Recent High Court decision clarifies the concept of ‘fixed-term employee’

Background

The Protection of Employees (Fixed-Term Work) Act 2003 (the Fixed-Term Work Act) provides fixed-term, or temporary, employees with various rights and entitlements. One of these is that where an employee is employed on two or more fixed-term contracts, the aggregate duration cannot exceed 4 years without objective grounds. Otherwise, the contract will be deemed to be one of indefinite duration (i.e. a permanent contract). 

In the case of Maurice Power v. HSE, Mr Power was appointed Chief Financial Officer of the Saolta University Healthcare Group in 2012. In October 2014, he took up the role of interim Group Chief Executive until 31 March 2015, or until the role was filled on permanent basis, whichever occurred sooner. This was extended a number of times until, following a public competition for the role in which Mr Power was unsuccessful, he resumed his position as Chief Financial Officer in September 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 4 years. 

The issue for determination in the case was whether an existing employee of an organisation who fulfils a more senior role on a temporary basis is a 'fixed-term employee' for the purposes of the Fixed-Term Work Act. 

What did the Labour Court decide? 

The Labour Court held that the scope of the Fixed-Term Work Act is confined to those employees whose relationship with their employer will end when their fixed-term contract ends, thereby excluding Mr Power.

What did the High Court decide? 

The High Court examined the definition of "fixed-term employee" in the Fixed-Term Work Act, which is as follows: 

“Fixed-term employee" means a person having a contract of employment entered into directly with an employer where the end of the contract of employment concerned is determined by an objective condition such as arriving at a specific date, completing a specific task or the occurrence of a specific event". ¹  

The High Court found that this definition merely requires that the end of the contract of employment concerned is determined by an objective condition. It does not require that this must also have a consequence that the employment relationship is brought to an end. A contract of employment may qualify as a fixed-term contract notwithstanding that the relevant employee continues in the employment of the organisation thereafter, whether by transitioning to a further contract or reverting to an earlier one.

The High Court found that the Labour Court misconstrued the definition of "fixed-term employee" by interpreting a contract of employment as being synonymous with an enduring employment relationship. 

What does this mean for employers? 

When implementing successive fixed-term contracts (to include existing employees who are occupying roles on a temporary basis), employers need to ensure they are compliant with the provisions of the Fixed-Term Work Act and in particular those which provide that:

• on or before the date of renewal of a fixed-term contract the employer must inform the fixed-term employee, in writing, of the objective grounds justifying the 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, an employer must have objective grounds of justification, otherwise the contract will be deemed to be a permanent contract 

While the High Court's decision confirms that an employee can be a "fixed-term employee", even though they continue to be a permanent employee of the organisation, it is important to note that the judgment does not mean that an employee would be automatically entitled to remain in the temporary post. Existing employees occupying temporary roles on a fixed term basis are still subject to provisions of the Fixed-Term Work Act. Where a vacant post has been filled by an employee under successive fixed-term contracts with an aggregate duration of in excess of four years, an employer is entitled to assert objective grounds of justification for the use of successive fixed-term contracts. The High Court commented in that regard that any right to return to the original post would be a factor to be considered in deciding whether the successive use of fixed-term contracts is objectively justified. The justification 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 on this topic please contact Triona Sugrue, Knowledge Lawyer, or any member of the ALG Employment team.

Date published: 1 July 2021

1 but does not include (a) employees in initial vocational training relationships or apprenticeship schemes, or (b) employees with a contract of employment which has been concluded within the framework of a specific public or publicly-supported training, integration or vocational retraining programme