The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
A detailed examination of the Regulations designed to implement the Fixed-Term Work Directive in Great Britain.
The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, SI 2002 No.2034 ("the Regulations") come into force on 1 October 2002. They are designed to implement the EC Fixed-Term Work Directive (No.99/70) ("the Directive"), which the government was required to have implemented by 10 July 2002.
In addition, they are intended as a response to a public consultation on fixed-term work (May 2001), which revealed that significant pay disparities existed between fixed-term and permanent employees. The government took the view1 that the Directive did not apply to pay and pensions but intended in its implementation of the Directive to prevent pay and pension discrimination against fixed-term employees as well.
The power to make the Regulations was granted by s.45 (s.46 in respect of Northern Ireland) of the Employment Act 2002 ("the EA 2002"), which came into force on 8 July 2002.
Application to employees only
The Regulations apply, with some exclusions (see below), to employees only, defined by ss.45 and 46 of the EA 2002 as: "an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment". The government was pressed2 in parliament to apply the Regulations to "workers", rather than to the narrower category of "employees", but has chosen not to do so for the following reasons3.
The scope of the Directive, as set out in clause 2 of the Framework Agreement on Fixed-Term Work (which the Directive was designed to put into effect): "This agreement applies to fixed-term workers who have an employment contract or relationship as defined in law, collective agreements or practice in each member state." (See Document Extract below)
The Framework Agreement, in its preamble, expressly excludes temporary agency workers from its coverage. A similar agreement relating to temporary agency work is being considered (see IRLB 687 p.2).
Many casual workers do not need the protection of the Regulations because they are already covered by the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, which, because of the clear overlap with sex discrimination, apply to "workers". This is the case, even though the wording of the Part-Time Work Directive (No.97/81/EC) is identical to the Fixed-Term Work Directive.
The government is to shortly embark on a review of the provisions of general employment law that relate to the distinction between an employee and a worker. A discussion document has been issued entitled Employment status in relation to statutory employment rights4. The consultation period ends on 11 December 2002.
Note, however, that on or after 10 July 2002a non-employee worker in the public sector will be able to challenge this interpretation of the government by relying directly on the provisions of the Directive in relation to less favourable treatment.
The Regulations apply to "an employee who is employed under a fixed-term contract" (reg. 1(2)).
By virtue of regs. 13, 15 and 16, the Regulations apply also to Crown employment and to House of Lords and House of Commons staff.
Police officers and police cadets are deemed to be employed by "the relevant officer" for the purposes of the Regulations. In relation to a member of a police force, a special constable or a police cadet appointed for a police area, this will be the chief officer of police or, in Scotland, the chief constable. In the case of police members of the National Criminal Intelligence Service and of the National Crime Squad, the relevant officer will be the respective director general. Finally, any other person holding the office of constable or an appointment as a police cadet is deemed to be employed by the person who has direction or control (reg. 17).
In the DTI guide to the Regulations5,the government states that the following are also covered by the Regulations:
Seasonal or casual workers, such as employees at children's summer camps, agricultural workers and shop assistants working specifically at Christmas or during similar peaks in demand.
Employees on fixed-term contracts covering for maternity, parental or paternity leave or sick leave.
Employees hired for a specific task, such as setting up a new database or running a training course, and whose contracts expire upon completion of the task.
The Regulations do not apply to:
The armed forces, apart from the employees of territorial, auxiliary or volunteer reserve associations established under Part XI of the Reserve Forces Act 1996 (reg. 14).
Fixed-term employees participating in government training schemes and training schemes funded by European Community institutions designed to provide them with training or work experience to help them seek or obtain work (reg. 18(1)). However, according to the DTI guide, the Regulations do apply to fixed-term employees employed on other schemes funded by the government or an EC institution, and to those employed on the New Deal subsidised employment option.
Fixed-term employees attending a period of work experience not exceeding one year that is required as part of a higher education course (reg. 18(2)). But note that, according to the DTI guide, university students doing holiday jobs on fixed-term contracts, and "gap year" students with fixed-term contracts that are not part of their course, are not excluded from the Regulations.
Agency workers employed on fixed-term contracts. An agency worker is defined as: "any person who is supplied by an employment business to do work for another person under a contract or other arrangements made between the employment business and the other person" (reg. 19). However, the DTI guide confirms that employees directly employed by the employment business to work under its control, for example to take bookings, are covered by the Regulations.
