Fixed Term Contracts

In June 2002, Gillian accepted a one year fixed term contract to work for a small publishing company as a graphic designer. At the end of the contract, she was offered a two year fixed term contract. Gillian was hoping to be offered a permanent job but she liked the work and her colleagues, so she reluctantly accepted the fixed term contract. In 2005, at the end of her two year contract, Gillian’s boss said that he wasn’t allowed to take her on as a permanent employee but he could offer her another one year contract. Again, she accepted. In June 2006, Gillian’s boss told her that the business wasn’t doing as well as he had hoped and so he couldn’t offer her a year’s contract but could offer her a six month fixed term contract.

By now Gillian had mugged up on the law and so she gladly accepted the short contract. What did Gillian know that her boss did not? On 10 July 2006, Gillian became a permanent employee of the company even though she had only been given a six month fixed term contract.

The reason for this is that a little known provision of some 2002 Regulations came into effect on 10 July.

These say that an employee who has been employed on successive fixed term contracts from 10 July 2002 automatically becomes a permanent employee after four years, unless the employer can justify keeping him or her on a fixed term contract.

The fact that the company is apparently not doing as well as the owner had hoped is unlikely to justify keeping Gillian on a fixed term contract.

The reason for this law is to stop employers abusing the use of fixed term contracts. Generally such contracts should only be used when there is a specific job or project to be done. Thus when the job or project is finished, there is no more work.

Gillian’s job as a graphic designer is ongoing and so after four years on successive fixed term contracts, the law says that she is now a permanent employee. Her employers cannot ask her to leave simply because her six month contract she had comes to an end.

The lesson for employers only – only use fixed term contracts for fixed term work.

For employees, if you are only offered fixed term contracts, remember that when you pass the four year mark (which cannot start earlier than July 2002) you are likely to become permanent.

Published 27/09/2006.