Key points
§  Add a note hereWith the coming into force on 1 October 2002 of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, employees on fixed-term or task-related contracts, or on contracts intended to come to an end on the occurrence or non-occurrence of a particular event, have the right not to be treated less favourably than comparable permanent employees working in the same establishment. In short, they have the right to be paid the same as those employees and to enjoy equivalent terms and conditions of employment (albeit, in appropriate circumstances, on a pro rata basis) including equal access to their employers' occupational pension schemes.
§  Add a note hereFixed-term employees have the right also to be afforded equal access to opportunities for transfer, promotion or developmental training, and must be informed of any suitable vacancies that may arise within the establishment in which they work. On completion of four year 's continuous employment under one or a series of consecutive fixed- term contracts, a fixed-term employee automatically acquires permanent status when that or the last of those contracts is renewed, unless their employers have objective reasons for continuing to employ that employee on a fixed-term basis. Amendments to the Social Security Contributions & Benefits Act 1992, and the Employment Rights Act 1996, mean that fixed-term employees engaged on contracts lasting (or expected to last for three months or less) now have access to certain rights previously denied to them under those statutes. Finally, the insertion of redundancy waiver clauses in fixed-term contracts of two years or more is no longer permissible.
§  Add a note hereThe 2002 Regulations, which implement EU Council Directive 99/70/EC of 28 June 1999 'concerning the framework agreement on fixed-term work', give employees on fixed-term or task-related contracts the right to compare the terms and conditions on which they are employed with those enjoyed by comparable permanent employees working in the same establishment; to seek a written explanation from their employers for what they perceive to be less favourable treatment; and to refer the issue to an employment tribunal if dissatisfied with the explanation proffered by their employers. On completion of four years' continuous under one or more consecutive fixed-term contracts, an employee automatically acquires permanent status within the employing organisation.
Add a note hereRegulations apply only to 'employees'
§  Add a note hereThe reader should note that the 2002 Regulations apply to those workers only who are 'employees' in the strict legal sense of the word, that is to say, to persons employed under contracts of employment or service. They do not apply to workers who are hired on an 'as and when required' basis, who are free, without penalty, to accept or reject any offer of occasional or short-term work that happens their way. Nor do the regulations apply to students undergoing work experience, or to agency 'temps', to persons employed under fixed-term contracts that are contracts of apprenticeship; or to persons who are genuinely self- employed. That said, it is arguable that the majority of people (notably youngsters paying their way through college or university) who are engaged to work in factories, offices, supermarkets, department stores, shops, hotels, restaurants, and the like, for an agreed number of weeks or months (or, in some instances, years) are not only employees, but fixed-term employees, given the clear evidence of mutuality of obligation and control that is characteristic of a contract of employment. The same applies to people engaged to replace permanent employees who are absent on maternity, parental or sick leave; and to employees hired to complete a particular task or project (for however short or long a period).
Add a note hereMeaning of 'fixed-term' contract
§  Add a note hereA 'fixed-term contract is a contract of employment that, under its provisions, is intended to terminate:
a.     Add a note hereon the expiry of a specific term (one, two, three months, or whatever);
b.    Add a note hereon the completion of a particular task (eg, the installation and testing of a new computer system);
c.     Add a note hereon the occurrence or non-occurrence of any other specific event (other than the achievement of normal retiring age) – such as the return to work of an employee after extended sick, maternity or adoption leave or (in the case of the non-occurrence of a specific event), the cancellation of a contract for goods or services.
Add a note hereMeaning of 'comparable permanent employee'
§  Add a note hereAn employee is a comparable permanent employee in relation to a fixed-term employee if, at the time when the treatment that is alleged to be less favourable to the fixed-term employee takes place, both employees are employed by the same employer and are engaged in the same or broadly similar work (having regard, where relevant, to whether they have a similar level of qualifications and skills). Further, the permanent employee must either work or be based at the same establishment as the fixed-term employee or (if there is no comparable permanent employee working at that establishment who satisfies those requirements) works or is based at a different establishment within the same organisation and satisfies those requirements.