Fixed-term employees working under contracts of apprenticeship (reg. 20).
Fixed-term, permanent and comparable employees
As opposed to a fixed-term employee who, as we have seen, is one employed under a fixed-term contract, a "permanent" employee is defined as one who is not employed under such a contract (reg. 1(2)).
A fixed-term contract is defined as "a contract of employment that, under its provisions determining how it will terminate in the normal course, will terminate -
(a) on the expiry of a specific term,
(b) on the completion of a particular task, or
(c) on the occurrence or non-occurrence of any other specific event other than the attainment by the employee of any normal and bona fide retiring age in the establishment for an employee holding the position held by him" (reg. 1(2)).
The right to equal treatment of fixed-term employees under the Regulations depends on a comparison with a "comparable permanent employee" (reg. 2(1)). In relation to the fixed-term employee complainant, a comparable permanent employee is one who, when the treatment that is alleged to be less favourable takes place:
is employed by the same employer as the complainant; and
is engaged in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualification and skills; and
works or is based at the same establishment as the complainant.
Where there is no comparable permanent employee in the same establishment who satisfies the first two requirements:
one who works or is based at a different establishment and satisfies the first two requirements will suffice.
An employee whose employment has ceased is not a comparable permanent employee (reg. 2(2)).
In terms of the comparator, the DTI guide notes the following:
Where the complainant does the same work as several permanent employees whose contractual terms are different, he or she may select a comparator. The complainant must bear in mind, however, that the success of his or her claim is based on selecting a similar comparator, and on whether or not objective reasons exist for the difference in treatment.
The complainant cannot compare conditions with someone at an associated employer's establishment.
Permanent employees will not have the right to equal treatment with similar fixed-term employees.
Less favourable treatment
The right to equal treatment provided under the Regulations is expressed as a right of the fixed-term employee not to be treated less favourably than a comparable permanent employee by the employer -
(a) as regards the terms of his or her contract; or
(b) by being subjected to any other detriment by any act, or deliberate failure to act, of his or her employer (reg. 3(1)).
The right applies only if the treatment complained of is on the ground that the employee is a fixed-term employee (reg. 3(3)(a)), and the treatment complained of cannot be justified on objective grounds (reg. 3(3)(b)).
The right includes, in particular, the right not to be treated less favourably in relation to: any period of service qualification relating to any particular condition; the opportunity to receive training; or the opportunity to secure permanent employment in the establishment (reg. 3(2)).
In determining whether a complainant has been treated less favourably than a comparator, the "pro rata principle" is to be applied unless it is inappropriate (reg. 3(5)). This means that the fixed-term employee should receive or be entitled to such proportion of any pay or other benefit received by a comparable permanent employee, as is reasonable in the circumstances, having regard to the complainant's length of service and to the terms on which the pay or other benefit is offered (reg. 1(2)).
The DTI guide indicates that where benefits are offered over a specified period of time, such as season tickets, season ticket loans, health insurance or staff discount cards, and the fixed-term employee is not expected to work for the entire period for which a benefit is offered, it may be appropriate to apply the pro rata principle and offer the benefit in proportion to the duration of the contract. So if the contract was for six months, the employee should receive half of an annual benefit.
The DTI guide provides examples of what may amount to less favourable treatment in the form of benefits provided to permanent employees but not to fixed-term employees, or offered to fixed-term employees on less favourable terms. These include:
free gym membership for permanent employees, but not for fixed-term employees;
allowing permanent employees to pay for gym membership monthly, whereas fixed-term employees are required to pay for six months at a time;
offering less paid holiday, or no paid bank holidays, to fixed-term employees;
providing non-contractual benefits such as a bonus to permanent employees, but not to fixed-term employees;
not providing fixed-term employees with training that is available to permanent employees;
selecting fixed-term employees for dismissal or redundancy solely because of their status as such; or
providing permanent employees with better promotion opportunities.
