Ending fixed-term contracts

The ending and non-renewal of a fixed-term contract will be a redundancy situation, as long as the contract is ending because the employer’s need for employees to carry out work of a particular kind has ceased or diminished (Pfaffinger v City of Liverpool Community College [1996] IRLR 508). This is the case even if the contract was for a specific purpose or carries only time-limited funding.

Any fixed-term employee with at least two years’ continuous service whose employment ends because the need for employees to do that work has ceased or diminished is entitled to a redundancy payment.

The rights of fixed-term or temporary employees improved with the introduction of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (FTERs). The regulations require an employer to treat temporary employees “no less favourably” than equivalent permanent staff, including in relation to redundancy rights. This includes contractual redundancy procedures, redeployment and redundancy pay.

Reps should note that these rights are in no way affected by the government’s decision to limit the duty to consult collectively on the ending of fixed-term contracts (see chapter 2).

Under regulation 8 of the FTERs, a fixed-term employee who has been working continuously under a contract that has been renewed at least once, or under a series of contracts for four or more years, will become a permanent employee automatically, unless the employer can justify continuing to employ them on a temporary basis.

The FTERs outlawed contract terms under which a fixed-term employee waives the right to a redundancy payment. Only employees are protected by the FTERs.