Temporary (fixed-term) employees 



Employees on fixed-term contracts (also known as temporary employees) are entitled to equivalent rights and treatment as permanent employees under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (FTER).



Fixed-term employees are employees working for a specified period of time or those employed to undertake and complete a specified task. The UK regulations apply only to employees. Agency workers are specifically excluded (regulation 19, FTER). 



A contract is for a fixed-term even if it contains a clause that would give either party the option to end it earlier by giving notice (Allen v National Australia Group Europe [2004] IRLR 847).



Fixed-term employees have the right to paid holidays pro rata to the length of their contract. Where employees work on successive fixed-term contracts, their service is added together to assess rights to holiday pay. The regulations cover all contractual terms including pay and pensions. However, each particular term does not have to be the same as for a permanent employee, as long as the overall employment package is no less favourable.



Fixed-term employees have the right to a written statement of their main contractual terms, and to guarantee pay and medical suspension pay (see Chapter 4), in the same way as permanent staff. The right to no less favourable treatment extends to qualifying periods for employment benefits and opportunities for training and permanent employment. Fixed-term employees also have the right not to be subjected to any other detriment because of their temporary employment status.



Fixed-term employees can compare their treatment with that of permanent staff employed by the same employer, so long as they are doing the same or similar work and are working at the same establishment. If there is no comparable employee at that establishment, a comparison can be made with the pay and benefits package of comparable employees at other locations.



Employers can legally justify less favourable treatment if they have a good reason. For example, they may be able to justify excluding a fixed-term employee from the occupational pension scheme because the contribution would be too low to be viable (subject to pensions auto-enrolment rules – see Chapter 4).



Fixed-term employees who believe they have been less favourably treated have the right to ask for a written statement explaining the difference in treatment. This can be used as evidence in a tribunal.


If a temporary employee has been working continuously under a single contract that has been renewed at least once, or under a series of contracts, for four or more years, they will become a permanent employee unless the employer can justify continuing to employ them on a temporary basis. Time spent on fixed-term contracts under government or EU-funded work placements or training schemes does not count towards the four years (Hudson v Department for Work and Pensions [2012] EWCA Civ 1416).



It is likely to be a breach of EU law for an employer to justify the continued renewal of fixed-term contracts beyond four years to cover “temporary” staffing needs where those needs are in fact permanent (Lopez v Servicio Madrileno de Salud Case C-16/15).


The ECJ has ruled that when a fixed-term employment contract is converted into a permanent contract, the employer is not obliged to reproduce the main clauses of the fixed-term contract exactly, but the new permanent contract, viewed overall, must not be materially less favourable to an employee whose tasks and functions are unchanged: 



Temporary employees who are employed for a short period can lose out on employment rights that depend on qualifying service, such as unfair dismissal rights, especially since the increase in the service requirement from one to two years. However, those who work on a series of temporary contracts with short gaps between each may be able to establish continuity of service (see Chapter 10, page 381).



The dismissal of fixed-term employees wholly or mainly for asserting their statutory rights under the regulations is automatically unfair, and requires no service. However, the ending of a fixed-term contract does not, of itself, amount to less favourable treatment. In Webley v Department for Work and Pensions [2005] IRLR 288, the Court of Appeal held that a decision not to renew a 51-week fixed-term contract (that is, a contract designed to prevent an employee gaining sufficient service to be able to claim unfair dismissal, at a time when one year’s service was required) was not unlawful under the FTER.



Less favourable treatment of fixed-term employees can amount to indirect sex discrimination or unequal pay (see Chapter 7) if it adversely affects more of one sex than the other:



Temporary employees have the same protection as permanent staff from discrimination on the grounds of pregnancy and maternity. A temporary employee cannot be dismissed, refused renewal of her contract or refused employment for these reasons, according to the ECJ (Tele-Danmark v Handels [2001] IRLR 853 and Jimenez Melgar v Ayuntamiento de Los Barrios [2001] IRLR 848).



Employers can no longer require employees to sign a waiver of dismissal or redundancy rights when beginning or renewing a temporary contract. It would be a breach of the FTER to select someone for redundancy because they are a fixed-term employee. A temporary employee who is made redundant and who has worked for the employer for two or more years is entitled to equal treatment in relation to redundancy pay and other redundancy rights, such as redundancy selection, redundancy process, access to redeployment or retraining opportunities (see Chapter 11: Redundancy).



The dismissal of a temporary employee brought in to cover for a colleague who is absent due, for example, to long-term sickness, secondment or sabbatical, when that colleague returns can be fair — see Chapter 10, page 389. There will not be a redundancy, because the reason for dismissal is the return of the original post-holder, not a reduction in the need for employees (Greater Glasgow Health Board v Lamont [2012] UKEATS/0019/12/B1), so there will be no right to a redundancy payment (see Chapter 11: Redundancy). 



Changes to the law governing collective consultation made in 2013 have limited the legal obligation to consult unions over collective redundancies that result from the expiry and non-renewal of fixed-term contracts (see Chapter 11, page 408). However, unions can still try to negotiate suitable consultation arrangements with the employer. Individual consultation requirements are unaffected.