Fixed Term Contracts
If I was working on a fixed term contract, and I wasn’t a teacher, I would be really incensed.
Let me explain.
In order for a worker on a fixed term contract to be entitled to a contract of indefinite duration-similar to a permanent contract-the law states that 2 conditions must be met.
Firstly, that I have been employed on at least 2 fixed term contracts.
And secondly, that I have at least 4 years continuous employment in the position. (Source: Protection of Employees (Fixed-Term Work) Act 2003).
But that’s not the case for teachers.
Because since December, 2013 teachers only required 3 years’ continuous service to qualify for a CID (Source: Circular letter 64/2013) .
And things are about to get better.
Expert Group Recommends Big Improvement for Teachers
Because this week a report by an “expert group”, chaired by Senior Counsel Peter Ward, established under the Haddington Road agreement to look at public sector pay and productivity promised to make life even better for teachers.
One of its recommendations is that teachers become entitled to a CID after only 2 years continuous service.
So an ordinary worker who isn’t a teacher needs 4 years continuous service to qualify for a CID. A teacher currently only needs 3 years and will only need 2 years from the beginning of the 2015 school year.
And it gets better for teachers.
Because one of the ways that an employer can prevent an employee from being entitled to a CID is if he can objectively justify the non awarding of a CID. One way this objective justification could arise is if the employee was covering or filling in for someone on a career break or secondment.
But thanks to the “expert group” this barrier won’t stand in the way of teachers.
Because they recommend:
“With regard to teachers covering for others on a career break or secondment, the report recommends that these individuals should not be disqualified from entitlement to a contract of indefinite duration on that ground.”
The law surrounding the entitlement to a contract of indefinite duration has been set out in Statute since 2003 with the Protection of Employees (Fixed Term Work) Act 2003. Remarkably this law hasn’t applied to teachers since December 2013.
Is this fair?
Is it moral?
Do teachers endure such ghastly working conditions compared to other workers that this non application of the law is justified?
It would be hard to make that argument for 3 reasons:
- A job for life
- A good pension
- Incredible holidays.
The Minister for Education (and former teacher), Jan O’Sullivan, has agreed to implement the recommendations of the expert group.
She will hardly meet with any resistance at the cabinet table from the Taoiseach or Minister for Finance who are both former teachers.
What do you think?
Fixed term employees are employed on the same type of contract-either a fixed term contract or a specified purpose contract.
A fixed term contract is one where the end date of the contract is known at the outset whereas a specified purpose contract is one which terminates on the occurrence of a specific event or cessation of a specific purpose.
The Employment Equality Acts apply to all employees, regardless of their length of service.
So fixed term employees are protected from indirect discrimination by virtue of their fixed term status.
The Protection of Employees (Fixed-Term work) act, 2003 offers significant protection to fixed term workers and the purpose of this legislation is
- to ensure that fixed term workers are no less favourable treatment than their comparable permanent counterparts and
- to prevent employers from abusing employees by employing them on a series of successive short fixed term contract.
Prior to this legislation fixed term employees were protected by the Unfair Dismissals Acts and the Employment Equality Acts.
A fixed term employee is defined in the Protection of Employees (Fixed-Term work) act, 2003 as:
|“fixed-term employee” means a person having a contract of employment entered into directly with an employer where the end of the contract of employment concerned is determined by an objective condition such as arriving at a specific date, completing a specific task or the occurrence of a specific event but does not include—|
|(a) employees in initial vocational training relationships or apprenticeship schemes, or|
|(b) employees with a contract of employment which has been concluded within the framework of a specific public or publicly-supported training, integration or vocational retraining programme;|
However fixed term workers are excluded from the protection of the Unfair Dismissals Acts by virtue of the fact that the contract has come to an end (either by expiry of the term or the arrival of the specific purpose event) but only provided three conditions are met:
- The contract was in writing
- The contract states that the Unfair Dismissals act will not apply to a dismissal which occurs only as a result of the end of the contract arriving
- The contract was signed by both employee and employer.
It is worth noting that the Employment Appeals Tribunal (EAT) are quite strict on these conditions being met in order to avoid an unfair dismissal award being made against the employer.
The above exclusion does not apply to dismissal during the term of the fixed term contract, provided of course the employee has the necessary period of continuous service (1 year).
There is an anti-abuse provision in the Unfair Dismissals (Amendment) Act 1993 also which prevents the employer from giving the employee a series of fixed term contracts.
As an employee can also successfully claim for unfair dismissal if he/she has been employed on more than one fixed term contract and the gap between contracts is less than three months and the last contract was granted in an attempt to avoid liability under the Unfair Dismissals legislation.
Renewal of fixed term contracts
It has been held by the Labour Court that the non renewal of a fixed term contract will not, of itself, give rise to a claim of less favourable treatment under the act.
The Act also provides that where an employer proposes to renew a fixed term contract the employee shall be informed in writing, not later than the date of the renewal, of the objective grounds justifying the renewal of the fixed term contract and the failure to offer a contract of indefinite duration.
(See also contract of indefinite duration-are you entitled to one after successive contracts of employment?)
Successive fixed term contracts
Generally there is a limit of four years on the length of successive fixed term contracts with the same employer or associated employer.
However there is no limit on the duration of the 1st fixed term contract. This limitation of four years refers to “continuous employment” in fixed term contracts and this definition has been well tested as to what is considered continuous and otherwise.
Section 9 deals with the definition of continuous employment within the context of the fixed term work act.
