1. Purpose of the Act

The purpose of the Act, which implements an EU Directive dated the 20th June, 1999, is as follows:-

(i) To provide for the improvement of the quality of fixed term work by ensuring the application of a principle of non-discrimination, which effectively means that fixed term workers may not be treated less favourably than comparable permanent workers; and

(ii) To provide for the removal of discrimination against fixed term workers where such discrimination exists and to establish a framework to prevent abuse arising from the use of successive fixed term employment contracts.

2. Scope of the Act

The Act applies to all employees who are working under a fixed term contract or specified purpose contract of employment and/or who holds office under, or in the service of, the state, including members of the Garda Siochana, Civil Servants and employees of any Health Board, Harbour Authority or Vocation Education Committee.

The Act does not apply to agency workers placed by a temporary work agency at the disposition of a user enterprise, apprentices, members of the Defence Forces, trainee Gardai or trainee Nurses.

The Act does, however, apply to agency workers employed directly by an employment agency.

3. Conditions of employment

The Act provides that a fixed term employee shall not be treated in a less favourable manner in respect of his/her conditions of employment than a comparable permanent employee, apart from in a number of limited circumstances as outlined below.

Conditions of employment in this regard refers to remuneration and matters relating thereto and includes conditions for membership of a pension scheme/arrangement entitlement to rights under the pension scheme/arrangement and conditions relating to the making of contributions to a pension scheme/arrangement.

Therefore, for example, where a comparable permanent employee is paid overtime, a fixed term employee, who compares himself/herself with that comparable permanent employee, is also entitled to the same rate of overtime payment. Furthermore, the holiday entitlement of a fixed term employee is related to the holiday entitled of a comparable permanent employee, subject to the minimum legal entitlements under the Organisation of Working Time Act, 1997.

4. Who is a comparable permanent employee?

An employee will be considered to be a comparable permanent employee in relation to a fixed term employee in the following circumstances:-

(i) If the permanent employee and the fixed term employee are employed by the same or an associated employer and one of the conditions referred to in (a), (b) or (c) below is met;

(ii) Where (i) above does not apply (including a case where the fixed term employee is the sole employee of the employer), the permanent employee is specified in a collective agreement, being an agreement that has effect in relation to the relevant fixed term employee, or;

(iii) Where neither (i) nor (ii) above apply, the employee is employed in the same industry or sector of employment as the fixed term employee (and one of the conditions referred to in (a), (b) or (c) below is met).

The following are the conditions (a), (b) and (c) referred to above:-

(a) Both employees perform the same work under the same or similar conditions or each is interchangeable with the other in relation to the work;

(b) The work performed by one of the employees concerned is of the same or a similar nature to that performed by that other and any differences between the work performed and conditions under which it is preformed by each, either are of small importance in relation to the work as a whole or occur with such irregularity as not to be significant, and;

(c) The work performed by the relevant fixed term employee is equal or greater in value to the work performed by the other employee concerned, having regard to such matters as skill, physical or mental requirements, responsibility and working conditions.

5. Exceptions to the principal of non-discrimination

The Act provides the following circumstances in which a fixed term employee can be treated in a less favourable manner:-

(i) Objective grounds

The Act provides that a fixed term employee may be treated in a less favourable manner than a comparable permanent employee where such treatment can be justified on objective grounds. Objective grounds will be deemed to exist where the treatment is based on considerations other than the status of the employee as a fixed term employee and the less favourable treatment is for the purpose of achieving a legitimate objective of the employer. The Act also provides that where, as regards any term of his or her contract, a fixed term employee is treated by his or her employer in a less favourable manner than a comparable permanent employee, the treatment in question shall be regarded as justified on objective grounds, if the terms of the 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.

(ii) Pensions

The right not to be treated in a less favourable manner than a comparable permanent employee shall not apply, in relation to any pension scheme or arrangement, to a fixed term employee who normally works less than 20% of the normal hours of the comparable permanent employee. This provision, however, does not prevent an employer and a fixed term employee from entering into an agreement whereby that employee may receive the same pension benefits as a comparable permanent employee.

6. Successive fixed term contracts

(i) Employees on fixed term contracts which commenced prior to the passing of the Act

Where a fixed term employee completes or has completed three years continuous employment with his or her employer or associated employer, (any or all of the three years service may have occurred prior to the passing of the Act), the employer may renew the contract for a fixed term on one occasion only and that renewal may be for a period of no longer than one year.

(ii) Employees on fixed term contracts of employment which commenced after the passing of the Act

Where fixed term employees are employed on two or more continuous fixed term contracts, the aggregate duration of those contracts may not exceed four years.

Where any term of a fixed term contract purports to contravene (i) or (ii) above, the term will be void and have no effect and the contract concerned shall be deemed to be one of indefinite duration, (i.e. a permanent contract).