Right to be informed of vacancies
In order to ensure that the fixed-term employee has the opportunity to secure permanent employment as described in reg. 3(2), he or she has the additional right to be informed by the employer of available vacancies in the establishment (reg. 3(6)). An employee is so "informed" only if the vacancy is contained in an advertisement that the employee has a reasonable opportunity of reading in the course of his or her employment. Otherwise the employee must be given reasonable notification of the vacancy in some other way (reg. 3(7)).
Objective justification
Less favourable treatment of a fixed-term employee is only unlawful under the Regulations if there is no objective justification for it. Regulation 4(1) provides that treatment is justified on objective grounds and therefore does not amount to less favourable treatment, "if the terms of a fixed-term employee's contract of employment, taken as a whole, are at least as favourable as the terms of the comparable permanent employee's contract of employment".
The DTI guide indicates that the question for an employer to ask is: "Is there a good reason for treating this employee less favourably?" It states that there will be such justification if the less favourable treatment is:
to achieve a legitimate objective, such as a genuine business objective;
necessary to achieve that objective;
an appropriate way to achieve that objective.
This is broadly the same test as is used for justifying indirect sex discrimination contrary to Article 141 of the EC Treaty (see Bilka-Kaufhaus GmbH v Weber von Hartz6).
The DTI guide states that the cost involved in providing a particular benefit to a fixed-term employee may outweigh the benefit the employee would receive, and thus provide objective justification for the difference in treatment. For example, an employee on a three-month contract who is denied a company car that a comparable permanent employee enjoys. This may be justified if the cost of providing the car is high and the need of the business for the employee to travel can be met in some other way.
Whether or not less favourable treatment is objectively justified needs to be considered on a case-by-case basis, the DTI guide advises, and within this broad approach, the comparison may take place on a term-by-term basis or on the basis of the whole package. So, first, an employer might show that there is an objective justification for not providing the particular benefit or for providing it on less beneficial terms. This is the approach used in the sex and race discrimination legislation, and in the Part-Time Workers Regulations. Alternatively, an employer might show that the value of the fixed-term employee's total package of terms and conditions is at least equal to the value of the comparable permanent employee's total package of terms and conditions (see Document Extract below).
Period of service qualifications
We have seen that, under reg. 3(2), period of service qualifications relating to particular conditions of employment must be the same for fixed-term employees as for permanent employees except where different periods are justifiable on objective grounds. The example given in the DTI guide is that, if permanent employees are given five days' paid holiday after one year's service, fixed-term employees should also get the same increase in holiday after this period, unless there are objective reasons for them to serve a longer qualifying period.
Pension benefits
Although there is no direct reference to pensions in the Regulations, the DTI guide states that pensions are covered, and that employers are to offer access to occupational pension schemes to fixed-term employees on the same basis as for permanent employees, unless differential treatment can be objectively justified. However, the DTI guide envisages that it will not always be necessary to offer all fixed-term employees access to occupational pension schemes and that this is to be decided on a case-by-case basis.
In parliamentary debate on the EA 2002, the government stated that "the employer might be able to justify excluding an employee on a very short fixed-term contract from an occupational pension scheme if including him or her has a disproportionate cost and/or is of no benefit to the individual employee"7. Should this be the case, the guide states that the employer will not have to pay contributions into a private pension or stakeholder pension on the employee's behalf and, if there is a waiting period to join an occupational pension scheme, the same period should apply to fixed-term employees unless a longer period can be objectively justified.
The employer and employee may agree that lack of access to an occupational pension scheme may be compensated for elsewhere in the employment package, using the package approach, whereby the terms of the contract as a whole are compared with those of a comparable permanent employee. As stated above, this contrasts with the position under the Equal Pay Act 1970, dealing with the equal treatment of men and women in the same employment, where each term must be considered separately8.
Right to written statement of reasons
By reg. 5(1), a fixed-term employee who considers that the employer has treated him or her less favourably than a comparable permanent employee may request a written statement from the employer giving particulars of the reasons for the treatment. This statement must be provided within 21 days of the request. It will be admissible as evidence in any proceedings under the Regulations and if it appears to an employment tribunal that the employer has deliberately and without reasonable excuse omitted to provide a written statement, or that the written statement is evasive or equivocal, the tribunal may draw any inferences from this that it considers just and equitable, including an inference that the employer has infringed the equal treatment right (regs. 5(2) and (3)).