Less favourable treatment and objective justification
Where an employee on a fixed term contract is treated less favourably than his permanent counterpart with respect to one term of his contract this can be objectively justified if
- It arises from a real need on behalf of the employer
- Is appropriate to achieve the objective
- Is necessary to achieve the objective.
Otherwise one of the main objectives of the legislation is to ensure that fixed term employees are given parity of treatment in respect of their conditions of employments as comparable permanent employees.
Section 5 of the Act defines what a comparable employee is:
The Labour Court has held that a fixed term employee does not have an automatic right to have the contract renewed on its expiry and that the non renewal of a fixed term contract will not, of itself, constitute less favourable treatment within the meaning of section 6 of the Act.
Other obligations of employers re fixed term employees
Some other obligations of employers include
- The employee must be notified in writing as soon as possible of the objective condition ending the contract. This may be arriving at a specific date or the occurrence of a specific event.
- The employer must inform the employee of vacancies and training opportunities to avail of a permanent job should one arise.
Fixed term employees may make a complaint to a Rights Commissioner in the first instance should a breach of their rights occur; the next step would be and appeal to the Labour Court and then to the High Court (but only on a point of law). The time limit is 6 months or 12 months in exceptional circumstances.
Section 13 of the Act prohibits penalization of the employee by the employer for making a complaint.
Redundancy of fixed term workers
A fixed term employee may be redundant within the meaning of the Redundancy Payments Acts on the expiry and non renewal of his/her fixed term contract.
Fixed term contracts are very common in the teaching profession in Ireland.
This is due to a number of factors including
• The DES (Department of Education and Skills) sanctioning temporary teaching posts for a school year, rather than approving permanent posts or contracts of longer duration
• Teachers taking leave from the school on a career break, maternity leave, sick leave, carer’s leave, parental leave, job sharing, secondment etc. with the subsequent need for the school authority, such as the Board of Management, to find a replacement.
This replacement will be given a fixed term contract.
The teacher’s contract of employment will be with the managerial authority of the school such as the VEC committee or Board of Management.
In the primary education sector the Board of Management of the school will be the employer, even though the teacher is paid by the DES.
For Boards of Management in the Primary education sector, all the normal rules and laws discussed elsewhere on this site apply when granting a fixed term contract. Additionally, there may be the requirement to make a job offer subject to certain conditions, eg
- approval of the Patron (where necessary),
- Garda vetting,
- registration with the Teaching Council,
- a certificate to teach Religious Education (if appropriate),
- pre employment medical screening by Medmark,
- and approval of the Minister for Education and Skills.
See also equality and discrimination in the workplace which sets out the legal grounds for schools to discriminate on religious grounds when taking on employees.
Fixed term contracts for teachers will fall into one of two categories:
• Fixed term where the duration of the contract is known or
• Specified purpose contract where the end date may be uncertain (such as maternity leave cover or illness cover).
Fixed term contracts for teachers will normally not exceed the school year, which runs from 1st September to 31st August.
It is critically important for the Board of Management to inform the teacher in the contract why they are being employed on a temporary basis, rather than being offered a permanent contract or a contract of indefinite duration, and how the contract will be determined/terminated.
Here is an example of a clause you may use when granting a contract to a teacher who will be covering for a teacher on a career break:
This contract is a Fixed-Term Contract of …. duration and is offered due to the absence of a permanent teacher in the school who is currently on career break. The contract will end on the termination of the career break. A career break can be sanctioned for a period of 1 year with annual application to renew up to 5 years.
In addition, where the Board decides to renew a fixed term contract, it is vital to inform the teacher in writing beforehand why it is not offering a permanent contract and to set out the objective justification for this.
This notice in writing should be given to the teacher at the latest by the date of renewal.
Renewal of Fixed Term Contracts
Renewal of a fixed term contract may lead to the entitlement to a contract of indefinite duration arising. (Click the link to see the circumstances where a CID may arise)
All of the other protections and obligations arising from the Protection of Employees (Fixed Term Work) Act 2003 will, naturally apply.
(See Department of Education and Skills-employing a teacher )
For a more detailed look at fixed term contracts…
Recommended: Education Law in Ireland
Haddington Road Agreement and Contracts of Indefinite Duration
The Haddington Road agreement saw some significant changes brought some significant changes to a teacher’s right to a CID and reduced the service requirement from 4 years to 3.
A contract of indefinite duration (CID) is similar to a permanent contract but is not defined in statute. It arises by operation of law under the Protection of Employees (Fixed Term Work) Act, 2003.
The Protection of Employees (Fixed Term Work) Act, 2003 provides under section 9(3) that a contract of indefinite duration will arise by operation of law if a contract is awarded in breach of sections 9(1) or 9(2) of the act.
What this means as follows: If an employee is employed on 2 or more successive fixed term contracts in continuous employment for a period of 4 years then any attempt to give that employee a further fixed term contract is unlawful and void and the employees is entitled to a contract of indefinite duration.
There is one major caveat here though: if the employer can justify the award of a further fixed term contract on objective grounds then there is no breach of the Protection of Employees (Fixed Term Work) Act, 2003 and no entitlement to a contract of indefinite duration.
What are objective grounds justifying the renewal of a fixed term contract and not the granting of a contract of indefinite duration?
