Good news for employers using fixed term contracts

Good news for employers using fixed term contracts

Published:

Author: Helen Burgess

The Court of Session has confirmed that the expiry of fixed term contracts do not trigger the requirement to collectively consult with appropriate representatives.

What the law says

Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA") specifies that "where an employer is proposing to dismiss as redundant 20 or more employees .. the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals". When deciding whether a dismissal amounts to a redundancy dismissal it is necessary to consider whether the dismissal is for "a reason not related to the individual concerned" (section 195(1) TULRCA). If it is not, then it will be deemed to be a dismissal for redundancy for the purposes of triggering collective consultation obligations.

Summary of the case

In University College Union v University of Sterling the issue arose as to whether the obligations to collectively consult under TULRCA were triggered by the expiry of certain fixed term contracts.

The four claimants were all employed under fixed term contracts - one for a post-doctoral research assistant which ended when the funding was exhausted, one a contract to co-ordinate and deliver three undergraduate modules in a particular semester which ended at the end of the semester, one a contract for maternity cover and one a contract for specific research projects again dependent on funding.

At first instance, the Scottish Employment Tribunal found that the expiry and non-renewal of the fixed term contracts was not a reason related to the individuals concerned, but rather because of particular business circumstances, and that therefore the four dismissals could be included in calculating the "20" trigger for collective consultation purposes.

The Employment Appeal Tribunal ("EAT") disagreed, and the Court of Session has now upheld the EAT's reasoning. In particular, the Court of Session found that the fixed term contracts had been entered into voluntarily by the employees and that the terms of the contracts were specific to the employees. It therefore followed that at least one of the reasons for dismissal related to the fact that the employee had agreed to accept the contract would come to an end at a particular time or on the occurrence of a particular event. The duration of the contracts related to specific matters, specific to the particular contract and the particular employee. In these circumstances the dismissals were related to the individual concerned and therefore did not count towards the numbers for collective consultation purposes.

Practical effect

Following the EAT decision, the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 was implemented to amend TULRCA. As a result, since 6 April 2013, where an employer is proposing to dismiss 20 or more employees at one establishment within a 90 day period, its proposed dismissal of employees on fixed-term contracts "at the agreed termination point" are excluded from collective redundancy consultation obligations.

This decision (and the amendment) is welcome news for organisations regularly contracting with employees on a fixed term basis, such as in the education sector. However, there is a word of warning - the Court of Session recognised that there could be circumstances where a substantial number of fixed term employees have their contracts terminated earlier than the original agreed date because the employer's work diminishes. In such a situation the reason for the dismissal has nothing to do with the individual employees but is based on the employer's need for their services, and therefore the dismissals would count towards the trigger for collective consultation. Employers should therefore always consider (a) the reason why; and (b) the date when, a fixed term contract is ending to decide whether or not it relates to the individual employee.