Regulation 5(4) disapplies the right to a written statement where the less favourable treatment in question is dismissal and the employee is entitled to a written statement of reasons for dismissal under s.92 of the Employment Rights Act 1996 ("the ERA").
Unfair dismissal and detriment
Regulation 6(1) provides that the dismissal of a fixed-term employee is automatically unfair under the ERA, regardless of his or her length of service or age, if the reason or principal reason for the dismissal is one of the reasons specified in reg. 6(3). The right not to be subjected to any detriment by an act or omission of the employer is similarly based on one of the reg. 6(3) grounds (reg. 6(2)). (Note that the right not to be subjected to a detriment does not include dismissal under Part 10 of the ERA (reg. 6(5)).
The reg. 6(3) grounds are that the fixed-term employee:
brought proceedings under the Regulations;
requested a written statement under reg. 5 above, or a written statement confirming a permanent contract under reg. 9 (see below);
gave evidence or information in connection with proceedings under the Regulations;
otherwise did anything under the Regulations in relation to the employer or any other person;
alleged that the employer infringed the Regulations;
refused, or proposed to refuse, to forgo a right conferred by the Regulations;
declined to sign a workforce agreement for the purposes of the Regulations;
performed or proposed to perform any functions or activities as a workforce representative or a candidate for such position; or
that the employer believes or suspects that the employee has done or intends to do any of the above.
Where the employee alleges that the employer has infringed the Regulations, or where the employer believes or suspects that the employee has so alleged, the employee will not have a claim if the allegation is false and not made in good faith (reg. 6(4)).
Selection for redundancy
It is also automatically unfair to select an employee for redundancy if the reason or principal reason is one of those specified in reg. 6(3), unless the circumstances in reg. 6(4) apply.
However, selection for redundancy solely on the basis that employees are on fixed-term contracts may be justified. The DTI guide gives examples of cases where employees have been brought in specifically to complete particular tasks or to cover for a peak in demand.
Enforcement
An employee may bring a complaint to an employment tribunal that the employer has infringed his or her right not to suffer less favourable treatment under reg. 3, or not to be subjected to a detriment under reg. 6(2), subject to this detriment not being a dismissal (reg. 6(5)).
By reg. 7(2), a complaint must be brought within three months of the less favourable treatment or detriment, beginning: (a) with the date of the less favourable treatment or detriment to which the complaint relates; or (b) where the act or omission is part of a series of similar acts or omissions, the last of them. Where the alleged infringement is that the employer has failed to inform the employee of a vacancy within the meaning of reg. 3(6), the period of three months starts to run from the date, or the last date, on which other individuals, whether or not employees of the employer, were informed of the vacancy.
A tribunal may consider a complaint that is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so (reg. 7(3)).
For the purposes of calculating the date of the less favourable treatment or detriment: a deliberate failure to act shall be treated as done when it is decided on (reg. 7(4)(b)); subject to this, a less favourable contractual term shall be treated as taking place on each day of the period during which the term is less favourable (reg. 7(4)(a)).
Unless there is evidence to the contrary, an employer shall be taken to have decided not to act when it does an act inconsistent with doing the failed act or, if there is no such inconsistent act, when the period expires within which it might reasonably have been expected to have acted if the failed act was to be done (reg. 7(5)).
Burden of proof
Once an employee has presented a complaint under regs. 3(1) and 6(2) to a tribunal, the onus is on the employer to identify the ground for the less favourable treatment or detriment (reg. 7(6)).
Tribunal decision
If the tribunal upholds the employee's complaint, "it shall take such of the following steps as it considers just and equitable":
(a) make a declaration as to the rights of the employee and the employer in relation to the matters complained of;
(b) order the employer to pay compensation;
(c) recommend action that is reasonable for the employer to take within a specified period so as to obviate or reduce the adverse effect on the employee of any matter to which the complaint relates (reg. 7(7)).
Compensation
The amount of any compensation is to be considered on a "just and equitable" basis, having regard to the infringement and any loss attributable to it (reg. 7(8)). Loss includes any expenses reasonably incurred by the employee in consequence of the infringement, and loss of any benefit that the employee might reasonably be expected to have received but for the infringement (reg. 7(9)).
