In 1999 the European Council agreed a directive dealing with fixed-term work with the aim of preventing those who work for fixed periods from being less favourably treated than colleagues who dont. The directive has to be implemented in the UK by 10 July 2001. Meanwhile, the Government has published a consultation paper and asked for responses by 31 May 2001.
The key issues include:
- whether new legislation should deal with pay differences between fixed-term and permanent employees;
- whether fixed-term employees should be able to ask their employers for a written statement justifying any less favourable treatment they believe has occurred either by reference to individual terms of employment or to the overall package of terms and conditions;
- how a limit on the number and length of successive fixed term contracts might work;
- how renewal of a fixed-term contract may be justified objectively;
- whether fixed-term employees should continue to have the option of negotiating away their rights to statutory redundancy payments after two years service when the term expires.
The Government has already decided that only employees will benefit from the new regulations. There will be no extension of the definition to include workers as in the case of the regulations which apply to part-time workers. However, the consultation paper carefully notes that the Government intends to publish a discussion document on employment status later in the year to consider the position of other types of workers. In any event the self-employed will not be covered by the new regulations.
Also, the regulations will not cover apprentices, work experience, government-funded training schemes, or agency workers although recent case law suggests that the position of agency workers may be ambiguous. The consultation paper also notes that some forms of contract normally considered as casual or temporary may be covered by a fixed-term contract.
The original directive requires employers to inform employees on fixed-term contracts of any vacancies in their organisations so that they have the same opportunities as other employees to find permanent positions. Employers are also encouraged to provide training for such employees in order to enhance their skills and help with career development.
Many employers may not be too pleased at the prospect of still more regulation. Even the Government accepts that it must steer a careful path between the danger of creating excessive burdens for business and addressing abuses such as the use of successive fixed- term contracts over long periods of time.
Employers and employees alike will be interested in the opportunities for restricting the use of successive fixed-term contracts. Where a fixed-term contract has been renewed in contravention of the new legislation, the limit on the length of the contract may become invalid in other words the contract will be treated as if it were permanent. In any event, the directive makes clear that fixed-term contracts should only be renewed if there is an objective justification for doing so.
The fixed-term contract is a familiar part of the boardroom scene. It is used as a device to retain talent since in theory a claim for breach of contract can be brought against an executive who leaves early and as a measure for calculating golden handshakes. One of the surprising results of the new regime may be to bring to the boardroom employment law protection not previously anticipated. Will the reason for the renewal of the directors fixed-term contract be justifiable? Shareholder interest may be one of the factors that will be relevant.
Responses to the consultation document may be sent to: fixedterm.mailbox @dti.gsi.gov.uk. The consultation document may be viewed online at www.dti.gov.uk/er/fixed
Email address: janet.gaymer@haynet.com
Janet Gaymer is senior partner at Simmons & Simmons
