Does the termination of a fixed-term contract amount to unfair dismissal?

Article

26 January, 2018

The use of fixed-term contracts is widespread across many industries and business sectors. Whilst the mechanism behind this type of contract appears simple, dealing with the expiry of a fixed-term contract is not always straightforward.

The Employment Appeal Tribunal in Royal Surrey County NHS Foundation Trust v Drzymala has recently held that an employer's compliance with the Fixed-term Employees Regulations does not necessarily mean it will have acted fairly when deciding not to renew a fixed-term contract.

Facts

A locum consultant doctor had been employed on a series of fixed-term contracts. Before her contract was due to expire a permanent vacancy arose. The Claimant was unsuccessful at interview and subsequently received notice that her fixed-term contract would not be extended. The letter however made no reference to a right of appeal or any alternative employment. The Claimant raised a grievance in respect of this and eventually was allowed an appeal. The panel however concluded that an earlier appeal would have made no substantive difference to the outcome.

Decision

The EAT upheld the tribunal's decision that the Claimant's dismissal was unfair. The EAT rejected the Trusts argument that it had complied with the non-discrimination regime in the Fixed-term Employees Regulations and therefore the dismissal was fair.

Dismissals arising from the non-renewal of a fixed-term contract are subject to the usual principles governing unfair dismissal claims. The Trust's failure to pursue a discussion exploring alternative roles and to provide the Claimant with a timely right of appeal did not satisfy the test of fairness.

Guidance for employers

Employers should be careful how they handle the expiry of fixed term contracts.

If a fixed-term contract is not to be renewed employers should establish a potentially fair reason to rely on in good time before expiry of the contract and must follow a fair procedure.

Employers should be particularly mindful of dismissing an employee where they have sufficient continuity of service to bring an unfair dismissal claim.

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