Compensation shall not be awarded for injury to feelings (reg. 7(10)). This contrasts with the position under the discrimination statutes, but reflects the position under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
There is a duty to mitigate loss, and a requirement to reduce compensation if the employee caused or contributed to the act or failure to act (reg. 7(11) and (12)). It is unclear in what circumstances such a deduction for contributory fault could be made.
If the employer fails, without reasonable justification, to comply with a tribunal's recommendation to it to take reasonable action, the tribunal may, if it considers it just and equitable to do so, increase the amount of compensation or make an award for compensation (reg. 7(13)).
Successive fixed-term contracts
The Regulations go further than giving new rights to employees working on fixed-term contracts. By virtue of the provisions in reg. 8, some fixed-term contracts will now be regarded as, and take effect as, permanent contracts in the following circumstances:
Where the employee is employed under a contract purporting to be a fixed-term contract (contract A) and that contract has previously been renewed (or extended - see reg. 1(2)).
Where the employee has previously been employed by the same employer on a fixed-term contract before the start of contract A.
In the above circumstances, reg. 8(2) provides that, with effect from a specified date, the provision in contract A that restricts the duration of the contract "shall be of no effect, and the employee shall be a permanent employee", but only in the following circumstances:
The employee has been continuously employed under contract A, or under that contract and a series of previous fixed-term contracts, for a period of four years or more, excluding any period of employment before10 July 2002.
Employment under a fixed-term contract was not objectively justified. Justification is to be determined, where contract A has been renewed, at the time when it was last renewed; or, where contract A has not been renewed, at the time when it was entered into. Note that a renewal of a contract includes its extension (reg. 1(2)).
The specified date, with effect from which a fixed-term employee becomes a permanent employee under these provisions is the later of the following two dates: the date on which contract A was entered into or last renewed; or the date on which the employee acquired four years' continuous employment (reg. 8(3)). Continuity of employment is to be determined in accordance with the ss.210-219 of the ERA, and any period of continuous employment falling before 10 July 2002 is to be disregarded (reg. 8(4)).
Modifications
A collective agreement or a workforce agreement (as defined in Schedule 1 to these Regulations) may modify the above provisions in relation to any employee or specified description of employees in one or more of the following ways in order to prevent abuse arising from the use of successive fixed-term contracts:
by specifying the maximum total period for which the employee or employees of that description may be continuously employed on a fixed-term contract or on successive fixed-term contracts;
by specifying the maximum number of successive fixed-term contracts and renewals for that employee or description of employees; or
by specifying objective reasons justifying the renewal of fixed-term contracts, or the engagement of the employee or employees of that description on successive fixed-term contracts (reg. 8(5)).
Note that a single fixed-term contract, of whatever length, will not be converted into a permanent contract under these provisions.
Right to written statement of variation
Under reg. 9(1), an employee who considers that, by virtue of reg. 8, his or her contract is no longer to be treated as fixed-term, and that he or she is now a permanent employee, may request a written statement from the employer confirming the status of the contract. The employer must, within 21 days of this request, provide the employee with a written statement to confirm this, or a statement giving reasons why the contract remains fixed-term. Regulation 9(2) provides that, if these reasons are based on an assertion that there are objective grounds justifying the engagement of the employee on a fixed-term contract, or the renewal of such a contract, the statement shall include a statement of those grounds.
A written statement under reg. 9(1) is admissible as evidence in any proceedings before a court, an employment tribunal or the commissioners of the Inland Revenue (reg. 9(3)). If it appears to the court or tribunal that the employer deliberately, and without reasonable excuse, omitted to provide a written statement, or that the written statement is evasive or equivocal, the tribunal may draw any inference that it considers just and equitable (reg. 9(4)).
An employee may present an application to an employment tribunal for a declaration that, by virtue of reg. 8, he or she is a permanent employee (reg. 9(5)). However, the complainant must have previously requested a statement under reg. 9(1) from his or her employer, and the employer must have either failed to provide it, or provided a statement giving reasons why the contract remains fixed-term. In addition, the employee must be employed by the employer at the time the application is made (reg. 9(6)).
Restrictions on contracting out
Regulation 10 applies s.203 of the ERA to the Regulations. This means that an agreement is void in so far as it purports to exclude or limit the operation of the Regulations, or preclude the bringing of proceedings under the Regulations. Settlements will have to be made via an Acas conciliation officer or by a compromise agreement in the prescribed form.
