Frequently Asked Finance and HR Questions Raised by Schools Issue 248 Date 22.06.2011

Frequently Asked Finance and HR Questions Raised by Schools Issue 248 Date 22.06.2011


Fixed Term Contracts – General guidance for all schools

Last updated April2017

  1. Is there a difference between ‘fixed term’ and ‘temporary’ contracts?

No. A fixed term contract (FTC) is defined as one which ends on a specific date or on the completion of a particular task, or on the occurrence (or non-occurrence) of a particular event. In legal terms, therefore, there is no difference between a 'temporary' and ‘fixed term’ contract; a FTC is simply a type of temporary contract. This guidance uses the term FTC throughout.

  1. What rights do fixed term employees have?

The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034)give fixed-term employees the right:

  • To the same pay and conditions as permanent staff
  • The same or equivalent benefits
  • To be informed of any permanent vacancies in the organisation
  • To protection against unfavourable treatment, for example:
  • not to be treated less favourably than a comparable permanent employee on the grounds that the employee is on a fixedterm contract and/or the difference in treatment cannot be justified on objective grounds
  • not to be selected for redundancy or be unfairly dismissed if the principal reason for the selection was because they were a fixed-term employee.
  • to have their contracts automatically converted to indefinite ones after four years (the four years must start after 10 July 2002 and there must be two or more successive contracts), unless there is objective justification* for continuing FTC employment

*The regulations do not define ‘objective justification’ but this should be precise and concrete circumstances justifying the use of successive fixed-term contracts. In the case of Ball v Aberdeen University a tribunal rejected the university’s case that short-term funding could automatically provide a justification for employment on a FTC. Objective justification for continuing FTC employment might be the need to cover a series of temporary absences for different postholders, for example, initially covering a secondment, then a maternity absence and then sickness absence.

  1. Is ending a FTC a dismissal?

Yes, even though the employee and school understand the employment is temporary and the date on which it will end (or the event that will end it), the ending of a FTC still counts as a dismissal in law.

  1. Does that mean the school needs to follow a dismissal procedure when ending a FTC?

Yes, when ending any FTC, the school should follow a short, three-step procedure in order to mitigate any unfair dismissal claim:

  1. Write to advise the individual that it is proposed their FTC will end, for the reasons envisaged in their original contract, offering a meeting at which this will be discussed further
  2. Meet to discuss the proposed ending of the FTC, considering any representations made by the employee or their representative, before making a final decision
  3. Write to advise the final decision, offering a right of appeal.

Schools’ Choice has published template letters for steps 1 and 3 and your named HR Caseworker will be happy to offer further advice as necessary.

  1. Who should make the final decision on ending a FTC

As the ending of a FTC is a dismissal, the final decision should only be made by those who have delegated authority to dismiss. In some cases, this will be the Headteacher whilst in other cases it may be members of the school’s Hearings Committee or an equivalent group.

Whilst the Governing Body or committees may be involved in general discussions regarding future staffing requirements, it is important that the employee is offered a full and genuine opportunity to make representations regarding any proposal to end their FTC before a final decision is made. As the employee will have the right to appeal any such a decision, you should ensure that members of the Governing Body who may be required to support an appeal hearing are not involved in discussions which would mean they could not undertake this role in an impartial manner.

  1. Do FTC employees need to be given written notice of the ending of their FTC?

No, their letter of appointment will indicate the date or event upon which their contract will end and state that no further written notice will be given.

Although the expiry and non-renewal of a fixed term contract is a dismissal, ordinarily the ACAS Code will not apply. However, it is best practice to go through a short process with the employee if there is not going to be a renewal of their contract, so that you can advise the employee of relevant developments as and when they occur. For example, if you are using a FTC to cover an employee’s maternity leave and that employee indicates an expected date of return to work, it would be good practice to update the FTC postholder of the employee’s anticipated return date.

Note that, after 1 year of service, fixed-term employees are entitled to a written statement of reasons for not renewing the contract and fixedterm workers who work continually for the same employer for two years or more may have the same redundancy rights as a permanent employee (see further questions below about redundancy).
If you are terminating employment prior to the end of a fixed term, ordinary unfair dismissal principles apply. The termination should be treated as if terminating a permanent contract and the ACAS Code should be followed if the termination is related to performance or conduct, or a redundancy consultation should be undertaken if relevant.