Objective grounds are grounds that are objectively justifiable by the employer:
1. They must correspond to a real need and legitimate objective of the employer
2. They must be appropriate to achieve this objective
3. They must be necessary to achieve this objective.
If an employer intends renewing a fixed term contract, and not granting a contract of indefinite duration, then the employer must state in writing to the employee the objective grounds for a further fixed term contract.
This written notice must be given to the employee at the date of renewal at the very latest.
Continuous employment is defined in the First Schedule to the Protection of Employees (Fixed Term Work) Act, 2003 and the issue of whether employment has been continuous is not entirely straightforward.
The Rights Commissioner service and the Labour Court have held that breaks of up to 3 months were not sufficient to break an employee’s continuous service.
Therefore it is strongly recommended that if you are an employer or employee you should obtain legal advice from a solicitor who is experienced in employment law matters.
Two very interesting relatively recent cases-2011 and 2013-of the Labour Court throw further light on the entitlement to a contract of indefinite duration.
The cases are DUBLIN INSTITUTE OF TECHNOLOGY AND EMILIA MIHAYLOVA (July, 2013)and REVENUE COMMISSIONERS AND WILLIAM BEARY (January 2011).
If you think you may have an entitlement to a contract of indefinite duration (CID) you should read both of these cases because they will give you a very good indication of how the Labour Court interprets the relevant legislation.
Here are some interesting extracts from both decisions:
In that regard it would seem that the concept of successive employment arises where a person is engaged to do the same job intermittently. Hence it could reasonably be said that where a person’s employment is terminated because there is no longer work available for him or her to do, and it is envisaged at the time of the terminations that his or her service will be required again in the future, and they are in fact re-engaged, the employment could be regarded as continuous.
Continuity of Service?
The fundamental effect of this provision is that all periods of employment are to be regarded as continuous unless broken by dismissal or resignation. Hence successive periods of employment, which are not continuous in the literal sense, because they are broken by, for example, lay-off or authorised absence, are deemed to be continuous. It is accordingly clear that the words “continuous” as used in the Act, has a special meaning which is different to its ordinary or dictionary meaning. As so defined the word can, in certain circumstances, have a meaning more akin to the ordinary meaning of the word successive.
In that context it is necessary for the Court to consider if the Claimant was employed on a serious separate contracts, each of which was terminated by dismissal, or whether the period between contracts can be regarded as lay-offs thus preserving the continuity of the employment within the statutory meaning accorded to that term.
There is authority for the proposition that the concept of lay-off can have wide ambit. The High Court, in An Post v McNeill ELR 19, accepted that a lay-off is not subject to any temporal limitation. InIrish Shipping v McAdams,Unreported, High Court, Murphy J. 30th January 1987, the Court declined to accept that the Employment Appeals Tribunal had erred in law in finding that two of the Claimants were on lay-off at a time when they were actually in the employment of another shipping line. Moreover, the Court is obligated, as a matter of European law, to interpret and apply the relevant provisions of domestic law, as far as possible, so as to achieve the result envisaged by the Framework Agreement annexed to the Directive. As is clear from Clause 5.1 of the Framework Agreement, the result envisaged by the Directive is to prevent the abuse ofsuccessivefixed-term contracts. This suggests that the Court should seek to interpret, as far as possible, the expressioncontinuous, as used in the Act, as coterminous with the expressionsuccessive, as used in the Framework Agreement.
In relation to the facts of the instant case Counsel for the Respondent correctly submitted that the expiry of a fixed-term contract without its renewal is a dismissal. Hence, on the literal application of the First Schedule of the Act of 1973 there could be no continuity between one fixed-term contract and the next unless it was immediately renewed. In the Court’s view such a result would be at variance with the object pursued by the Directive and could not be adopted.
The alternative and better approach is to construe the First Schedule of the 1973-2005 Act so as to produce the result envisaged by the Directive. In that regard it would seem that the concept of successive employment arises where a person is engaged to do the same job intermittently. Hence it could reasonably be said that where a person’s employment is terminated because there is no longer work available for him or her to do, and it is envisaged at the time of the terminations that his or her service will be required again in the future, and they are in fact re-engaged, the employment could be regarded as continuous. This would be to adopt an extended and somewhat more liberal interpretation of the term ˜lay-off” such as was done in Department of Foreign Affairs v A Group of Workers ELR 332. While s.11 of the Redundancy Payments Act 1967, which defines the notion of law-off for the purposes of both that Act and the Act of 1973, requires that notice of the employers belief that the cessation of employment will not be permanent be given, the law has long accepted that notice can be actual, constructive or imputed.
For all of the reasons set out above the Court is satisfied that for the purpose of ensuring that the Act is applied in harmony with the Directive a purposive or theological construction should be to applied to the notion of lay-off in the circumstances of the instant case. On that construction where it can be shown that at the time the Claimant’s assignments ceased it was probable that the cessation in employment would not be permanent, a lay-off came into being. On this construction it could be held that constructive notice to that effect was given by virtue of the facts known to both parties at the relevant time.
It is clear that on each occasion on which the Claimant’s employment ceased it was because the purpose of the contract has come to an end, either because a project had been completed or because the person for whom he was providing cover returned to work. In either case the employment ceased because the Respondent no longer had work available for the Claimant to do. Hence, the net question arising is whether the breaks in service are to be regard as lay-off or as dismissal followed by re-employment under a new contract. This is essentially a question of fact and degree. It turns on whether, at the time each assignment came to an end, it was reasonable in the circumstances then prevailing to believe that the cessation would probably not be permanent. Obviously the standard of reasonableness does not require the parties to know with any degree of certainty that the employment will resume; it merely requires that they have reason to believe that it will probably resume.