Amendments to primary legislation
The Regulations make a number of amendments to primary legislation so as to remove discrimination in statutory rights between fixed-term employees, or certain types of fixed-term employees, and permanent employees. These are contained in Schedule 2, and are as follows.
Statutory sick pay
The provisions in Schedule 11 to the Social Security Contributions and Benefits Act 1992, which disqualify an employee with a contract for a "specified period of not more than three months" from statutory sick pay ("SSP"), are removed (Schedule 2, para. 1). This means that even short-term employees will be eligible for SSP, provided that the remaining qualifying conditions are met. This change comes into effect where the period of incapacity occurs on or after 1 October 2002 (Schedule 2, para. 4).
ACAS conciliation
Section 18(1) of the Employment Tribunals Act 1996 ("the ETA") is amended to include claims under the Regulations among those in respect of which Acas conciliation officers have a statutory duty to promote settlements (Schedule 2, para. 2(a)).
Appeals
Section 21 of the ETA is amended to allow an appeal to the EAT on a point of law arising from any decision of, or arising in any proceedings before, an employment tribunal, under the Regulations (Schedule 2, para. 2(b)).
Guarantee payments and payments for medical suspension
The ERA exclusions disentitling fixed-term employees (on contracts of three months or less, or on contracts made in contemplation of the performance of a specific task which is not expected to last for more than three months) from a guarantee payment for workless days, or to payment of remuneration while suspended from work on medical grounds, are removed (Schedule 2 para. 3, repealing ss.29(2) and 65(2) of the ERA).
Notice pay
The ERA rights of an employer and employee to minimum notice periods are now extended to cover a contract of employment made in contemplation of the performance of a specific task which was not expected to last for more than three months (Schedule 2, para. 3(4) repealing s.86(5) of the ERA).
As the DTI guide explains, after an employee on such a contract has been continuously employed for one month, he or she will have the right to receive, and the corresponding obligation to give, a week's notice of termination if their contract is terminated other than by completion.
Written reasons for dismissal
Section 92 of the ERA is amended to ensure that an employee employed under a limited-term contract that terminates by virtue of the limiting event, without being renewed under the same contract, is entitled, upon request, to a written statement of reasons for dismissal (Schedule 2, para. 3(5)). By s.92(3) of the ERA, an employee must be continuously employed for one year at the effective date of termination to be entitled to this right.
Circumstances for dismissal and redundancy
Under common law, a contract for the performance of a task (Wiltshire County Council v NATFHE9) or a contract that lasts until an event occurs (Brown v Knowsley Borough Council10) automatically terminates when the task is completed or the event occurs. As a result, the contract is not for a fixed term and the expiry of the contract will not constitute a dismissal for the purposes of unfair dismissal and redundancy (s.95(1)(b) and s.136(1)(b) of the ERA). Schedule 2, para. 3(7) and 3(13) amends these provisions of the ERA so that the termination of such contracts will constitute dismissal for such purposes. Section 97 of the ERA is amended so that the effective date of termination of a limited-term contract, which terminates on the limiting event without being renewed, is the date the termination takes effect (Schedule 2, para. 3(8)).
Similarly, s.145 of the ERA is amended so that the "relevant date" (the effective date of termination for the purposes of redundancy pay) is, in the case of a limited-term contract that terminates on the limiting event without being renewed, the date on which the termination takes effect (para. 3(14)).
Repeal of redundancy waivers
Under s.197 of the ERA, an employee employed under a contract of employment for a fixed term of two years or more is not entitled to a redundancy payment where the fixed term expires without being renewed if, before the expiry, the employee has agreed in writing to exclude a right to a redundancy payment on the expiry of the term. This provision is repealed by Schedule 2, para. 3(15).
Transitional provisions contained in Part 2 of Schedule 2 mean that any waiver will cease to have effect where "the relevant date" under s.145 of the ERA (the termination date) falls on or after 1 October 2002, unless both the following conditions are satisfied:
(a) that, where there has been no renewal of the contract, the contract was entered into before 1 October 2002, or where there have been one or more renewals, the only, or most recent, renewal was agreed before that date; and
(b) the waiver was entered into and took effect before that date (Schedule 2, para.5)).
