FIXED TERM CONTRACTS

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1 FIXED TERM CONTRACTS Document Status: Version: Approved V1 DOCUMENT CHANGE HISTORY Version Date Comments (ie. viewed, or reviewed, amended, approved by person or committee Approved 19-Sep-2006 Transition Board Approved V Reviewed by Policy Development Group & Partnership Forum and approved for all DPCT staff Approved SMT Reviewed by PDG Reviewed by Policy Development Group Authors: Document Reference: 30-July Ian Leather, Head of HR Operations Ian Leather/Z:work/Devon PCT Policies Review Date of approved document: EINA Linked Strategies, policies Dissemination Requirements YES All Managers and Administrators. Infopoint Devon PCT has made every effort to ensure this policy does not have the effect of discriminating, directly or indirectly, against employees, patients, contractors or visitors on grounds of race, colour, age, nationality, ethnic (or national) origin, sex, sexual orientation, marital status, religious belief or disability. This policy will apply equally to full and part time employees. All Devon PCT policies can be provided in large print or Braille formats if requested, and language line interpreter services are available to individuals of different nationalities who require them. Fixed Term Contracts, V1 Reviewed Page 1 of 9

2 CONTENTS Section Page 1 Introduction 3 2 Termination of a Fixed Term Contract upon Expiry 3 Appendices Appendix 1 Management Guidance The Use of Fixed Term Contracts 5 Fixed Term Contracts, V1 Reviewed Page 2 of 9

3 1.0 Introduction 1.1 The PCT Board is committed to the promotion of long term security of employment and to that end, has determined that fixed-term contracts of employment must only be used for the genuine organisational reasons listed below. Any exceptional variation must be approved by the PCT Senior Officer responsible for Human Resources The provision of "cover" for extended absence from work of a substantive (permanent) employee, through maternity or sickness leave, secondment or the career break/retainer scheme; The management of organisational change, ie to retain vacant substantive positions in case of the need to re-deploy permanent staff from services threatened with closure; For training purposes, ie when issued for a specific period of training; for specific operational contracts, ie research and development, projects, pilot schemes etc. 1.2 Fixed term contracts of employment must be issued for a maximum period of one year and where the period to be covered by the contract is greater than one year, must be reissued annually, (reference Section 197 Employment Rights Act 1996). 1.3 Successive Fixed term contracts may only be issued for a maximum period of 4 years after which permanent employee status will be granted automatically (Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, paragraph 8) Employees engaged under fixed term contracts are entitled to be treated no less favourably than colleagues engaged under similar permanent contracts (reference: Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002). 2.0 Termination of a Fixed Term Contract upon Expiry 2.1 Prior to any consideration to terminate the Fixed Term Contract upon its natural expiry, the manager must be satisfied that the fixed term worker has been notified of any suitable vacant permanent posts and has had the opportunity to apply for the vacancy. 2.2 That being the case, the manager must take the following steps in order to terminate the contract: Step 1 At least 4 weeks prior to the commencement of the contractual notice period, the manager must write to the employee advising them of the expiry of the fixed term contract and that consideration is being given to termination upon expiry. The employee must be invited to a meeting to discuss the matter and advised that they will be entitled to be accompanied at the meeting by a trade union representative, colleague or friend (not acting in a legal capacity). Fixed Term Contracts, V1 Reviewed Page 3 of 9

4 Step 2 The manager must next hold a meeting to discuss the reasons for the termination of the fixed term contract upon expiry. Whilst the presence of a HR Officer is not essential at this meeting, advice should be sought from HR Department before proceeding. At the meeting the employee and/or his/her representative must be afforded the opportunity to respond/challenge the manager s decision. At the end of the meeting, the manager must advise the employee of their decision, advise the employee of his/her right to appeal against the decision to the next more senior level of management and that the decision will be confirmed in writing. Step 3 If the employee wishes to appeal, the senior manager must arrange an appeal hearing at which he/she must be accompanied by an officer from HR Department. The employee will again be entitled to be accompanied by a trade union representative, colleague or friend (not acting in a legal capacity). Having heard from both parties to the appeal, the manager and the employee, the senior manager will, after taking HR advice, advise the employee of the final decision and subsequently formally confirm in writing. 2.3 Importantly, if the final decision is to proceed with termination of the fixed term contract upon its natural expiry, this 3 step process should be completed in sufficient time to enable the employee to be afforded his/her proper entitlement to the statutory or contractual notice period (whichever is greater). Fixed Term Contracts, V1 Reviewed Page 4 of 9