Can a Lay-Off extend beyond 26 Weeks?
A further question which arises in this case is whether the break of 35 weeks in the Claimant’s employment between 20th February 2004 and 26th October 2004 is capable of being construed as a lay-off. The Rights Commissioner took the view that a break in excess of 26 weeks, even if a period of lay-off, breaks the continuity of employment. The Rights Commissioner formed this view based on her interpretation of paragraph 10 of the First Schedule of the Act of 1973.
Paragraphs 1 to 7 of the First Schedule relate to the circumstances in which employment is to be regarded as continuous. Paragraphs 8 to 13 deal with service which is to be regarded as computable. As already observed, Paragraph 1 of the First Schedule provides, in effect, that all service is to be deemed continuous unless terminated by dismissal or resignation. Paragraph 3 provides that a lay-off shall not amount to a dismissal. Consequently, a lay-off, regardless of its duration, does not break continuity of service. Paragraph 10 of the First Schedule deals not with continuity of service but with computability of service. The effect of this provision is that, for example, in computing the notice to which an employee is entitled under the Act of 1973-2005, periods of service while on lay-off which exceed 26 weeks are to be disregarded. It is clear that while such service is not computable, an absence on lay-off in excess of 26 weeks does not break continuity of service. This was made clear by O’Sullivan J inAn Post v McNeill ELR 19. This is a matter of considerable importance in determining if the Claimant’s case falls to be dealt with under s.9(1) or s.9(2) of the Act.
It is clear that the Claimant was employed on a succession of fixed-term contracts from 1st September 2002 until 31st October 2008. The Court is satisfied that all of the breaks during this period, between the termination of one contract and the commencement of another, should properly be regarded as periods of lay-off. Hence, the Claimant was continuously employed by the Respondent, on successive fixed-term contracts, between the aforementioned dates.
Since the Claimant first entered employment with the Respondent prior to the passing of the Act his claim falls to be dealt with under s.9(1) of the Act. The Claimant completed his third year of continuous fixed-term employment on 31st August 2005. The Respondent was then entitled to renew the employment for a fixed-term on one occasion only. Hence, the renewal of the Claimant’s contract for a further fixed-term on 2nd October 2006 contravened s.9(1) of the Act. Consequently, prima facie, that contract became one of indefinite duration by operation of s.9(3) unless that renewal was saved by s.9(4) of the Act.
The Court must now turn to consider the question of whether the renewal of the Claimant’s fixed-term employment beyond the point normally permissible by s.9(1) was justified on objective grounds within the statutory meaning of that term.
Section 7(1) of the Act sets out the test for objective justification for the purposes of the Act. It provides: –
7.(1) A ground shall not be regarded as an objective ground for the purposes of any provision of this Part unless it is based on considerations other than the status of the employee concerned as a fixed-term employee and the less favourable treatment which it involves for that employee (which treatment may include the renewal of a fixed-term employee’s contract for a further fixed term) is for the purpose of achieving a legitimate objective of the employer and such treatment is appropriate and necessary for that purpose.
This formulation is derived from the jurisprudential criteria established by the ECJ against which indirect discrimination may be justified. This approach was first applied in a case of gender discrimination in Bilka-Kaufhaus GmbH v. Weber Von Hartz ECR 1607
It is essentially a three-tiered test which requires that the impugned measure must firstly meet a “real need” of the employer; secondly the measure must be “appropriate”to meet the objective which it pursues and finally the measure must be “necessary” to achieve that objective.This test imports questions of proportionality and whether alternate means having a less discriminatory effect are available to achieve the objective in view.
In essence the case law of the ECJ equates reliance on objective justification of a discriminatory practice with a derogation from the obligation to apply the principle of equal treatment. InLommers v Minister van Landbouw, Natuurbeheer en Visseri IRLR 430, at par 39, the ECJ pointed out that: –
according to settled case-law, in determining the scope of any derogation from an individual right such as the equal treatment of men and women laid down by the Directive, due regard must be had to the principle of proportionality, which requires that derogations must remain within the limits of what is appropriate and necessary in order to achieve the aim in view and that the principle of equal treatment be reconciled as far as possible with the requirements of the aim thus pursued (Johnston, paragraph 38; Sirdar, paragraph 26, and Kreil, paragraph 23).
InC-212/04Adeneler and others v. Ellinikos Organismos Galaktos IRLR 716 the ECJpointed outthat the objective grounds relied upon must relate to real and concrete circumstances concerning the work to which the contracts relate. The Court also drew a distinction between what it referred to as work which is intended to meet the fixed-and permanent needs of the employer and that which is intended to meet transient or purely temporary needs.
It is the Respondent’s case that the Claimant was employed to provide cover for temporary absences of permanent staff and that the service which he provided was, by its nature, intended to meet its temporary needs. It claims, moreover, that the need to provide temporary cover is a legitimate aim and that the use of fixed-term contracts is an appropriate and proportionate response to that need. The Respondent further submitted that it would be disproportionate to require it to employ staff over and above its normal need to meet occasional and transient vacancies that arise.
The Union argues that there is a permanent need for staff to provide cover for absences and that, in that sense, the work undertaken by the Claimant should be regarded as part of the fixed and permanent needs of the Respondent. In advancing that argument the Union referred to the large number of temporary staff employed by the Respondent at any time as evincing a real and permanent need for staff to provide cover for temporary absences.
