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The Employment Contract

Important Lessons from High Court Fixed Term Contract Case

A recent High Court case involving a teacher and a school board of management in an employment dispute is worth looking at. The case is The Board of Management of Malahide Community School v Conaty [2019] IEHC 486 and you can read the full decision of the High Court here.

The High Court decided that the fixed term contract that the school gave to Ms Conaty was void because it had the effect of depriving her or protections she had already acquired under statute, particularly the Unfair Dismissals Act 1977.

The focus of this piece, however, is not Ms Conaty’s case per se but what wider lessons we can learn from the decision.

Protection for employee waiving her employment rights

Section 2(2) (b) of the Unfair Dismissals Act 1977 is described in the act as an exclusion. The High Court has decided that it is, in fact, a waiver.
Section 2(2) (b) states,

(b) dismissal where the employment was under a contract of employment for a fixed term or for a specified purpose (being a purpose of such a kind that the duration of the contract was limited but was, at the time of its making, incapable of precise ascertainment) and the dismissal consisted only of the expiry of the term without its being renewed under the said contract or the cesser of the purpose and the contract is in writing, was signed by or on behalf of the employer and by the employee and provides that this Act shall not apply to a dismissal consisting only of the expiry or cesser aforesaid.

The Judge in this case held that if the employee is to sign a contract containing this waiver their consent needs to be given at the commencement of the employment and the consent must be informed.

The Court referred to section 13 of the Unfair Dismissals Act 1977 which states

 13.—A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of this Act) shall be void in so far as it purports to exclude or limit the application of, or is inconsistent with, any provision of this Act.

The High Court recognised that Freedom of contract is severely restricted by section 13 of the Act. Any provision in an agreement which purports to exclude or limit the application of, or is inconsistent with, any provision of the Act is void.

But how is this restriction on an employee ever contracting out of their rights allowed in, for example, settlement agreements?

The High Court recognised that However, there is case law which suggests that—at least in the context of settlement agreements—an employee may be entitled to waive their rights on the basis of informed consent.

Therefore, if an employee is to enter into an agreement, whether a contract of employment or settlement agreement, his/her informed consent must be obtained in advance, not retrospectively. This is an important lesson for employers to take from this case and it has wider application to employment settlement agreements.

Fixed term contract

For a contract to be classified as a ‘fixed term contract’ as envisaged by section 2(2)(b) the term of the contract must be fixed-that is, the termination date must be ascertainable at the outset.

And not reliant on variables or contingencies such as teaching hours continuing to be available and/or demand for the subjects continuing.

In this case the contract contained this clause,

“The temporary contract will commence on 30 August 2015* 8th October 2015 and will terminate of 31 August 2016 subject to satisfactory service during the probationary period. The temporary contract may be renewed for a continued period in the event that the allocated hours as specified above continue to be available and the demand for these subjects continues.”

The Judge decided that the contingencies set out in this clause meant that it was not a fixed term contract as the termination date was not ascertainable.

Conclusion

The lessons to be extracted from this case are important and of potentially wider application, especially regarding an signing a waiver of their rights and the possibility of employees claiming that they are not, in fact, on fixed term contracts by reason of the contingencies in their contract of employment.

Read the full decision in

The Board of Management of Malahide Community School v Conaty
[2019] IEHC 486