Add a note hereObjective grounds for less favourable treatment
§  Add a note hereAs was indicated in the preamble to this section, fixed-term employees have the right to be paid the same as comparable permanent employees working in the same establishment and to be employed on the same terms and conditions as those other employees albeit, in appropriate circumstances, on a pro rata basis. If, for example, a comparable permanent employee has the right under his (or her) contract to six weeks' paid annual holidays, a fixed-term employee employed for just three months, would be entitled to one-and-a-half weeks' holidays during that three-month period. The same pro rata principle would need to be applied in relation to other benefits (such as the use of a company car, free medical insurance, permanent health insurance, access to an occupational pension scheme, annual rail season tickets, clothing allowances, low-interest loans, and so on).
§  Add a note hereEmployers may justify the less favourable treatment of fixed-term employees if they can demonstrate to the satisfaction of an employment tribunal that there are objective grounds for such treatment, eg. if the cost of offering a fixed-term employee a particular benefit is disproportionate when compared to the benefit the employee would receive, or that there is no practical way of offering the same benefits to a fixed- term employee on a pro rata basis. For example, an employer may be able to justify a refusal to offer a company car to a fixed-term employee on a three-month contract (whose comparator has a company car) if the cost of doing so is high and the employee's need to travel on business can be accommodated in some other more cost-effective way. Alternatively, less favourable treatment may be acceptable under the 2002 Regulations if the terms of a fixed-term employee's contract of employment, taken as a whole (or as a 'package'), are at least as favourable as those enjoyed by a comparable permanent employee working at the same establishment. In the final analysis, it will be for an employment tribunal to determine whether a fixed-term employee has been treated less favourably than a comparable permanent employee working in the same establishment.
Add a note hereComplaints of less favourable treatment
§  Add a note hereFixed-term employees have the right under the 2002 Regulations to challenge their employers' refusal or failure to acknowledge their rights under those Regulations by demanding a written statement from their employers asking the latter to explain why they are being treated less favourably than comparable permanent employees. An employer's refusal or failure (without reasonable excuse) to provide that statement within the next 21 days, as well as the contents of any statement that is provided, is admissible in evidence in proceedings before an employment tribunal.
Add a note hereAmendments to primary legislation
§  Add a note hereUntil 1 October 2002, access to certain statutory rights (payments under the Employers' Statutory Sick Pay Scheme) was denied to employees on fixed-term contracts lasting or expected to last for three months or less. With the concomitant repeal of these and related provisions in both the Social Security Contributions & Benefits Act 1992 and the Employment Rights Act 1996, all fixed-term employees, regardless of the duration (or expected duration) of their contracts, are now entitled (subject to the usual qualifying conditions) to statutory sick pay (SSP) when incapacitated for work; guaranteed payments in respect of workless days; and payment of their normal wages or salary if suspended from work on medical grounds. Furthermore, they are henceforth required to give and are entitled to receive the prescribed minimum statutory notice to terminate their contracts of employment.
Add a note hereRedundancy waiver clauses no longer permissible
§  Add a note hereSection 197 of the 1996 Act has also been repealed. What this means is that the insertion of a redundancy waiver clause in a fixed-term contract lasting or expected to last for two or more years will be void and unenforceable unless the contract in question (or, in the case of successive renewals, the most recent renewal of that fixed-term contract) was agreed before 1 October 2002, and the agreement to exclude any right to a statutory redundancy payment was entered into and took effect before 1 October 2002.
Add a note hereRight to be informed of suitable vacancies
§  Add a note hereFixed-term employees working alongside comparable permanent employees in the same establishment have the right to compete on equal terms when vacancies are advertised or posted on company notice boards. To that end, their employers are duty-bound to inform fixed-term employees (eg, by email or internal memos) of suitable available vacancies within their establishments, and at the same time as those details are circulated or made available to permanent employees.
Add a note hereAcquiring permanent status
§  Add a note hereUnder the 2002 Regulations, the use of successive fixed-term contracts will be limited to a maximum of four years. If a fixed-term contract (which may be a stand-alone contract or one of a succession of fixed- term contracts) is renewed after that four-year period (ignoring any period of continuous employment that began before 10 July 2002 – being the date on which the UK Government should have implemented Council Directive 99/70/EC), it will be treated in law as a permanent contract, unless its use for a longer period can be objectively justified. In such circumstances, the employee in question may write to his (or her) employer asking for written confirmation that he (or she) is now in permanent employment or setting-out objective reasons for his continued status as a fixed-term employee. If the employer does not respond in writing within the next 21 days, the employee may refer the matter to an employment tribunal for adjudication, without having to resign in order to do so.
