An employer is expected to make a fixed-term employee permanent at the end of a fixed-term contract if the employee's services are still required, so the employer cannot renew the fixed-term contract unless there are objective grounds justifying the renewal. If an employer proposes to renew or extend a fixed-term contract, then it must notify the employee in writing of the objective grounds justifying the renewal or extension and provide an explanation as to why a permanent contract is not being offered.

Once the first hurdle has been passed and it has been established that the renewal is objectively necessary, then special rules need to be considered in relation to the renewal of successive fixed-term contracts. If a fixed-term employee is employed by his employer (or an associated employer) on two or more continuous fixed-term contracts which began after 14 July 2003, the aggregate duration of the contracts cannot exceed four years. If an employee has been employed on a fixed-term contract before 14 July 2003 and completes or has completed three years' continuous service with his employer (or an associated employer), then the contract can only be renewed on one more occasion and the term of the renewed contract cannot exceed one year. A provision in a fixed-term contract which purports to breach either of these rules will have no effect and the contract will be deemed to be a permanent contract.

In one recent case, a group of employees employed on a series of fixed-term contracts successfully argued that they were each entitled to a permanent contract despite the fact that there was a break between the extension or renewal of each fixed-term contract. The employer claimed that continuity of service was broken each time a successive fixed-term contract expired and so the employees did not have the required continuous service for a permanent position. However, a Rights Commissioner concluded that the break periods between the fixed-term contracts were periods of lay-off that did not break continuity of employment.

The purpose of a fixed-term contract is that it comes to an end at the expiry of the relevant fixed-term. However, an employer will need to examine whether there is an on-going need for the work in question. If this is the case, an employer will then need to make the fixed-term employee permanent unless it can objectively justify the renewal of the contract. It is important to note that a fixed-term employee may be entitled to a statutory redundancy payment at the end of his fixed term contract if he has at least two years' service. Therefore, if the employer does not intend to renew the contract and the employee is not entitled to a permanent position based on length of service, then the employer will need to consider whether the employee is entitled to a statutory redundancy payment.

An employer must inform fixed-term employees of any vacancies that arise during the term of the fixed-term contract to ensure that they have the same opportunity to secure a permanent position as other employees. In addition, employers must facilitate access to appropriate training opportunities as far as reasonably practicable so that an employee can enhance his skills, career, development or occupational mobility.

If their contract is due to expire during a period of maternity leave, then the leave and any entitlements to benefits expire on the day the contract expires.

Recently, an employee who was employed under a fixed-term contract was held to have been unfairly dismissed and was awarded almost €160,000 in compensation by the Employment Appeals Tribunal. This case was brought by the employee when his employment was terminated on the expiration of a three year fixed-term contract on the basis that he had relied on representations made by a colleague that he was a permanent employee.

A fixed-term employee can refer a dispute in relation to an entitlement under the Protection of Employees (Fixed-Term work) Act 2003 (the Act) to a Rights Commissioner and, depending on the circumstances, may be entitled to a permanent contract or compensation of up to two years' remuneration.

Disputes in relation to the dismissal of a fixed-term employee may, depending on the circumstances, be dealt with under the Act or the Unfair Dismissals Acts. The Employment Appeals Tribunal has jurisdiction to award up to two years' gross remuneration, reinstatement or re-engagement in the event that a claimant is successful in a claim under the Unfair Dismissals Acts.

For further information please contact Gillian Dully.


Spring 2007.