5 Appendix 1 MANAGEMENT GUIDANCE THE USE OF FIXED TERM CONTRACTS Fixed Term Contracts, V1 Reviewed Page 5 of 9

6 Introduction This guidance on the use of Fixed Term Contracts is provided to assist those managers considering using such contracts and offers advice on the Primary Care Trusts (PCT) policy, the associated legislation and the limitations on use that arise from both. Policy The Devon Primary Care Trust Board took a position on the use of Fixed Term Contracts in April 2001 through the adoption of PCT policy 1. The policy emphasise the PCTs commitment to the promotion of long term security of employment and as a consequence limits the use of fixed term contracts to four specific areas: o The provision of cover for extended periods of absence from work of a permanent employee for instance through maternity or sickness leave, secondment or career break; o The management of organisational change, i.e. to retain vacant permanent positions by filling with fixed term employees pending re-deployment of permanent staff from services threatened with closure; o For training purposes i.e. when used for a specific period of training; o For specific operational contracts, i.e. research and development, project work, pilot schemes etc. Importantly, the PCT policy does not allow the use of such contracts for probationary periods for two reasons. Firstly, the PCT has a process in place that enables managers to address the poor performance of an individual employee 2, whether permanent or fixed term that makes such measures unnecessary, and second unless the use of probationary periods was adopted for all permanent employee appointments, it could be considered discriminatory under employment legislation 3. The PCT policy also provides that fixed term contracts must be issued for a maximum period of one year and where the contract is greater than one year must be reissued annually. This is to comply with section 197 of the Employment Rights Act 1996, but more significantly to ensure that the circumstances of the fixed term employee are reviewed annually to ensure the appropriateness of the contracts use. Legislation The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations came into force on 1 st October The Regulations introduce a number of new rights for fixed term employees. They apply to employees retained under a contract of employment that is due to end on a specified date, or a specified event does or does not happen or on the completion of a particular task. Typical examples include employees on fixed term contracts to cover for maternity leave and shop assistants retained specifically to cover the Christmas period. Certain employees are excluded however, such as apprentices and students on work placements of one year or less as part of a higher education course. 1 Fixed Term Contracts Policy HR 33 2 Capability Policy HR 18 3 Sex Discrimination Act 1975 Fixed Term Contracts, V1 Reviewed Page 6 of 9

7 Less Favourable Treatment The Regulations provide that fixed term employees shall not be treated less favourably than comparable permanent employees, on the grounds that they are fixed term employees, unless the different treatment can be objectively justified by the employer. Employers will need to consider whether less favourable treatment is objectively justified on a case by case basis. Guidance from what might amount to objective justification is given in the Guide to Regulations published by the Department of Trade and Industry 4. A fixed term employee has the right not to be treated less favourably with regard to the terms of his or her contract (including benefits and pay) or by being subjected to any other detriment by any act or deliberate failure to act of the employer. In addition the Regulations specifically include the rights for fixed term workers not to be treated less favourably in relation to: Any period of service qualifications relating to any particular condition of employment (eg an increase in paid annual leave after three years of employment). The opportunity to receive training. The opportunity to secure permanent employment in the establishment including the right to be informed of available vacancies in the establishment by the employer (an employer should advertise internal of vacancies in a location or in a manner so to ensure that all employees are able to access them). Further, less favourable treatment will be assessed in one of two ways. Either each of the fixed term employees terms and conditions of employment should not be less favourable than the equivalent treatment given to their comparator permanent employee or the fixed term employees overall package of conditions should not be less favourable. Limitations of the use of Successive Fixed Term Contracts The Regulations limit the use of Successive Fixed Term Contracts to four years (without objective justification). Consequently, if fixed term employees have their contracts renewed, or if they are re-engaged on a new fixed term contract when they already have a period of four or more years of continuous employment (service prior to 10 th July 2002 does not count towards this period of four years), the renewal or new contract will automatically become a permanent contract. This is acknowledged with the PCT policy. Given that the Regulations are not retrospective, no fixed term employee shall be able to claim permanent employee status until at least October Redundancy Rights The Regulations repealed the provisions enabling fixed term employees to waiver their right to a redundancy payment. Any waivers agreed before October 1 st 2002 will remain effective until the contract expires or is renewed. However, this does not apply within Devon PCT which never adopted a clause within fixed term contracts denying employees the right to a redundancy payment. 4 Fixed Term Contracts, V1 Reviewed Page 7 of 9

