of Ford v Warwickshire County Council (1983) IRLR 126 HL, while decided over 30 years ago and well before the Fixed-Term Regulations came into being, still remains the leading case in this area of law– indeed, the facts of the case are as common today as they were then!
In this case, Ms Ford was employed by the County Council as a teacher at a further education institution between 1971 and 1979. She was employed from September to July each year i.e. for the duration of the academic year. There was no contract for the summer months. Ms Ford subsequently claimed unfair dismissal and a redundancy payment when the Council failed to renew her contract in 1979. The employment tribunal and the EAT rejected her claims on the basis that she did not have two years’ continuous service and she could not bridge the gap of the summer months. The Court of Appeal also held that the reason for her absence from work, during the summer months, was the expiration of her fixed-term contracts rather than an absence for a temporary cessation of work.
However, the House of Lords, as it then was, held in Ms Ford’s favour. They said that the fact that the unavailability of work in the summer months had been foreseen by the employer sufficiently far in advance for the employer to anticipate it by giving notice by way of fixed-term contract did not alter the reason for the dismissal or prevent the absence from work being “on account of a temporary cessation of work.” The House of Lords decided that what is temporary is a question of fact for the Tribunal to decide. That said, they commented on how a tribunal should approach deciding whether or not the interval between successive fixed-term contracts was “temporary.” The House of Lords set out what has now become known as the “mathematical approach”, i.e. a Tribunal should look back from the end of the last fixed term contract over the whole period during which the employee had been intermittently employed. The House of Lords said that continuity would not be broken unless the employment tribunal found an interval which could not be described as short relative to the combined duration of the two fixed-term contracts either side of it.
Fixed-term contracts are not always the easy solution or the once attractive option for employing temporary staff. Careful management of Fixed-term employees is important to avoid litigation. The 2002 Regulations provide fixed-term employees with a number of rights and obligations which must be given careful consideration when making relevant decision making. Otherwise, Principals/Boards of Governors will easily find themselves foul of the law.
In summary, to minimise the risk of a claim under the Fixed-Term Regulations, the following steps are recommended:
- Ensure all fixed-term workers are issued with contracts.
- This contract should state very clearly the reason for the fixed-term contract – i.e. sick leave absence, maternity cover, cover for a secondment/career break.
- Give consideration to whether a notice provision is required/will be useful. Is there a possibility that you may need to terminate the fixed-term contract earlier than the specified end date?
- Diarise when the fixed-term contract will end.
- Ensure the dismissal is for one of the five fair reasons set out in Article 130 of the Employment Rights (NI) Order 1996.
- Ensure a fair procedure is adopted.
- Begin the 3 step dismissal procedure well in advance of the end date.
- If redundancy is a reason for dismissal, ensure a redundancy payment is made.
- When making significant decisions regarding fixed term employees, be mindful of how comparable permanent employees are being treated.
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