The Union contends that there are no objectively justifiable grounds upon which the Claimant could be denied a contract of indefinite duration.
Type of Contract to which the Claimant could be entitled
In considering the question of objective justification the type of contract to which the Claimant would become entitled if s. 9(3) of the Act were to take effect in the normal course is highly relevant. The Union’s firm position is that the Claimant is entitled to a contract of indefinite duration as a permanent full-time clerical officer on the same terms and conditions as apply to all other clerical officers in the Civil Service. In that regard it is noteworthy that in the period from 6th January 2003 when the Claimant was first placed on a panel, to 31st October 2008, when his final placement terminated, he worked a total of 187 weeks. The total number of weeks in this period was 303. Hence he was actively employed for 62% of the available time. It is thus clear that the Claimant’s employment with the Respondent was essentially part-time in nature in that he worked less hours than a comparable full-time employee when measured over a period of up to 12 months. On this point the Court adopts the definition of part-time work contained at s.7(1) of the Protection of Employees (Part-Time Work) Act 2001which is a statute inpari materiawith the Act.
The decision of the High Court inMinister for Finance v McArdle ELR 165 is authority for the proposition that where a fixed-term contract transmutes to oneofindefinite duration by operation of law the resulting contract is identical to that from which it is derived in every respect other than in regard to its tenure. Consequently a fixed-term worker cannot accrue a better contract than that which he or she held on a fixed-term other than in respect to the circumstances in which the contract will come to an end. It would seem that in circumstances in which the Claimant was only employed for approximately 62% of the time of a full-time clerical officer he could not accrue, by operation of s.9(3) of the Act, a contract which would entitle him to employment in a full-time capacity.
Based on this employment pattern it appears that the requirement for the Claimants services, throughout the period of his employment, was intermittent and irregular. Against that background there would appear to be real and concrete circumstances concerning the nature of the service which the Claimant provided over the currency of his employment which could amount to objective justification for not affording the him the type of contract which he seeks even if he could accrue such an entitlement under the Act. In particular, the Court is satisfied that the Respondent is pursuing a legitimate need in not recruiting more regular full-time clerical officers that are necessary for the discharge of its revenue collecting functions while maintaining arrangements for the filling occasional vacancies as they arise. Moreover, the engagement of staff as and when required is an appropriate means of achieving that objective and appears to be the only practical way in which the objective can be pursued.
Accordingly, the Court is satisfied that there were objective grounds which justify the Respondent’s failure to appoint the Claimant to a permanent full-time clerical post.
However, as the Court has found, the Claimant accrued a prima facie entitlement to a contract of indefinite duration by reason of the duration of his employment on fixed-term contracts. The grounds relied upon by the Respondent as providing objective justification for not affording the Claimant such a contract are valid in so far as they relate to the type of full-time post which he claims. However, the Court cannot accept that the reasons advanced as objective justification (the burden that would be imposed on the Respondent by having to employ full-time permanent staff to meet occasional and transient vacancies) could apply with equal force if, as appears to be the case, the only type of contract of indefinite duration which the Claimant could have accrued would be one which mirrored the pattern of his fixed-term employment.
At the request of the Court both parties made submission on the type of contract to which the Claimant would be entitled if successful in his claim. Both parties rejected the notion that the Claimant could have a form of permanent or indefinite duration contract to provide relief cover in accordance with the pattern previously obtaining. In these circumstances the Court must hold that the by operation of s.9(4) of the Act the Claimant did not accrue an entitlement to a contract of indefinite duration in the post of full-time clerical officer.
For the reasons set out herein the Court determines as follows:-
The Claimant did not accrue a contract of indefinite duration by operation of s.9(3) of the Act.
Revenue Commissioners and William Beary, 2011, Labour Court
Teachers and Contracts of Indefinite Duration
The rules for teachers and their entitlement to a contract of indefinite duration are changed since the Haddington Road Agreement. You can read more about teachers and fixed term contracts here.
It’s true, you know.
The foundation stone of the employer/employee relationship is the employment contract.
So, it’s critical from day one, and becomes even more important if there is a dispute.
It is vital that it is drafted correctly, especially from the employer’s viewpoint.
This extensive article looks at the contract of employment in Irish law and some of the critical issues which arise in the employment relationship.
It will also look at
- terms of employment,
- the express terms you should include
- who is a “deemed employee” and why it matters
- changing a contract of employment,
- termination of the contract,
- minimum notice periods,
- the difference between a contract of service and contract for services,
- issues prior to employing someone
- and more.
The employment contract is the source of much misunderstanding and strife between employers and employees.
Even though legislation has come to play a huge role in the employment relationship the legal relationship between employer and employee is rooted in the law of contact. There is no requirement in law that the employment contract be in writing.
However, there is an obligation on the employer under the Terms of Employment (Information) act, 1994 to give employees a written statement of certain terms of employment (see below).
This legislation does not apply to employees with less than one months’s service or to employees who are expected to work less than 8 hours per week.
Who is an Employee in Irish Law? Is an Employment Contract Necessary?
It is vitally important for both employers and employees to understand who is considered to be an employee in Irish law versus the worker being an independent contractor.
Clearly an independent contractor will not enjoy the benefits of Irish employment legislation.
Contract of service or contract for services?
The vital difference is that an employee works under a contract of service while an independent contractor supplies his/her labour and/or services under a contract for services.
