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Ending of fixed-term contracts
[ch 11: pages 386-387]If the reason for non-renewal of a fixed-term contract is that the employer needs fewer employees to do work of a particular kind, this will be a redundancy situation (Pfaffinger v City of Liverpool Community College [1996] IRLR 508). Examples include non-renewal because the post funding has run out, a project has been completed, or an undergraduate course has ended (Association of University Teachers v University of Newcastle-upon-Tyne [1987] ICR 317). Fixed-term employees with at least two years’ service will qualify for a statutory redundancy payment and other statutory redundancy rights, such as offers of suitable alternative employment (see page 409).
The ending of a fixed-term contract to provide temporary cover for absence (such as maternity, sickness or secondment cover) because of the return of the original post-holder is not a redundancy situation and there is no right to a redundancy payment. This is because the reason for dismissal is not a reduction in the need for employees. Instead, it is the return of the post-holder:
After three years working as a permanent employee for the Health Board, Ms Lamont accepted an internal transfer to a fixed-term two year contract, while the post-holder was on secondment. Lamont was dismissed when the post-holder returned. Her claim for a redundancy payment failed because the reason for dismissal was not redundancy. Instead, it was the ending of the fixed-term contract upon the planned return of the original post-holder. It made no difference that before accepting the fixed-term contract, Lamont had held a permanent role for three years.
Greater Glasgow Health Board v Lamont [2012] UKEATS/0019/12/B1
Anyone in this situation should try to negotiate access to redeployment opportunities before transferring, as well as a right to compensation if there is no suitable available vacancy when the post-holder returns.
Less favourable treatment of fixed-term employees when selecting for redundancy can be indirect discrimination, which the employer must justify to avoid breaking the law.
It is a breach of the Fixed-term Employees (Protection of Employment) Regulations 2002 (FTER) to select someone for redundancy because they are a fixed-term employee. A temporary employee who is made redundant is entitled to equal treatment when compared with permanent colleagues sharing the same employer, in relation to redundancy pay and other redundancy rights, including redundancy selection, redundancy process, access to redeployment or retraining opportunities (see also Chapter 2: Fixed-term Employees).
Any contract terms under which a fixed-term employee waives their right to a redundancy payment is a breach of the FTER.