NON-RENEWAL OF FIXED-TERM CONTRACT

Added 9/3/05, links updated 14/5/06. This information will be part of a new section after s.25.11 in The Voluntary Sector Legal Handbook 2nd edition, and updates s.22.3.2.
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 make it unlawful to treat a fixed-term employee less favourably than a comparable permanent employee--although in relation to contractual terms and conditions fixed-term employees can be given comparable rights, rather than the same. In Department for Work and Pensions v Atasha Webley, Mrs Webley claimed that she had been treated less favourably when her fixed-term contract was not renewed, because permanent employees doing the same work had not had their contracts terminated. The Court of Appeal held on 21 December 2004 that non-renewal of a fixed-term contract is not in itself discriminatory, because the whole point of a fixed-term contract is that it is going to end.

However, do remember that the statutory dismissal procedures apply to non-renewal of a fixed- term contract; a person who has been employed on a fixed-term contract (or series of contracts) for one year or more can claim unfair dismissal if there is not a fair reason for the non-renewal (the reason will usually be redundancy); and a person who has been employed on a fixed-term contract or series for two years or more is entitled to statutory redundancy pay (unless the contract contains a waiver of the right to redundancy pay from before July 2002 which is still valid).

The decision in DWP v Webley is at www.bailii.org/ew/cases/EWCA/Civ/2004/1745.html.
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 are at www.opsi.gov.uk/si/si2002/20022034.htm.
For the DTI's guidance click here (the address is too long to show on screen).

FIXED-TERM CONTRACTS

Updated 27/3/03. This information updates ss.22.3.2, 24.5 and 30.4.4 in The Voluntary Sector Legal Handbook 2nd edition.
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 and the relevant sections of the Employment Act 2002 came into effect on 1 October 2002. Fixed-term employees include employees hired for a fixed period (i.e. with a fixed ending date), employees hired for a period which ends when a specified event does or does not happen (for example if a grant is not renewed, or when a person who has been on maternity leave returns to work), and employees hired to carry out a specific task.

Fixed-term employees have the same statutory rights as permanent employees, including the right to claim unfair dismissal if the contract is not renewed when it ends and there is not a fair reason for the dismissal. (The fair reason will generally be redundancy--in which case the employee will be entitled to redundancy rights, including redundancy pay after two years continuous employment.)

A waiver of the right to redundancy pay remains valid where it was included in a fixed-term contract of two years or more which started before 1 October 2002. But for contract renewals or new contracts on or after this date, the right to waive redundancy pay has been abolished.

From 1 October 2002, the contractual rights of fixed-term employees must not be less favourable than those of a comparable employee on a permanent contract, unless less favourable treatment is objectively justified. This does not require exact pro rata entitlements; it is sufficient for the fixed-term employee's contractual rights to be, as a whole, at least as favourable as the permanent employee's. Fixed-term employees who believe they have been treated less favourably now have a right to receive a written statement of reasons for their treatment.

Fixed-term employees have a right to be informed by their employer of available vacancies. This could include displaying an advertisement or notice that fixed-term employees have a reasonable opportunity of reading in the course of their employment (for example, putting the notice on a staff noticeboard), emailing notices to relevant employees, or giving reasonable notice in some other way.

Where a person has been employed on a fixed-term contract or contracts for more than four years and the contract started on or after 10 July 2002, the contract will be converted to a permanent contract at its next renewal--unless the employer can show an objective justification for continued fixed-term employment.

The fixed-term rules do not apply to people on government or EU-funded training schemes, work experience on higher education courses, and agency workers.

The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 are at www.opsi.gov.uk/si/si2002/20022034.htm.
For the DTI's guidance click here (the address is too long to show on screen).

WHEN DOES A CASUAL BECOME AN EMPLOYEE?

Updated 19/3/06. This information adds to s.22.3.4 in The Voluntary Sector Legal Handbook 2nd edition.
A relationship with a casual worker is characterised by lack of mutual obligations: the employer does not have to offer work, and if it is offered, the casual does not have to accept it. But where work is offered regularly and the worker always accepts it, a contract of employment may be created. This entitles the worker to full employment rights (including the right to claim unfair dismissal if work ceases to be offered) rather than only workers' rights such as equal opportunities, minimum wage and paid holiday leave.

In Cornwall County Council v Prater, a home tutor who worked regularly for 10 years successfully claimed that she was an employee during that period. She was not paid for a total of 14 months during that period, when there were no pupils for her to tutor, but the employment appeal tribunal said that these were a temporary cessation of work and did not interrupt the continuing contract of employment. The EAT's decision was upheld by the Court of Appeal on 24 February 2006. This has important implications for any organisation that regularly uses an individual as a so-called casual. The decision is at www.bailii.org/ew/cases/EWCA/Civ/2006/102.html.