This means that existing contracts, or renewals of contracts, which contain waivers will remain valid. However, it will often be the case that the validity of existing waivers will be unclear. In particular, where there is a fixed term of two years or more subject to a waiver, and the contract is renewed or extended for a period of less than two years, can the employee validly waive redundancy pay in relation to the second contract period? Furthermore, is a waiver ever valid if there is a succession of fixed-term contracts, each of which individually is for a period of less than two years?
There are conflicting authorities in the EAT, and the Court of Appeal's decision in BBC v Kelly-Philip11 concerned waivers for unfair dismissal. Such waivers are no longer possible where the fixed term, which must be at least one year, is started or renewed from 25 October 1999. Since the Regulations are to be interpreted in accordance with the Directive wherever possible, it is likely that the preferred view will be that there needs to be a series of terms of at least two years each in order for a waiver to be valid.
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Preamble This framework agreement . . . following the framework agreement on part-time work, represents a further contribution towards achieving a better balance between "flexibility in working time and security for workers". The parties to this agreement . . . recognise that fixed-term employment contracts respond, in certain circumstances, to the needs of both employers and workers. This agreement sets out the general principles and minimum requirements relating to fixed-term work, recognising that their detailed application needs to take account of the realities of specific national, sectoral and seasonal situations. It illustrates the willingness of the Social Partners to establish a general framework for ensuring equal treatment for fixed-term workers by protecting them against discrimination and for using fixed-term employment contracts on a basis acceptable to employers and workers. General considerations . . . 6. Whereas employment contracts of an indefinite duration are the general form of employment relationships and contribute to quality of life of the workers concerned and improve performance; 7. Whereas the use of fixed-term employment contracts based on objective reasons is a way to prevent abuse; 8. Whereas fixed-term employment contracts are a feature of employment in certain sectors, occupations and activities which can suit both employers and workers; 9. Whereas more than half of fixed-term workers in the European Union are women and this agreement can therefore contribute to improving equality of opportunities between women and men; . . . THE SIGNATORY PARTIES HAVE AGREED THE FOLLOWING Purpose (clause 1) The purpose of this framework agreement is to - (1) improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination; (2) establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships. Scope (clause 2) 1. This agreement applies to fixed-term workers who have an employment contract or employment relationships as defined in law, collective agreements or practice in each member state. . . . Principle of non-discrimination (clause 4) 1. In respect of employment conditions, fixed-term workers shall not be treated in a less favourable manner than comparable permanent workers solely because they have a fixed-term contract or relation unless justified on objective grounds. . . . Measures to prevent abuse (clause 5) To prevent abuse arising from the use of successive fixed-term employment contracts or relationships, member states . . . shall . . . introduce . . . one or more of the following measures - (a) objective reasons justifying the renewal of such contracts or relationships; (b) the maximum total duration of successive fixed-term employment contracts or relationships; (c) the number of renewals of such contracts or relationships. 2. Member states . . . shall, where appropriate, determine under what conditions fixed-term employment contracts or relationships - (a) shall be regarded as "successive"; (b) shall be deemed to be contracts or relationships of indefinite duration. Information and employment opportunities (clause 6) Employers shall inform fixed-term workers about vacancies which become available in the undertaking or establishment . . . As far as possible, employers should facilitate access by fixed-term workers to appropriate training opportunities to enhance their skills, career development and occupational mobility. . . . Provisions on implementation (clause 8) 1. Member states, and/or the social partners, can maintain or introduce more favourable provisions than workers than set out in this agreement. 2. This agreement shall be without prejudice to any
more specific Community provisions, and in particular Community provisions
concerning equal treatment or opportunities for men and women. |
References
1 Explanatory Notes to the Employment
Act 2002
2 22.1.02, Hansard (HC) Standing Committee F col. 543
3 27.11.01, Hansard (HC) col. 865
4 DTI 02/1058
5 Fixed-term work, a guide to the Regulations (PL512)
6 [1986] IRLR 317
7
22.1.02 Hansard (HC) Standing Committee F col. 554
8 Hayward v Cammell Laird Shipbuilders Ltd (No.2) [1988] IRLR 257
9 [1980] IRLR 198
10 [1986] IRLR 102
11 [1998] IRLR 294