The status of the worker, in a dispute situation, will be determined by legal interpretation and some basic rules. Important decided cases in this area include
- Ready Mixed Concrete v Minister of Pensions and National Insurance and
- Henry Denny & Sons (Ireland) limited (t/a Kerry Foods) v Minster for Social Welfare
- Minister for Labour v PMPA Insurance Co. Ltd.
It is worth noting that regardless of the label put on the relationship by the parties the Courts will look at the facts of the situation and decide what type of contract exists. In making it’s decision the Court will be influenced by:
- Whether there is written evidence of terms
- Whether there is control over the worker as to how, what, when, why, and how the worker works
- Whether the employee provides his own labour/skill to the “employer” and cannot assign his duties to another.
The key areas therefore which a Court or tribunal will consider will be the aspect of personal service, the degree of control over the worker, and any written terms of the contract.
A Deemed Employee
A deemed employee situation will arise where a person is working for an employer through another agency or body.
That person will be a deemed employee of the person for whom they are doing the work. This situation will commonly arise where employment agencies place people in a work environment.
The employment agency must be one as defined by the Employment Agency Act, 1971 but this act defines an employment agency very widely. It is important to note though that the notion of a deemed employee only applies in relation to the application of specific statutes which provide for protection for a deemed employee.
However it can be a dangerous situation where a business does not know of their potential liability to a deemed employee until a problem occurs and the deemed employer can be held responsible for a dismissal over which he had no control or knowledge.
You might also be interested in the law surrounding temporary agency workers.
Partners are not employed by or with each other but may, as a partnership, have employees.
Ownership of a shareholding in a company does not prevent the owner from being an employee of the company. But a controlling shareholder may have difficulty establishing that he was an employee.
Prior to Contract
Before entering into a contract of employment there are three areas that an employer needs to consider carefully.
These areas can be broadly categorized as follows:
- Advertising the position
- Interviewing for the job
- Conditions precedent.
Advertising the job can be fraught with danger for the employer as it is easy to fall foul of employment equality legislation.
In addition the wording of the advertisement can be held to form part of the subsequent contract of employment.
Interviewing for the job
Employers need to be careful not to ask questions which fall foul of the Employment Equality Acts, 1998-2004 and avoid asking questions that could be considered discriminatory on the grounds of age, marital status, sex, and the other grounds referred to in employment equality legislation.
Keeping note of the interview is a smart practice as what is said at interview (by both parties) can be held to form part of the subsequent contract.
The employer should make a job offer conditional on certain conditions being fulfilled, depending on the position.
These conditions may cover Garda vetting, clean driving licence, health to do the job, suitable references, registration with professional bodies, and others-this will depend very much on the nature of the work and position.
The areas of references and medical examinations can cause problems and the key principle always for the employers is that you have the employee’s consent to take up references and medical reports/evidence.
The Data Protection Commissioner has held that you need written consent to take up references. However there is no general requirement in law that an employer furnish a reference.
There is no reason why a prospective employee should not be asked to undergo a medical prior to a job offer being made even though it is common for employers to only require a medical examination after the offer has been made and accepted.
A pre-contractual closed shop is lawful under the Common law and European law.
Terms of Employment
The contract of employment in Ireland is made up of both express terms and implied terms with the Terms of Employment (Information) Act, 1994 stipulating that certain basic information must be given to the employee in writing.
This includes the names and addresses of both employer and employee, the place of work, the title of the job, pay, any terms relating to sick pay, periods of notice and many other basic details.
In every contract of employment, written or otherwise, there are 4 categories of implied terms which fall under the headings of
a) terms implied by custom/practice (depending on the industry)
b) terms implied by statute (right to redundancy, right not to be unfairly dismissed, right to notice, right not to be discriminated against as per Employment Equality Acts, right to breaks, annual leave, holidays as per Organisation of Working Time Act, 1997, protective leave including maternity leave, payment of wages as per Payment of Wages Act 1991, atypical workers such as part timers and fixed term workers protected by the Protection of Employment Acts, health and safety provisions as per Health and Safety at Work Act 2005)
c) terms implied by law (employers duty of care and employees duty of trust and confidence)
d) collective agreements in unionized employment.
Express Terms of Employment
The express terms of employment are those terms clearly agreed between the employer and employee and can be oral or in writing.
Terms of Employment (Information) Acts
The Terms of Employment (Information) Acts 1994-2001 provide that employees must be given a statement, signed by the employer, of certain of their terms and conditions of employment within 2 months of their employment.
What must be included in this statement?
- The names of the employer and employee
- The address of the employer
- The place of work (This can be a thorny issue if you need the employee to move to another location or provide geographical mobility in the course of employment and it has not been provided for in the contract of employment)
- Hours of work (this needs to be clear about shifts, overtime, work breaks, lay offs, short time, and so forth)
- The job title or nature of the work for which they are employed (Drafting this too widely can give problems when it comes to redundancy; drafting too narrowly can lead to practical, on the ground difficulties)
- The date of commencement of employment (when does employment start is an important question as most statutory entitlements will be dependent on the length of service)
- The duration of the contract and expiry date if the contract is a fixed term/temporary contract
- The rate of pay or method of calculation (the salary package and the breakdown between basic salary, commission, bonuses, allowances, and so forth should be set out)
- How often/the intervals at which pay will be paid
- Terms and conditions re paid leave (what is the position re holidays and is there extra days over and above those set down by statute in the Organization of Working Time Act,1997)
- Terms and conditions re illness/sickness or injury and pensions (what is the situation re sick pay; there is no general right to be paid while out sick but the contract can provide for it expressly or custom and practice of the industry/job can imply it but this may need to be proven if questioned)
- The period of notice obliged to be given by both parties
- If any collective agreement affects the contract
- Times of breaks/rest periods both daily and weekly
- The company’s pay reference period.
