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Guidelines On Contract Management Contracts of Indefinite Duration (V6)
Guidelines On Contract Management Contracts of Indefinite Duration (V6)
In the University of Limerick we employ permanent and temporary Faculty, Staff and
Researchers. To enable us to provide the best possible levels of service it is very
important that we recruit from the widest possible pool of applicants and have a fair
and transparent process for making these appointments. Selecting Faculty, Staff and
Researchers by way of open competition is therefore essential to achieving this
objective. Therefore we should make every effort to recruit staff on a permanent basis
through open competition. However there will always be a need to recruit temporary
staff so we must ensure we comply with the relevant employment legislation.
The Protection of Employees (Fixed-Term Work) Act 2003 which came into force on
the 14th July 2003 has had major implications for the employment of temporary staff
in the University of Limerick. There is a lot of confusion about the definition of fixed-
term and to whom the label applies. In the University fixed-term employees were
traditionally described as temporary and persons employed on contracts of indefinite
duration were traditionally described as multi-annual or permanent.
Fixed-term Contract
The Act stipulates that fixed-term employees must be informed which of the three
conditions (i), (ii) or (iii) above will apply to the ending of their contract. Therefore, at
the commencement of an employee’s temporary employment s/he should be provided
with a contract, which in addition to providing the standard information relating to the
terms and conditions of employment, should include information relating to the
employment circumstances and the objective reason which will bring about the
termination of their contract, e.g.
1• Reaching a specific date, e.g. 31st December 2010
Certain positions within the University of Limerick are not permanent and probably
never will be i.e. Research Post Docs. Therefore good practice in relation this staff
grouping would be to issue X (2/3/4/?) year non-renewable fixed-term contracts.
Research Post Docs should be informed of this in advance of taking up a research
post so they are fully informed and have no false expectations.
Specific Purpose Contracts
Many fixed-term employees are employed for a specific purpose the length of time
for which they will be employed may not be capable of being determined at the initial
appointment stage. For example, an employee might be employed in a post pending it
being filled in a permanent capacity through open competition. This type of fixed-
term employee should be issued with a specific purpose contract, which outlines the
specific purpose for which they are employed clearly stipulated on the contract and
the specific event which will bring about the contract’s termination.
Example 1: “You are employed pending the filling of the post on a permanent basis
through open competition. Your employment will terminate when the post is filled on
a permanent basis”.
Example 2: “You are employed to cover the career break of Mr John Smith. Your
employment will terminate upon Mr Smith returning to work at the termination of his
career break”.
Example 4: “You are employed to cover for Ms Celia Murphy while she is on sick
leave. Your employment with the University of Limerick will terminate when Ms
Murphy returns from sick leave. You are not being offered a contract of indefinite
duration as Ms Murphy is the permanent holder of this post”.
Example 5: (Funding dependent on fee income & customer demand e.g. Adult
Education): “The funding for this post is dependent on customer demand and fee
income. The continuation of your employment is dependent on the continuation of
such customer demand and fee income. Your employment will terminate in the event
that funding for the post is no longer available”. (Levels of Customer Demand & Fee
Income need to be defined in advance).
The University must also inform the employee in writing of the objective reasons (see
Appendix 2 – sample letter) why a new specific purpose contract is being issued and
the reason as to why s/he is not being offered a permanent contract. This information
must be set out in writing (separate to the employment contract) to the employee no
later than the date of the renewal. The University cannot retrospectively supply this
information to the employee.
Given the possibility of certain research projects being awarded no cost extensions
past the initial contract period, there is a risk that contracts of indefinite duration
would be created as a result. Therefore all contracts funded by research providers
that provide for no cost extensions (e.g. SFI) should be issued specific purpose
contracts to avoid the creation of contracts of indefinite duration should a no cost
extension be awarded.
Termination of Contracts
If the renewed contract terminates before the employee comes within the scope of S.
9(2) of the Act (4 years), then the employee has no further entitlement under the 2003
Act. However there are anti-avoidance measures that the employer needs to be aware
of which are outlined below.