§  Add a note hereWith a view to preventing fixed-term employees building up sufficient service to qualify for statutory rights otherwise dependent on qualifying periods of continuous employment (eg, the right not to be unfairly dismissed) many employers operate a system of successive fixed-term contracts, with breaks of one or more weeks between each, in the (often mistaken) belief that this tactic destroys continuity of service. Section 212(3) of the Employment Rights Act 1996 clearly states that continuity is preserved if an employee is absent from work in circumstances such that, by arrangement or custom, he (or she) is regarded as continuing in the employment of his employer for any purpose. In Ford v Warwickshire County Council [1983] IRLR 126, the House of Lords held that the interval between the termination of a teacher's fixed-term contract at the end of every summer term and its renewal at the beginning of the autumn term did not break the continuity of his period of employment. If a fixed-term employee is informed (or is given to understand) on the termination of his contract that he will be re- engaged under a second fixed-term contract in (sic) 'one or two weeks' time', the likelihood is that there will be no break in the continuity of his period of employment; the more so, if this happens more than once.
§  Add a note hereNotwithstanding the foregoing, the 2002 Regulations allow that, in certain situations, fixed-term employees will not acquire permanent status on completion of four years' continuous service under one or more fixed-term contracts if, under the terms of a collective or work- force agreement they and their employers accept that there are objective reasons for continuing to employ them under fixed-term or task-related contracts. Guidance notes produced by the Department of Trade & Industry suggest that such an agreement would be appropriate in the case of actors, professional sports people, and similar, who are traditionally employed under a series of fixed-term contracts.
Add a note hereTermination and non-renewal of a limited-term contract
§  Add a note hereSection 95 of the Employment Rights Act 1996, as amended by the 2002 Regulations, states that the expiry and non-renewal (under the same contract) of a 'limited-term' contract – which is the collective term for a fixed-term contract, a 'task-related contract', and a contract that provides for its termination on the occurrence or non-occurrence of a particular event – is a dismissal in law. Subject to the usual age and service qualifications (ie, one year 's continuous service and under normal retiring age at the effective date of termination), a person employed under a limited-term contract, that expires without being renewed (whether under the same contract or otherwise), may not only challenge the fairness of his or her dismissal before an employment tribunal but may also (in accordance with section 92 of the 1996 Act) request a written statement of reasons for dismissal, which latter must be supplied within the 14 days. It is as well to add that no such qualifying conditions apply if a fixed-term employee is dismissed or selected for redundancy simply for being a fixed-term employee or for presuming to assert his or her statutory rights under the 2002 Regulations.
Add a note hereUnfair dismissal and the right not to be subjected to a detriment
§  Add a note hereFixed-term employees, who are dismissed, selected for redundancy, disciplined, victimised, or subjected to any other detriment, for asserting their rights under the 2002 Regulations, or for questioning or challenging any alleged infringement of those rights (either before an employment tribunal or otherwise), may complain (or yet again complain) to an employment tribunal and will be awarded appropriate compensation should their complaints be upheld. Such complaints must be presented within three months of the effective date of termination of their contracts.
Add a note hereWritten statement of employment particulars
§  Add a note hereReaders should note that the written statement of initial employment particulars (or 'contract') necessarily issued to every new employee under sections 1 to 7 of the Employment Rights Act 1996 must, if the employment is not intended to be permanent, specify the period for which the employee's employment is expected to continue or, if it is for a fixed term, the date when it is to end.
Add a note hereFurther information
§  Add a note hereA detailed Guide to the 2002 Regulations (including further guidance on the pro rata principle and advice on what may or may constitute objective grounds for the less favourable treatment of fixed-term employees) may be accessed and downloaded from website The Guide in booklet form (Ref. PL512) may also be obtained from the DTI Publications Orderline on 0870 1502 500, or by email from