 |
 |
 |
 |
|||||||||
 |
 |
 |
 |
 |
 |
 |
|
|||||
 |
|
|||||||||||
 |
 |
 |
 |
|
||||||||
 |
|
|||||||||||
 |
 |
|
||||||||||
 |
Fixed Term Contracts as recessionary remedy? Use carefully cautions Diarmuid Cunningham Employers’ labour requirements are changing rapidly in the changing economic climate. One cost–saving mechanism frequently considered by employers is the use of fixed term contracts. Employee protection legislation Fixed–Term Contracts are governed by the Protection of Employees (Fixed–Term Work) Act, 2003. The Act seeks to;
Renewal – ‘objective grounds’ If, at the expiry of a Fixed Term Contract, the employees’ services are still required, the legislation effectively requires the employer to make the Fixed–Term employee permanent. The employer can only renew a Fixed -Term Contract if there are objective grounds justifying its renewal. The objective grounds which are relied on must exist at the time of the renewal and must be notified in writing to the employee on or before the renewal date. Thus, objective grounds must be genuine and cannot arise after the renewal of the contract. The Employer must also provide an explanation as to why a permanent contract is not being offered. It appears from the EAT determinations to date these requirements will be deemed to be mandatory. Additional requirements Even if the employer is satisfied that a renewal or extension is objectively necessary, the legislation provides additional criteria that must be complied with. Any contract purporting to avoid these criteria will have no effect and such a contract will essentially be deemed to be a permanent contract.
Example John X started work for AB Ltd. on July 16th 2003 on a one-year fixed term contract. His contract was renewed on July 16th 2004 on a two-year fixed term basis. On July 16th 2006, AB Ltd. seek to offer him another two-year fixed-term contract. AB Ltd cannot do this as it would mean that the aggregate duration of John’s contracts would total 5 years (2003-2008). John can be offered either a (final) one-year fixed contract (and only then if objective grounds for this exist at this time) or a permanent contract.
Breaks between Fixed-Term Contracts A break between the Fixed-Term contracts can be construed as a period of temporary lay–off thereby not breaking the continuity of employment. A statutory redundancy payment may be payable to Fixed Term Employees in the same way as permanent Employees, once they have obtained two years full service. Dispute Resolution In the event of a dispute arising, the matter can be referred initially to a Rights Commissioner. The Act provides that the Rights Commissioner can grant relief by way of a permanent contract or alternatively compensation of up to two years remuneration. A Fixed–Term employee whose contract has not been renewed may also be entitled to seek relief from the Employment Appeals Tribunal, who can grant relief of up to two years gross salary. Caution should therefore be exercised when seeking to extend or renew a Fixed–Term Contract. The renewal of a Fixed Term Contract is something to be approached carefully, well in advance of the renewal date and strictly in accordance with the procedural requirements set out in the Act. Further Information This note is for general guidance only and is not to be relied upon as legal advice which may need to be tailored for any given situation. For further information on this subject please contact a member of our Employment Law Department on employment@ckt.ie or 021 4626900 |
|
||||||||||
 |
|
|||||||||||
 |
|
|||||||||||
 |
|
|||||||||||
 |
 |
|
||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|