Most FTCs will include a provision for early termination with notice, for example, where other procedures (perhaps capability, conduct or redundancy related) are necessary. However, the length of statutory and contractual notice requirements (particularly for teaching staff) mean that, in reality, early termination of the contract can rarely be achieved. The obligation to provide appropriate notice does not apply in the cases of summary dismissal on the grounds of gross misconduct. For further advice about other HR policies and procedures, please log into the Schools’ Choice website using the Single Sign-On process and follow the links to the HR pages.

  1. Should a FTC employee be given priority consideration for any permanent vacancy arising in the school before the end of their FTC?

No. There is no requirement to appoint the FTC employee to a vacant permanent post, but the school must ensure it notifies the FTC employee of opportunities and gives reasonable consideration for posts they are suited to/apply for.

Equally, the school should ensure that it undertakes a rigorous recruitment and selection process for all appointments, to ensure that it appoints the best candidate available.

  1. What if the reason for the FTC changes during the temporary employment? (For example, the FTC teacher was originally covering sickness absence and now they are staying on to cover maternity leave.)

If a FTC is extended, but the reason for the on-going employment is different to that set out in the original contract, it is essential that you explain this in the contract extension instruction sent to the Schools’ Choice HR Transactions Team. The team will ensure that the contract extension refers to the new reason for the temporary employment, allowing you to end the employmentfairly for this reason at the end of the FTC.

  1. Can we end a FTC for a different reason to that set out in the original contract?

Unless you have followed some other formal procedure/dismissal process (eg, redundancy or capability procedures), ending a FTC for a different reason to that for which it was established would risk a claim for unfair dismissal to an Employment Tribunal.

  1. Does the expiry of a fixed term contract count towards collective redundancy consultation?
    Although previously expiries of fixed-term contracts could potentially be caught by the collective consultation requirements, the changes which came into effect on 6 April 2013, under the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 mean that this is no longer the case.

The expiry of a fixed term contract will only count towards collective redundancy consultation if:

  • you are proposing to dismiss the relevant employee as redundant; and
  • the dismissal will take effect before the expiry of the fixed term.
  1. When does ending a Fixed Term Contract (FTC) attract a redundancy process and payment?

It depends on the reason the contract is coming to an end. In employment law, there are five potentially fair reasons for dismissal:

  1. Conduct
  2. Capability
  3. Redundancy
  4. A statutory requirement (that would make continued employment unlawful)
  5. “Some other substantial reason” (SOSR)

When the reason the contract is fixed-term has been clearly expressed in writing at the outset and where that reason is still valid, the dismissal is likely to be for SOSR. This is because the event that has led to the contract ending has been clearly explained at the beginning.

If the reason for ending the FTC is that the requirement for employees to carry out that particular work has or will cease or diminish (ie, by reason of redundancy), then a redundancy payment will be due, providing the employee has accrued relevant service. This is two years’ continuous service, which may include service with other schools and public sector employers (You can check the relevant date for any member of staff by looking at the school’s copy of their contract letter.) However, if it can be argued that the employment is ending for one of the other potentially fair reasons for dismissal, then no redundancy payment should apply.

  1. What types of FTC might fall under the other fair reasons for dismissal that would not ordinarily attract a redundancy process and payment?

Some reasons might include:

  • Pending a planned permanent appointment
  • Pending a school closure, school amalgamation or the opening of a new school
  • Short term employment related to training or qualification requirements (for example, during teacher training)
  • Maternity cover (this is the ‘one in, one out’ principle)
  • Sickness cover (another ‘one in, one out’ example)
  • Cover or backfill for a secondment (another example of ‘one in, one out’)
  • Appointments pending a known fall in pupil numbers, for example, in the following September, where a short-term appointment is needed only to see the school though to a planned reduction in the number of classes. This might sometimes be described as “pending a review of the staffing structure”. Similarly, where the reverse applies, for example, where there is a known increase in pupil numbers for a short period only, perhaps around Nursery pupils*
  • Appointments made as a result of short-term budget surplus, for example, that would allow the school to boost its classroom support for a short period only*
  • Specific project or grant funding, that is clearly time limited*

*See questions 12 and 15.

Again, these are cases where it can be argued that the contract is coming to an end for “Some Other Substantial Reason”, on the occurrence of a particular event, which is known and stated clearly at the outset of the contract.

