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Fixed Term Contracts

The use of temporary employment contracts is governed by the Protection of Employees (Fixed Term Work) Act 2003 and fixed term contracts may be used for temporary employment situations that are determined by :

  • Arrival of a specific date;
  • Completion of a specific task; or
  • Occurrence of a specific event.

Fixed term contracts can therefore be very helpful in certain situations when employees are not required on a permanent basis and a temporary contract is more suitable e.g. for maternity or sick leave cover, to complete a specific project or to deal with a peak or seasonal demand in business. In addition, one of the key advantages in the use of fixed term contracts is that a waiver can be inserted to exclude the provisions of the unfair dismissal legislation applying to the termination of the contract or term.

However, there are strict conditions attaching to their use with the objective of ensuring that temporary workers are not treated in a discriminatory or less favourable manner than comparable permanent colleagues and to prevent abuse of the use of successive temporary contracts, and the following key points must be adhered to when drafting temporary contracts of employment to ensure that they remain valid and legitimate:

  • Fixed term contracts must explicitly exclude the application of the unfair dismissal legislation in order to be able to rely on the unfair dismissal waiver.
  • When two or more continuous fixed term contracts are offered, the aggregate duration of the contracts may not exceed 4 years, unless there is a genuine objective reason for not offering a contract of indefinite duration. (The recent Labour Court Determination in the Department of Employment Affairs and Social Protection & Anna Concarr [FTD 184] usefully confirmed that to get the benefit of the fixed term legislation, there must be a renewal, and that offering one single contract in excess of 4 years cannot amount to a contravention of Section 9 of the legislation)
  • Renewal of fixed term contracts must always be in writing before the renewal date.
  • Renewals must outline the objective reasons for continuing to offer a fixed term contract and the failure to offer a contract of indefinite duration.

Failure to adhere to the correct requirements in respect of documentation may mean what was genuinely a fixed term situation may not be on paper and therefore will be in breach of the legislation and it is really important to ensure that renewal dates are not missed and the paperwork kept up to date.

In addition, fixed term workers must not be treated less favourably to comparable permanent colleagues in respect of their terms and conditions of employment, with the exception of pensions arrangements when a fixed term worker works less than 20% of the normal hours of the comparable employee.

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