Are You Entitled to a Contract of Indefinite Duration? Employed on Successive Fixed Term Contracts?

contract-of-indefinite-duration

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.

Objective Grounds

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

Continuous employment is defined in the First Schedule to the MINIMUM NOTICE AND TERMS OF EMPLOYMENT ACT, 1973 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.

Successive Employment?

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[1998] 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[2007] 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[1998] 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.

Objective Justification

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[1986] 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[2002] 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[2006] 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[2007] 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.

Determination

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.