Updated Guidelines on the Protection of Employee (Fixed Term Work) Act 2003

version 1

October 2006
Table of Contents

Table of Contents2

  1. Introduction3
  1. PURPOSE OF the Legislation3
  1. Non-Discrimination in Terms and Conditions4
  1. Regulating the Use of Fixed Term Contracts7
  1. Initial Fixed Term Contract7
  1. Renewing a Temporary Contract8
  1. Objective Grounds9
  1. Contracts of Indefinite Duration 11
  1. Permanent and Indefinite Duration - Different?12
  1. Acting Up13
  1. Objective Justification13
  1. Informing Re Permanent Vacancies14
  1. Anti-Avoidance Provisions14
  1. Relief Staff15
  1. Summary17
  1. Appendix 1 – Types of Contracts18
  1. Introduction

The Protection of Employees (Fixed-Term Work) Act 2003which came into force on the 14th July 2003, has had major implications for the employment of temporary staff in the health service. This document is intended to update the guidelines which were issued by the Agency in April 2004, and to provide up-to-date information on the most salient provisions of the legislation to date.

There is a lot of confusion in the health service about the definition of fixed term and to whom the label applies. In health service parlance fixed term employees were traditionally described as temporary and persons employed on contracts of indefinite duration were traditionally described as permanent. There are a number of scenarios for which the term “temporary” is used in the Health Services[1]. These scenarios derive from the fact that traditionally employees who were not recruited as permanent employees through open competition were described as temporary regardless of the purpose or duration of their employment. Employees who fell into this category include:

  1. Employees employed to fill vacant posts pending their permanent approval and filling.
  2. Persons employed for a specific initiative.
  3. Locums – i.e. persons who fall into this category include individuals employed either on a once-off short-term basis or those employed intermittently on an “if and when required” basis.
  4. People employed as “temps”. Frequently such employees are issued with “reminder” temporary contracts on a regular basis, e.g. every 6-months.
  1. Purpose of the Legislation

The purpose of Fixed Term Work Act is:

(i)To improve the quality of fixed-term work through the application of the principle of non-discrimination by ensuring that fixed term / temporary workers are not treated less favourably than comparable permanent workers; i.e. they must be provided with the same terms and conditions of employment (other than tenure).

(ii)To prevent abuse arising from the use of successive fixed-term employment contracts by regulating the use of fixed-term / temporary employment contracts. The employer is required to provide information relating to the purpose and duration of the employment when issuing contracts of employment to temporary staff.

(iii)The law provides for a maximum duration of successive fixed term contracts after which they are deemed to be permanent contracts. By operation of the law the “offending” term (i.e. temporary or fixed term) is severed from the contract thus altering its status from one of definite duration to one of indefinite duration.

  1. Non-Discrimination in relation to Terms and Conditions of Employment

Temporary employees are entitled to be treated in the same manner as comparable permanent employees, unless the difference in treatment can be objectively justified. Comparable permanent employees are persons who perform the same work as the temporary employees under the same or similar conditions. Temporary / fixed term employees are also entitled to be treated on an identical basis to the permanent employees if the work performed is different but of equal or greater value to that of the permanent employees.

Temporary employees may work part-time or whole-time hours of attendance. If temporary employees work part-time, their comparable employees are equivalent permanent part-time staff. If the temporary employees are whole time, then the equivalent permanent whole-time employees are the comparators. It is up to the temporary employee to choose their comparator.

All fixed term employees are entitled to the same terms and conditions of employment as their permanent counterparts from the first day of their employment unless there are objective reasons for a difference in treatment. The following are some examples of conditions of employment which apply equally to fixed term staff.