  1. When is it sometimes unclear whether a redundancy situation applies when ending a FTC?

When the reasons with asterisks above have been loosely applied, or allowed to drift with various contract extensions, or the reason for the FTC has changed but not been updated in the contract extension letter. For example:

A one year FTC is set up from September, “pending a staffing review at the end of the Summer Term”. Ahead of this review, the budget received is better than expected and the contract is extended for a further year. In the subsequent year, falling pupil numbers mean the school can no longer afford the post and plan to end the FTC when it expires in August.

In this example, there was no “review of the staffing structure at the end of the Summer Term” and the contract reason was not updated to reflect the fall in pupil numbers that could have been anticipated at the time of the contract extension. This means that the original clarity that the contract would end for SOSR has been eroded and there may now be an argument that the real reason for dismissal is redundancy, as the work is diminishing.

Please note – all examples included in this guidance are for illustrative purposes only. Cases need to be considered on an individual basis, looking at the specific circumstances that apply and communication with the employee that has taken place. These general examples should not be taken to imply, or preclude, employment rights or entitlements for individuals.

  1. If the school needs to reduce its staffing, can we ‘just’ end any FTCs we have before looking at a formal redundancy process?

When reviewing its staffing and possible redundancy proposals, it would be reasonable for the school to consider what FTCs will naturally be coming to an end (for the reason envisaged in the original contract or subsequent extensions) and when.

However, if this does not negate the need for staffing reductions, all remaining posts (whether permanent or FTC) in the affected staff group(s) should be included “in the pot” for redundancy consultation and, as necessary, selection procedures. To select a FTC post holder for redundancy, purely on the basis of their FTC employment status, could be found by an employment tribunal to be an automatically unfair dismissal, under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.

However, as detailed above, it may still be fair and reasonable to end a FTC without attracting a redundancy process or payment, upon the occurrence of the specific event it was set up for. And this may support the school in using natural wastage to avoid redundancy procedures. For example:

Temporary employment is originally offered for maternity cover. This then leads on to a further contract to cover the secondment of another teacher. At the end of the secondment, the seconded teacher accepts a permanent post at the host school and therefore will not be returning to their original school. The FTC at the home school is brought to an end, as the secondment has come to an end. The home school chooses not to replace the teacher who has resigned to take up the other post, as there is a known fall in pupil numbers the following year which would otherwise require staffing reductions.

In this example, the FTC has been fairly ended for the reason envisaged – the ending of the secondment – and the school has successfully used natural wastage to avoid a redundancy situation. Although the FTC employee will be leaving the school with two years’ service, no redundancy payment is due, as the contracted has ended for SOSR, ie, the end of the secondment.

It should also be noted that where FTC employment ends by reason of redundancy, the Teachers’ Pension Scheme does not provide for payment of early retirement benefits.

  1. Can you summarise the key things to remember with FTCs?
  • Ordinarily, you will only be able to fairly end the FTC for the reason stated in the original contract or subsequent extension letters, so getting this right is critical
  • The reason the employment is coming to an end will be the primary consideration when determining any entitlement to redundancy processes or pay, ahead of length of service
  • If an employee continues working past the end of a contract without it being formally renewed, there’s an ‘implied agreement’ by the employer that the employee is employed on an indefinite term.
  • If the original event on which it was anticipated the FTC would end has come and gone without a review of the contract, or has been used year in year out for contract extensions, it may be harder to argue that the contract is not subsequently ending by reason of redundancy.
  1. Do the school holidays break continuity?

A gap between two contracts does not necessarily break continuity of service. There are several situations where continuity of employment will not be broken even though there has been a complete week in which there is no employment contract. There are three sets of circumstances where continuity will not be broken. These are:

  1. The employee’s illness or injury;
  2. A temporary cessation of work; or
  3. There is an arrangement or custom to regard employment as continuing

Time during which an employee is “absent from work on account of a temporary cessation of work” will count for continuity purposes. A leading case in this area held that a teacher employed on a series of temporary assignments under several employment contracts did not have her continuity of service broken by the intervals between each assignment because these intervals were held to be due to a temporary cessation of work.

So, by way of example, imagine you have a teaching assistant on a fixed term contract which expires on the last day of the summer term. Before the end of that contract you negotiate a further fixed term contract which is to start at the beginning of the next academic year. It would therefore be both the Schools and teaching assistants intention that the teaching assistant will be returning after the summer holidays. In this situation continuity would be preserved.