Where the employer decides not to renew a fixed-term contract or offer a permanent
appointment, the decision for the termination must correspond with the information
provided in the contract, and the employment should not merely be terminated
because the timeframes as provided for in Section 9(2) are within sight.
Section 13(i)(d) of the 2003 Act prohibits an employer from penalising an employee
by dismissing him/her in circumstances “wholly or partly for or connected with the
purpose of the avoidance of a fixed-term contract being deemed to be a contract of
indefinite duration under section 9(3)”.
A decision to terminate could also give rise to a claim under the Unfair Dismissals
Acts, 1977-2007 if the employee perceives that the employment did not genuinely end
i.e. there is still an ongoing requirement for the work performed by the employee.
It is important that every fixed-term and specified purpose contract contains the
following language: -
“The Unfair Dismissals Acts 1977 to 2007 shall not apply to the termination of your
employment by reason only of the [expiry of this fixed-term contract/the completion of
the specified purpose of this contract] without it being renewed”.
Section 9(2) of the legislation states that where fixed-term employees are recruited
after the passing of the Act and are employed on two or more continuous temporary
contracts the total duration of these contracts may not exceed four years or the
contract will be deemed to be one of indefinite duration.
The question has been asked as to whether or not there is a distinction between
permanent employees and employees who acquire indefinite duration status under the
Act. This issue was addressed in a decision under this legislation by the Rights
Commissioner, who defined a contract of indefinite duration as follows:
“A person who has an expectation that subject to the normal date of
retirement in the employment, she will be retained in the employment and will
not be dismissed without there being any good reason such as misconduct or
unfitness for her position, or other compelling or unavoidable circumstances.
Any dismissal shall be achieved by the application of the agreed termination
arrangements for her employment or the application of the relevant Statute as
the case may be by reference to the comparable employee, in this case, an
established civil servant.
The Labour Court subsequently upheld this view.
There is no distinction in practical terms between either category of employee and the
term indefinite duration could be used to describe all employees who are not
employed on a fixed-term basis. It should be noted that indefinite duration/permanent
status does not mean that the employee’s employment cannot be terminated on
grounds of misconduct, capability, redundancy or any of the grounds set out in the
Unfair Dismissals Act, 1977-2007.
Conclusion
1 · Does there have to be objective justification for an employer to enter into a fixed-
term arrangement in the first place?
No, employers do not have to specify an objective justification for entering into a
fixed-term contract in the first place, although an objective justification has to be
provided for all renewals of the fixed-term contract and the failure to offer a contract
of indefinite duration.
Yes, there is nothing under the Protection of Employees (Fixed-Term Workers) Act,
2003, which prevents this. The Act simply prevents the use of successive fixed-term
contracts which exceed an aggregate duration of four years where there is no
objective justification. However, there is nothing to prevent a fixed-term contract for
a period, for example, of five years, from being entered into in the first instance.
3· Can you give an employee a fixed-term contract for five years if the project is a
five year project?
4· In reality, are there any circumstances in which you can treat contract of indefinite
duration staff differently to permanent staff.
The fact that a teacher was non-qualified was held to amount to objective justification
under the Protection of Employees (Part-Time Work) Act 2001 in Louth VEC –v-
Martin (2005). It depends on the individual circumstances of each case, but lack of
qualification is likely to be objective justification.
7· A person has been appointed for various periods of breaks for the last 3.5 years as a
locum, with no defined/specified weekly hours, providing cover for annual, sick,
study leave, i.e. as and when required. If it is found he/she is entitled to a contract of
indefinite duration, would he/she have to have specified weekly working hours? As a
locum, he may not be required every week, he is only required when a regular
employee is absent.