  • If the employer operates an induction programme it is important that temporary staff would be provided with an opportunity to undergo a similar programme. The purpose of a probationary period is to establish an employee’s suitability for the position; this should be done in the time of entry and not in the fourth year of employment.
  • Temporary employees are entitled to the same annual leave as permanent employees on a pro-rata basis; e.g. employees on a six-month temporary contract are entitled to half the annual leave entitlement of comparable permanent employees. Service related annual leave entitlements may continue to be granted but there should be no distinction between permanent and temporary service for the purposes of accruing this entitlement; e.g. where an extra annual leave day is granted to permanent employees on completion of 2 year’s service, this entitlement must also extend to temporary employees.
  • All temporary employees on maternity leave are entitled to receive maternity pay. However should the temporary contract expire before the end of the maternity leave, maternity pay will not be paid beyond the expiry date of the contract (except in the cases of NCHDs).
  • Temporary employees are entitled to access to pension schemes on the same basis as their permanent counterparts where they work at least 20% of the hours of the comparable permanent employee.
  • Temporary employees are entitled to the same sick pay as permanent employees on a pro-rata basis; e.g. where a permanent officer is entitled to six months full pay and six months half pay in a four year period, a temporary officer employed on a one year contract would be entitled to one quarter of this entitlement. The local rules of sick pay schemes must apply equally to both temporary and permanent staff e.g. rules relating to uncertified days should be granted on a pro-rata basis.
  • Temporary employees are entitled to the same treatment as permanent employees in the workplace. This includes access to training, performance review, personal development planning or any other treatment which helps the employees to perform the job to the best of their ability.
  • All temporary service must now be reckoned the same as permanent service for the purpose of access to permanent competitions. This means that there can be no distinction between permanent or temporary service for access to promotional posts.
  • The employer may be able to objectively justify different treatment of temporary staff however the grounds for the different treatment must be based on considerations other than the temporary status of the employees. For example the non-grant of flexible working to a fixed term employee in a very specialised area on the basis that there is no one available to cover the shortfall in hours and the employer has clearly established that the employee in this instance cannot be accommodated, this could be deemed to be an objective ground as it could be argued that the requirement to work whole-time and it would achieves a legitimate objective of the employer and is appropriate and necessary for the purpose. E.g. the employer requires a project to be completed by a specific time frame and it is necessary to have a whole-time person.
  • Statutory leaves such as maternity leave, parental leave, adoptive leave, Force Majeure leave, annual leave and public holidays all have their own qualifying conditions and these conditions are not necessarily affected by this legislation.

4.Regulating the Use of Fixed Term Contracts – Section 8

Section 8 of the legislation is particularly important from the health service perspective and requires employers to rethink the way they administer fixed term contracts. The legislation is not intended at limiting the use of fixed-term contracts per se. Rather it is intended to prevent the successive use of fixed-term contracts in a manner which is deemed to constitute abuse. Recent decisions under the Fixed Term Work legislation have reinforced the importance of the correct administration of fixed term contracts, both at the initial stage and the renewal stage. The Act itself stipulates certain information must be provided to all fixed term employees in their contracts of employment. This aspect of the Act is one which employers must pay special attention to. Local managers must be extremely vigilant to ensure that the temporary contract reflects the specific circumstance of each individual’s temporary employment. The information that must be stipulated in each contract is as follows:

Initial Fixed Term Contract

At the commencement of an employee’s temporary employment s/he should be provided with a contract, which in addition to providing the standard information relating to the terms and conditions of employment, should include information relating to the employment circumstances and the objective reason which will bring about the termination of their contract, i.e.

  • Reaching a specific date, e.g. 31st December 2006
  • Completing a specific task – until the research project has been completed
  • The occurrence of a specific event - the employee who you have replaced returns from maternity leave

These conditions must be specified in writing in the contract of employment in a timely manner.

NB –Specific Purpose Contracts

Many fixed term employees are employed for a specific purpose the length of time for which they will be employed may not be capable of being determined at the initial appointment stage, e.g. they are employed in a post pending it being filled in a permanent capacity through open competition. This type of fixed term employee should be issued with a Specific Purpose contract, which outlines the specific purpose for which they are employed clearly stipulated on the contract and the specific event which will bring about the contract’s termination.

Example 1:You are employed pending the filling of the post on a permanent basis through open competition (or the Public Appointments Service). Your employment will terminate when the permanent employee takes up duty.

Example 2: You are employed to cover the career break of Mr John Smith. Your employment will terminate upon Mr Smith returning to work at the termination of his career break.

Example 3: You are employed under the Waiting List Initiative. This is a temporary post and your employment will terminate when the Waiting List Initiative comes to an end.

If the person’s employment is terminated at the cessar of the purpose specified in the contract or on the expiry date of the initial fixed term contract, i.e. there is no renewal, the employee has no further entitlements under this legislation and s/he will not qualify for a contract of indefinite duration. Specific purpose contracts should not be renewed except in very exceptional circumstances.

Renewing a Temporary Contract

Where it is intended to extend or renew a fixed term contract the employer must specify in writing the grounds which will bring about the termination of the contract:

  • Arriving at a specific date, e.g. 1st July; or
  • Completing a specific task, e.g. finishing a research project; or
  • The occurrence of a specific event, e.g. the return of a permanent employee following maternity leave.

The employer must also advise the employee in writing of the objective reasons (see page 7 overleaf) for the renewal of the fixed term contract and the reason as to why s/he is not being offered a permanent contract. This information must be set out in writing to the employee no later than the date of the renewal. Employers cannot retrospectively supply this information to the employee. It is also not sufficient to make assertions such as “All Consultants know that permanent posts as filled through the PAS” or “the NCHD knew that they were participating on a training scheme”.