8 Statutory Employment Rights Where a fixed term contract expires on the completion of a particular task or the occurrence or non-occurrence of a particular event, the termination is now be treated in law as a dismissal (previously it was not). Consequently, after one year s continuous employment, employees employed under these types of contracts will be entitled to claim unfair dismissal and have the right to a written statement of reasons for dismissal. In addition, employees on fixed term contracts of three months or less now have a right to receive statutory sick pay, payments on medical suspension, guarantee payments and the right to receive and the duty to give a weeks notice after one months continuous service. Finally, a fixed term employee will have the right to ask their employer for a written statement setting out the reasons for less favourable treatment if they believe this may have occurred. The employer must provide this statement within 21 days. If fixed term employees believe they are being less favourably treated to a comparably permanent employee because they are on a fixed term contract or that their employer has infringed their rights under the Regulations, they may present their case to an Employment Tribunal. Statutory Procedures With effect from October 2004, employees on fixed term contracts have the right to consideration for alternative employment under the terms of the new statutory procedures for dismissal 5. Prior to any consideration to terminate the Fixed Term Contract upon its natural expiry, managers must be satisfied that the fixed term worker has been notified of any suitable vacant permanent posts and has had the opportunity to apply for the vacancy. That being the case, the manager must take the following steps in order to terminate the contract: Step 1 At least 4 weeks prior to the commencement of the contractual notice period, the manager must write to the employee advising them of the expiry of the fixed term contract and that consideration is being given to termination upon expiry. The employee must be invited to a meeting to discuss the matter and advised that they will be entitled to be accompanied at the meeting by a trade union representative, colleague or friend (not acting in a legal capacity). Step 2 The manager must next hold a meeting to discuss the reasons for the termination of the fixed term contract upon expiry. Whilst the presence of a HR Officer is not essential at this meeting, advice should be sought from HR Department before proceeding. At the meeting the employee and/or his/her representative must be afforded the opportunity to respond/challenge the manager s decision. At the end of the meeting, the manager must advise the employee of their decision, advise the employee of his/her right to appeal against the decision to the next more senior level of management and that the decision will be confirmed in writing. 5 Employment Relations Act 2004 Fixed Term Contracts, V1 Reviewed Page 8 of 9

9 Step 3 If the employee wishes to appeal, the senior manager must arrange an appeal hearing at which he/she must be accompanied by an officer from HR Department. The employee will again be entitled to be accompanied by a trade union representative, colleague or friend. Having heard from both parties to the appeal, the manager and the employee, the senior manager will, after taking HR advice, advise the employee of the final decision and subsequently formally confirm in writing. Importantly, if the final decision is to proceed with termination of the fixed term contract upon it s natural expiry, this 3 step process should be completed in sufficient time to enable the employee to be afforded his/her proper entitlement to the statutory or contractual notice period (whichever is greater). Non-Renewal not Inherently Discriminatory In Department for Work and Pensions v Webley the Court of Appeal (CA) had to consider whether a failure to renew a fixed term contract could in itself give rise to a claim under the Fixed Term Worker Regulations for unfavourable treatment.. According to the CA, once it is accepted that fixed term contracts are not only lawful but are recognised in the preamble to the European Working Time Directive as responding in certain circumstances to the needs of both employers and workers, it follows that the termination of such a contract by the simple passage of time cannot, of itself, constitute less favourable treatment. It is of the essence of a fixed term contract that it comes to an end at the expiry of the fixed term. This judgement makes it clear that a refusal to renew or extend a fixed term contract will not by itself be grounds for a claim for less favourable treatment under the Regulations. Recommendations Notwithstanding the above, the potential for claims arising under the Fixed Term Worker Regulations mean that the disadvantages to employers of using fixed term contracts will in many cases now outweigh the advantages. Managers should therefore review their use of fixed term contracts and restrict such use to the situations detailed with PCT policy HR 33. Further Information and Advice Further information on all the matters contained within this guidance can be obtained from the Department of Trade and Industry website, or the Advisory Conciliation and Arbitration Service website, or by contacting Ian Leather telephone Ian Leather 4 th April 2005 Fixed Term Contracts, V1 Reviewed Page 9 of 9

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