New Supreme Court decision: The Fixed-Term Work Act applies to employees who “act up”
The Protection of Employees (Fixed-Term Work) Act 2003 (the Fixed Term Work Act) provides that where an employee is employed on two or more successive fixed-term contracts, the aggregate duration cannot exceed four years without objective grounds. Otherwise, the contract concerned will be deemed to be permanent.
In Maurice Power v. HSE, Mr. Power was appointed Chief Financial Officer of the Saolta University Healthcare Group in 2012. In 2014, he took up the role of Interim Group Chief Executive. This appointment was extended a number of times until 2019. He claimed an entitlement to remain in the post of Group Chief Executive on a permanent basis by virtue of having been employed in that post under successive fixed-term contracts with an aggregate duration of in excess of four years.
In 2021, the High Court held that Mr. Power was a "fixed-term employee" and therefore benefited from the protection of the Fixed-Term Work Act. Read our briefing on that decision here.
What did the Supreme Court decide?
The Supreme Court had to decide whether the High Court was correct that Mr. Power was a fixed-term employee during the period he "acted up". If he was, then the HSE would have to establish objective grounds justifying the renewal beyond four years.
The net question came back to the definition of "fixed-term employee" in the Fixed Term Work Act. The Supreme Court was satisfied that the High Court was correct in its approach. The Fixed Term Work Act refers to the contract concerned. In the Supreme Court's opinion, this is the contract operative at the relevant time, in this case a fixed-term contract.
The HSE advanced an argument that what occurred was in fact a variation of the original employment contract rather than a series of fixed-term contracts. The Supreme Court firmly rejected that argument. In its view, the original contract was either terminated or at least suspended, not varied.
The case will now be remitted to the Labour Court and it may consider whether the renewal of the successive fixed-term contracts was justified.
What does this mean for employers?
As set out in our briefing on the High Court decision, employers must ensure when implementing successive fixed- term contracts (including where existing employees occupy another role on a temporary basis) that:
- on or before the date of renewal of a fixed term contact, they inform the fixed-term employee in writing of the objective grounds justifying a renewal, as opposed to offering a permanent contract.
- where a fixed-term employee is employed on two or more fixed-term contracts and the aggregate duration exceeds four years, there are objective grounds of justification, otherwise the contract will be deemed to be permanent.
Objective grounds justifying a renewal must be based on objective transparent criteria, which respond to a genuine need, are appropriate for achieving the objective being pursued and necessary for that purpose.
For further information in relation to this topic, please contact Triona Sugrue, Knowledge Lawyer or any member of the ALG's Employment Law Group.
Date published: 5 April 2022