Objective Grounds

The purposes of Section 8 is not just to ensure that a fixed term employee is informed about the reason that his /her contract is being renewed, the contract must also stipulate an objective ground justifying its renewal which must be based on considerations other than the temporary status of the employees. This means that the practice of automatic renewal of the temporary contracts without real regard to the circumstances which give rise to the renewal is no longer permitted. Employers must examine the circumstances of all fixed term employees when they are drawing up their contracts.

The purpose of this Section also extends to ensuring that the employer has clearly established that it has no option but to renew the contract on a temporary basis. Section 8 and Section 9 of the legislation are therefore linked as the rationale for the renewal of the contract on a fixed term basis will frequently be the same rationale for the denial of indefinite duration status where the criteria under the legislation is met. Employers must be able to show that they gave proper consideration to granting the employee a contract of indefinite duration, but real and objective reason exist for continuing the employee on a fixed term basis and these reasons are outlined to the employee in their renewal contract, i.e. the operational reality of the person’s employment is outlined to the employee in the paperwork that is furnished to them. The continuation of employees employed on a fixed term basis must correspond to a real need on behalf of the organisation and reflect the reality of that need, i.e. the contract renewal shouldn’t merely be a function of administration.

Example:A person has been employed on a fixed term basis to cover another member of staff’s maternity leave. The permanent employee has now returned from maternity leave so the purpose for which the fixed term employee was employed has been fulfilled. However another member of staff has gone on sick leave and you wish to retain the person on a fixed term basis to cover the vacancy caused by the sick leave. The following detail must be inserted in the renewed contract:

You are employed to cover for Ms Celia Murphy while she is on sick leave. Your employment with the HSE will terminate when Ms Murphy returns from sick leave. You are not being offered a contract of indefinite duration as Ms Murphy is the permanent holder of this post.

Termination of Contracts

If the renewed contract terminates before the employee comes within the scope of S. 9(1) or (2) of the Act then the employee has no further entitlement under this legislation (however there is anti-avoidance measures that the employer needs to be aware of which are outlined in this document below).

  1. Contracts of Indefinite Duration – Section 9

Section 9(1) of the legislation states that existing temporary employees who were in employment when the legislation came into force i.e. 14th July 2003; had completed three or more year’s continuous service with their employer, may have had their contracts renewed only once more by the employer for no longer than one year. Following the next renewal the temporary contract would be deemed a contract of indefinite duration.

Section 9(2) of the legislation states that where fixed term employees are recruited after the passing of the Act and are employed on two or more continuous temporary contracts the total duration of these contracts may not exceed four years or the contract will be deemed to be permanent.

For example, an employee whose two year initial fixed-term / temporary contract is subsequently renewed will be automatically deemed to have a contract of indefinite duration when a four year aggregate has been exceeded.

When the timeframes provided in the legislation have been exceeded the fixed term designation has no effect and the contract concerned shall be deemed to be a contract of indefinite duration. Conversion from fixed term (temporary) designation to indefinite duration status cannot be made dependent on certain conditions by the employer, e.g. subject to satisfactory references or undergoing a medical assessment. While it may be good practice to obtain references for all temporary staff and be proactive with regard to their safety, health and welfare, the employee’s rights under this legislation are not dependent on any particular conditions set down by the employer. In FTL/05/11 Determination No. 063 the Labour Court state “The expression “contract of indefinite duration” should be understood in contradistinction of a contract of definite duration on a fixed term contract. The terms and conditions of a contract of indefinite duration which comes into being by operation of Section 9(3) must therefore be the same as those contained in the fixed term contract from which it is derived as modified by Section 6 in all respects other than its fixed term duration.” This confirms that there is no offer and acceptance of a contract of indefinite duration, it happens automatically by virtue of the legislation.

Where an employee acquires indefinite duration status as a result of Section 9(1) or (2) of the Act they will be entitled to the same terms and conditions of employment that they enjoyed heretofore, the only difference being the change in the tenure of their contract. i.e. their contract alters from one of definite duration to one of indefinite duration, their remaining terms and conditions of contract are unaffected. An employee is only entitled to what they had before they became an indefinite employee, e.g. a Locum employee would not be entitled to whole-time hours by virtue of the fact that s/he acquire indefinite duration status. Instead s/he would acquire an entitlement to locum work on the same basis as heretofore on an indefinite basis.

Distinction between permanent and indefinite duration?

The question has been asked as to whether or not there is a distinction between permanent employees and employees who acquire indefinite duration status under the Act. This issue was addressed in a decision under this legislation by the Rights Commissioner, who defined a contract of indefinite duration as follows:

“A person who has an expectation that subject to the normal date of retirement in the employment, she will be retained in the employment and will not be dismissed without there being any good reason such as misconduct or unfitness for her position, or other compelling or unavoidable circumstances. Any dismissal shall be achieved by the application of the agreed termination arrangements for her employment or the application of the relevant Statute as the case may be by reference to the comparable employee, in this case, an established civil servant.