If the employer fails to provide this statement to the employee a claim can be made to the Rights Commissioner service who may order compensation of up to 4 weeks remuneration and require the employer to give the statement of terms to the employee.
In addition to the above statutory minimum terms and conditions it is prudent and advisable for the employer to include other terms in the contract dealing with
- Short time/lay offs
- Illness pay
- Retirement age
- Time off work
- A probationary period (cannot exceed one year)
- Bullying and harassment procedures
- Grievance and disciplinary procedures (a specified disciplinary procedure should be in place and a copy of this together with the grievance procedure should be given to the employee along with the contract/letter of offer)
- Company car
- Share options
- Retirement age (should be specified by the employer)
- Any restrictions re competition and setting up against the employer in the future using trade secrets/contacts. Note that common law implies a duty of loyalty in the employment contract; common law also protects confidential information and trade secrets in the absence of an express or written term in the contract covering this area. However there is no common law barrier to soliciting for business done by the employer once the employee leaves the employment.
- Email and internet use
In addition to the above, the employer must give new employees, within 28 days of starting employment, a written summary of the procedures to be used should it be necessary to dismiss them.
As an employer you need to be clear what terms and conditions are obligatory in the employment contract as a result of the Terms of Employment (Information) Acts and the additional terms and conditions which might be advisable and prudent for the employer.
Legal advice is recommended as the consequences of a badly drafted contract with an employee will be far more costly than the cost of having a properly drafted contract of employment by a legal professional.
Termination of the Employment Contract and Minimum Notice Periods
Providing for termination of the employment contract is an important term of the contract of employment, one which the employer needs to take care over, particularly the notice period.
There are a number of important considerations to think about such as
- The notice period
- The reason(s) for termination.
An agreed notice period is strongly recommended in all contracts of employment.
If none is specified then the employer is obliged to give “reasonable” notice. Reasonable notice will vary from contract to contract.
Minimum Notice Periods for termination
The statutory minimum notice periods on termination of employment are as set out in the Minimum Notice and Terms of Employment Acts 1973 to 2001 which are based on years of service of the employee.
13 weeks – 2 years 1 week
2 – 5 years 2 weeks
5 – 10 years 4 weeks
10 -15 years 6 weeks
over 15 years 8 weeks.
Employees are entitled to the above notice periods or pay in lieu except in cases of dismissal for misconduct where the employer is entitled to terminate the employment immediately without notice.
The employer on the other hand is entitled to at least 1 week’s notice from the employee, but this will depend on the contract.
Note: Both the employer and employee have the right to terminate the contract of employment without notice due to the misconduct of the other party.
Any claims in respect of breaches of the Minimum Notice and Terms of Employment Acts go to the Employments Appeal Tribunal which can award compensation to the employee for not receiving proper notice. (Note that if the employee was sick or on strike during the notice period no compensation is payable)
Reason for termination of the employment contract
Both employer and employee have a broadly similar right under common law to terminate the contract of employment. If notice is not provided for in the contract then “reasonable” notice should be given.
“Reasonable notice”, in the absence of a stipulated period of notice, will be decided by
- Custom and practice
- Length of service
- Age and experience of the employee
- Job role
- The particular facts of the case.
It is recommended to the employer that a notice period always be stipulated in the contract.
Giving notice of termination of employment contract
Some important points concerning notice:
- Notice can be given at any time including during leave or illness leave but not during maternity leave;
- It must be clear and unambiguous
- It can be in writing or orally (unless it is specified in the contract that it be in writing)
- The Minimum Notice and Terms of Employment Act, 1973 sets out minimum notice periods depending on the length of service
- The minimum period of notice in all cases is one week
- If an employee is dismissed for misconduct he loses his entitlement to notice under the Minimum Notice and Terms of Employment Act, 1973.
Damages following dismissal
In general punitive damages allowed following a dismissal will be restricted to remuneration to which the employee was entitled and not for any distress caused by the manner in which the dismissal has occurred.
Changing a Contract of Employment
Changing or varying the terms and conditions of a contract of employment can only be done with the agreement of the parties. It cannot be unilateral.
An employer is leaving him/herself open to a successful claim if he imposes changes to a contractual entitlement unilaterally. It is worth noting that agreement can be express, implied, or by acquiescence.
However an important distinction should be made between a work practice and a contractual provision or term of the contract.
Variation by the parties
Sometimes variation by one of the parties becomes necessary to give the contract commercial efficacy. If a term is so obvious that common sense would dictate that it must be included in the contract the Courts will imply it into the contract.
Variation by Trade Unions or a 3rd Party
What about variation of the terms of employment through the trade union negotiating on behalf of the employee? Generally employees will accept changes negotiated on their behalf by their trade union.
However a trade union cannot bind those members who have made it clear that they will not be bound by the changes-see Goulding Chemicals Ltd v Bolger , Irish Supreme Court.
Take a more detailed look at the legality of trade union negotiated variations of contracts.
Custom and Practice
Some contracts of employment will have terms of employment implied into them by custom and practice of the employment or industry.