NEW RIGHTS FOR AGENCY WORKERS

Updated 7/3/04. This information updates ss.22.5.1 and 22.5.2 in The Voluntary Sector Legal Handbook 2nd edition.
From 6 April 2004 workers placed by employment agencies and employment businesses (a business which places staff but is not an employment agency) have additional rights. These include:

• agencies placing actors, models and extras can no longer charge upfront fees before they find them work;
• employment businesses can no longer withhold workers' pay simply because they cannot produce an authenticated timesheet;
• agencies must obtain information on any health and safety risks known to the employer, and the steps taken to prevent or control those risks;
• limits on the time during which a "temp to perm" fee can be charged when a worker placed as a temp takes up permanent employment with that employer;
• provisions to allow limited company contractors to opt out of the provisions (from 6 July 2004).

TEMPORARY AGENCY WORKERS DIRECTIVE

Added 24/10/05. This information updates s.22.5.1 in The Voluntary Sector Legal Handbook 2nd edition.
The EU Temporary Agency Workers Directive, which would have given agency temps the same rights as employees in the organisation where they are placed, has been dropped by the European Commission. This was done as part of a general cull of proposed directives, but it could re-emerge in future.

NEW RIGHTS FOR AGENCY TEMPS?

Updated 21/7/07. This information adds a new section to s.23.4 in The Voluntary Sector Legal Handbook 2nd edition.
The Temporary and Agency Workers (Prevention of Less Favourable Treatment) Bill, which was introduced in the House of Commons on 13 December 2006, was talked out in the House of Commons on 2 March 2007 and debate will resume on 19 October 2007. As a private member's bill it has little chance of being passed. It would prohibit direct discrimination (but not indirect) against short-term and agency workers, giving them the same rights as long-term and directly employed staff unless different treatment is objectively justified. Employers would have to notify agency staff of any vacancies in the organisation, and the bill would allow for regulations providing for joint liability between the agency and end-user.

Separately from the private member's bill the DTI consulted on rights of agency workers (until 30 May 2007) and legislation may be introduced by the government in due course.

For the bill go to tinyurl.com/yvmzf5.

AGENCY TEMPS AS EMPLOYEES OF THE END-USER

Updated 21/2/08. This information updates s.22.5.1 in The Voluntary Sector Legal Handbook 2nd edition.
In Dacas v Brook Street Bureau the Court of Appeal ruled in 2004 that an implied contract of employment could be created between an agency temp and the end-user (in this case Wandsworth Council), in particular where the relationship lasts at least one year. But in James v Greenwich Council, the employment appeal tribunal held in 2006 that an agency temp who had worked for the Council for five years did not have an implied contract with the Council. The agency worker appealed this decision but the court of appeal confirmed it on 5 February 2008.

The court of appeal confirmed the guidance provided by the employment appeal tribunal on the rare situations when a contract of employment might be implied. The guidance includes:

• Where there are contracts between the agency and worker and between the agency and end-user, and those contracts are being complied with, only in rare cases would there be an implied contract between the worker and end-user. Even if there are mutual obligations between the worker and end-user, they arise in the context of the agency contracts.
• The mere fact that the person has been an agency temp with the end-user for an extended period does not create a contract between the worker and end-user.
• If there are no contracts between the agency and the end-user and/or worker, or if the parties do not act in accordance with the contracts, it may be appropriate to imply a contract between the worker and end-user.
• If something happens after the relationship commences that indicates, by words or conduct, that the relationship has changed and there are now mutual obligations binding the worker and the end-user, it may be appropriate to imply a contract between them.
• A contract between the worker and end-user might be implied if the end-user can insist on the agency supplying a specific worker.
• Where a person who has been an employee becomes an agency worker doing the same work (so nothing has changed except who pays the wages) a tribunal might say that the contract of employment never ended, because the agency arrangement simply continued it.

MINISTERS OF RELIGION MAY BE EMPLOYEES

Updated 5/12/06.This information updates s.22.6.3 in The Voluntary Sector Legal Handbook 2nd edition.
Ministers of religion have been treated by the courts as appointed to a holy office, rather than being employed by the church or religious body, and were thus not entitled to claim employment rights. But in a decision on 27 October 2006, the employment appeal tribunal ruled that ministers of religion are entitled to claim unfair dismissal. The House of Lords had already ruled, in December 2005, that ministers are 'workers' and thus protected under equal opportunities legislation.

The EAT decision in New Testament Church of God v Reverend S Stewart is at www.bailii.org/uk/cases/UKEAT/2006/0293_06_2710.html.
The church is seeking permission to appeal. If granted, the appeal is likely to be heard in summer 2007.
The 2005 decision, in Percy v Church of Scotland, is at www.bailii.org/uk/cases/UKHL/2005/73.html.