In the case of the HSE West –v- 90 Named Complainants, the Labour Court
determined that the contract of indefinite duration that has been offered by the HSE in
that case, which did not specify a minimum weekly working hours, was unacceptable
and that a contract of indefinite duration must specify a minimum number of weekly
working hours. In coming to its Determination, the Labour Court relied on the
Organisation of Working Time legislation which deals with zero hours contracts. In
that regard, regardless of whether a minimum number of weekly working hours is
specified in a contract of employment, the Organisation of Working Time Act, 1997,
states that where an employee working under a zero hour contract, works less than
25% of his/her hours in any week, the employee must be compensated. The level of
compensation depends on whether the employee got any work, or none at all. If
he/she got no work, the compensation should either be 25% of the possible available
hours or compensation for 15 hours work, whichever is less. If the employee got
some work, he/she should be compensated to bring him/her up to 25% of the possible
available hours.
8· Where an employee becomes entitled to a contract of indefinite duration but has not
been on a regular grade (with increments), how is he/she to be treated in the future for
pay and other benefit improvements?
9· If you are employing a new relief worker on an “if and when required” basis, must
you state a minimum number of hours in the contract?
No. However, the Organisation of Working Time Act 2007 provides for zero hours
contracts and regardless of whether you state a minimum number of hours or not, the
employee will be entitled to compensation.
10· Could a permanent worker bring a case if his/her conditions of employment are
less favourable than a fixed-term contract worker?
Not under the 2003 Act. However, the employee may have a valid claim if they can
prove that they are being discriminated against on one of the nine grounds outlined in
the Employment Equality Acts.
11· If you employ a person for a specific block of work for a definite period and it
transpires it is necessary to extend the period to complete the task, does that employee
have a right to be retained by the employer and assigned to other duties?
In essence, there is no difference. The 2003 Act uses the expression "contract of
indefinite duration" rather than "permanent". No position is permanent in the sense
that any contract of employment can be terminated in accordance with its terms and
provided the employer has a valid reason to terminate having regard to the Unfair
Dismissals Acts 1977 to 2007.
13· For a contract commencing after July 2003, is there any limit on the amount of
contracts that can be given within the four year limit?
No. An unlimited number of successive fixed-term contracts can be issued within the
four year time limit provided the employer at renewal date gives the employee a
written statement setting out the objective justification for renewing the fixed-term
contract and failing to offer a contract of indefinite duration. It would seem to be an
administrative burden to have numerous successive short fixed-term contracts of
employment and therefore best practice would dictate that an employer should give an
employee the longest fixed-term contract available in the first instance.
No. The issue of an “acting up” position is separate from the issue of an employee’s
entitlement to a contract of indefinite duration. However, it is very important that the
terms upon which an employee is required to fill a role on an “acting up” basis are
clearly set out in writing.
16 · If a fixed-term employee is terminated at the end of the contract, are there any
repercussions for the employer if he/she subsequently fills the job of another fixed-
term worker or makes the position a permanent one for the new incumbent?
This will very much depend on the individual circumstances. Section 13 of the 2003
Act deals with penalisation of employees and prohibits penalisation of the employee
by way of termination of a contract. If it could be shown that the termination of the
contract/dismissal of the employee was to avoid the employer’s obligations under the
2003 Act, then the employee would have a cause of action against the employer.
Furthermore, the employee may have a cause of action under the Unfair Dismissals
legislation if the Employment Appeals Tribunal was satisfied that the termination of
the fixed-term contract was purely to avoid obligations under the Unfair Dismissals
legislation.
Appendix 2
[Date of letter]
I refer to your fixed-term contract of employment, which is due to expire on [insert date].
The University would like to renew your contract of employment for a further fixed-term,
which will expire on [insert date] unless otherwise terminated in accordance with the
provisions of the contract.
The University is not in a position to offer you a contract of indefinite duration and is
therefore offering to renew your contract for a further period of [insert period e.g. 1 year] for
the following reason [insert reason – see examples above].
I enclose a further fixed-term contract for your review. Please respond to me in writing, to be
received by me no later than [insert date], confirming whether you accept this contract
renewal as well as the terms and conditions set out in the contract.
Yours sincerely,
_____________
[Insert name]
[Insert job title]