For this to happen the custom must be
“so notorious, well known and acquiesced in that the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties” O’Reilly v Irish Press 
Contractual Right to Vary
Many employment contracts will contain a term reserving the right to the employer to vary or alter the terms and/or conditions of the contract.
However this does not give the employer the right to make unreasonable changes and courts and tribunals will always look to see if the change was necessary and reasonable.
It is important to note that if an employee does not object to a change and works away under the changed terms he/she may be held to have implicitly agreed to the changed terms and conditions.
On the other hand an employee could argue that he/she was simply being co-operative and this did not imply approval of the change. The best way for an employer to counter this is to bring any proposed change to the attention of the employee; if he/she does not he cannot slip changes in “under the radar” and claim acquiescence by the employee.
It is worth noting also that where an employer is entitled in law to make changes to contracts of employment employees are still entitled to engage in trade disputes to attempt to bring about change. This is the case even in companies where unions are not recognised as the Labour Court can be asked by the union to investigate the dispute.
Co-Operation and not variation
A distinction must be drawn between an employee co-operating in a change and acquiescing to a contractual variation. Courts will not allow employers to slip in changes unknown to an employee.
Even where the employer is legally entitled to take certain action employees may engage in a trade dispute and seek to persuade to bring about the changes they require.
Even in a “non union” employment the Labour Court can investigate a trade dispute where it is not the practice of the employer to negotiate with a trade union.
Collection agreements and contracts of employment? Read about the legality of collective agreements and the tests applied.
Amending the Terms of Employment in Ireland-historically
Terms and conditions of employment-are employers entitled to unilaterally vary such terms and conditions?
In short, the answer is no.
Where an employment contract does not expressly enable the employer to vary the terms of employment, employers may either:
1. Obtain the employee’s express agreement to the change (recommended);
2. Terminate the employee’s employment on due notice and offer re-engagement on new terms (not recommended); or
3. Attempt to impose the change unilaterally (not recommended).
Options 2 and 3 above are not recommended and leave the employer at significant risk to a successful claim for unfair/constructive dismissal/non payment of wages claims.
Unilateral variation of an employee’s terms and conditions of employment to the employee’s detriment may give rise to:
1. A claim of constructive dismissal under the Unfair Dismissal Acts 1977-2007 or at common law;
2. A claim for damages for breach of contract;
3. A claim in respect of an unlawful deduction under the Payment of Wages Act 1991;
4. A “trade dispute” under the Industrial Relations Acts 1946-2004,
5. Industrial relations issues, and
6. Injunctive proceedings to prevent the unilateral variation.
What is contractual, and not merely a work practice, may not be varied unilaterally.
Such variation must be agreed between the parties regardless of whether the term is express or implied.
In practice, whether or not an employee benefit constitutes a term or condition of employment may be somewhat academic if changing it is likely to give rise to industrial relations issues and human resources problems.
In Neville v Waters Munster Glass Ltd RP558/2003, the claimant, having refused to accept a reduction in salary and to work a reduced three day week, was consequently made redundant. Although the claimant argued that he had been unfairly dismissed, the tribunal held that a genuine redundancy situation existed.
It is clear from a UK case, GAP Personnel Franchises Ltd v Robinson UK EAT/0342/07, that where employees do not accept a unilateral variation by the employer, especially one that has an immediate impact (e.g. the reduction in pay or benefits), they should make it clear, preferably in writing, that they do not accept the change and are working under protest. Otherwise the employee may eventually be held to have implicitly accepted the change.
Amending terms of employment in Practice
In the course of varying terms and conditions employers should:
1. Maintain clear communication with employees;
2. Provide employees with reasonable notice of any variation to terms and conditions;
3. Be able to explain why the change is necessary and inform the employees of the alternative (i.e. a more formal re-structuring and ultimately possible job losses);
4. Consider whether the new terms can be imposed in stages as opposed to implementing all variations at once. This may help to ease the transition and allow employees to plan for the change; and
5. Consider whether an incentive can be suggested to assist employees in accepting the change. This does not necessarily have to be a financial benefit.
Employers’ Obligations and Contracts
Employers need to ensure that they have robust, legally sound contracts of employment in place for all of their staff.
There are 4 main reasons for doing so:
1. it is a legal obligation
2. you will need them for a NERA inspection
3. a well drafted contract will minimize the opportunities open to employees to bring costly and damaging claims against you as an employer
4. it makes good business sense to have clarity between both employer and employee as to their obligations and responsibilities.
We specialize in drafting employment contracts for employers in Ireland.
No matter how small or big your business or school is, we can draft contracts for your particular circumstances.
And we can review and advise on your existing contracts and ensure that you will have nothing to worry about should you be chosen for a NERA inspection.
We can provide you with a fast, no obligation quotation-contact us now and minimize the chances of costly employment related claims and grab some peace of mind to allow you concentrated on running your business or school.
Our contracts typically include the following terms:
- date of employment
- appointment and duties
- job specification
- probationary period
- hours of work
- annual leave
- illness/sick leave
- maternity, paternity, force majeure leave
- grievance, bullying, harassment, dignity at work, disciplinary
- internet and email
- data protection
- termination-notice and pay on termination
- health and safety
- short time and layoffs
- changes to the terms of employment.
However each employer’s situation is different and each employee is different.
So every contract we draft is an individual contract as opposed to a one size fits all affair.
Learn more about our employment law/HR services here.