The above mentioned rules do not apply where there are objective grounds justifying the renewal of a contract of employment for a fixed term only.

7. Obligations of employers to provide information to fixed term workers

The Act provides that in order for a fixed term employee to have the same opportunity as other employees to secure a permanent employment position, the employer is obliged to inform him or her in relation to relevant vacancies which occur in the organisation. This information may be provided by means of a general announcement at a suitable place in the employee’s place of employment. As regards access by a fixed term employee to appropriate training opportunities, the Act provides that such access should be provided by the employer but only in so far as practicable. Whether the employer has met this obligation or not will obviously be a matter for interpretation by the Courts.

8. Renewal of fixed term contracts

The Act provides that where an employer proposes to renew a fixed term contract, in accordance with the provisions relating to successive fixed term contracts as outlined at 6 above, the employee must be informed in writing, not later than the date of renewal of the contract, the objective grounds which justifies both the renewal of the fixed term contract and the failure to offer a contract of a definite duration. The Act further provides that this written statement is admissible as evidence in any proceedings under the Act. It is also provided for in the Act that a Rights Commissioner or the Labour Court may draw any inferences considered just and equitable if it appears that an employer omitted to provide a written statement or that the written statement is evasive or equivocal.

9. Prohibition on penalisation of fixed term employees

The Act prohibits an employer from penalising a fixed term employee on the grounds that:-

• He/she has exercised or proposes to exercise his/her right not to be treated in a less favourable manner than a comparable permanent employee in relation to conditions of employment;

   

• He/she has in good faith opposed by lawful means an act which is unlawful under the Act;
• He/she has given evidence in any proceedings under the Act or given notice of his or her intention to do so or to do any other thing referred to above;
• He/she has been dismissed from his/her employment and the dismissal is wholly or partly for, or connected with, the purpose of a fixed term contract being deemed to be a contract of indefinite duration under the provisions of the Act dealing with the abuse of successive fixed term contracts.

The following behaviour constitutes penalisation by an employer of a fixed term employee:-

• Dismissal of the employee;

   

• Any unfavourable change in the conditions of employment of the employee;
• Any unfair treatment of the employee, including selection for redundancy, or;
• Any other action which is prejudicial to his or her employment.

10. Remedies for penalisation/dismissal

Where an employee has less than one year’s service and is dismissed within the meaning of the Unfair Dismissals Acts, 1977-2001, he/she may refer the case to a Rights Commissioner under the Act.

Where an employee has more than one year’s service and is dismissed within the meaning of the Unfair Dismissal legislation, he/she may refer a complaint to a Rights Commissioner under the Act or to a Rights Commissioner/Employment Appeals Tribunal under the Unfair Dismissal legislation. However, relief may not be granted to the employee in respect of that penalisation under both Acts.

11. Redress available under the Act

An employee may refer a dispute in relation to an entitlement under the Act to a Rights Commissioner or to the Labour Relations Commission for adjudication. A decision of the Rights Commissioner can be appealed to the Labour Court for a legally binding determination.

A Rights Commissioner can do one or more of the following under the Act:-

• Declare that the complaint was, or was not, well founded;
• Require the employer to comply with the relevant provision of the Act;
• Require the employer to re-instate or re-engage the employee (including on a contract of indefinite duration);

   

• Require the employer to pay the employee compensation not exceeding two years remuneration.

In a case where the ownership of the business changes after the contravention to which the complaint relates, the new employer will be considered as the employer with reference to the above decision.

12. Appeals from a decision of a Rights Commissioner

The employer or employee may appeal the Rights Commissioner’s decision to the Labour Court within six weeks from the date on which the Rights Commissioner’s determination is communicated to the parties.

A complaint by a fixed term employee that a Rights Commissioner’s decision has not been implemented by the employer may be made by the employee concerned to the Labour Court within six weeks of the date on which the decision is communicated to the employee. The Labour Court will then issue a determination to the like effect of the Rights Commissioner’s decision. In the Circumstances, the Act precludes the Labour Court from hearing the employer concerned or other evidence in the case.

13. Appeals to the High Court

The party who took proceedings before the Labour Court may appeal to the High Court on a point of law only and the determination of the High Court shall be final and conclusive.

14. Amendment of the Employment Agency Act, 1971

The Act increases the finds set out in the Employment Agency Act, 1971, from IR£50 and IR£10 to €2,000 and €1,000 respectively.

Conclusion

As can be seen from the above, the Act introduces significant changes and obligations for all employers in relation to those employed under fixed term or specified purpose contracts. It will undoubtedly involve increased costs for employers and consideration should therefore be given to conducting a thorough audit of their contracts to ensure they are not in contravention of the provision of the Act.

Jennifer Cashman

Employment Law Department

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