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Fixed-term contracts: To consult or not to consult - the sequel

The Government has now confirmed that the expiry of fixed-term contracts will be specifically excluded from TULRCA’s remit.

Currently…

With many posts intrinsically linked to grants, specific funding streams or particular projects, fixed-term contracts are widely used in the Higher Education sector and, with public budgets being squeezed, universities are increasingly confirming the expiry of fixed-term contracts when funding ends. At the moment, where contractual expiries take place within a 90 day window during which other redundancies occur at the same establishment, there can be 20 or more proposed redundancies within a 90 day period: with the result that the non-renewal of the fixed-term contracts can involve the need for employers to consult on a collective basis in line with TULRCA.

The University of Stirling case clarified that in any instance where a decision not to renew a fixed-term contract was taken in the context of a wider business decision, that non-renewal would “count” for the purposes of section 188 TULRCA, whereas if the expiry of the fixed-term contract were simply to happen in the normal course of events, collective consultation obligations would not normally engage in respect of the non-renewal. As noted in our previous article, the University of Stirling decision left a good deal of scope for uncertainty.  

From April 2013…

Any lingering uncertainty will be cleared up in a few months because in December the Government announced that the expiry of fixed-term contracts will be excluded from collective consultation rules in legislation to be brought in by 6 April 2013.

At the same time, the Government announced that minimum periods of collective consultation are to be slashed from 90 days to 45 daysin cases where 100 or more redundancies are proposed within a period of 90 days or less. ACAS is also to be tasked with preparing new statutory guidance for employers. However, confirmation regarding fixed-term contracts will be of most interest to universities given the common usage of these contracts.

Our thoughts and some tips

Given that the very basis of a fixed-term contract is that the employee knows at the outset that a key term is the contract’s expiry at a particular defined point in time, most employers have (with some foundation) felt that the need to collectively consult in these circumstances was an unnecessary hurdle which reduced flexibility and ultimately prolonged periods of uncertainty for staff. Although it has not been universally welcomed, most universities will embrace this development as simplifying matters for all concerned and removing an unnecessary consultative burden.

All employers should remember, however, that in cases where an employee under a fixed-term contract has one or more years’ continuous service (or two or more years’ continuous service if their employment started on or after 6 April 2012), they will have acquired protection against unfair dismissal so the employer will still need to consult with them to effect a fair dismissal. Similarly, a non-renewal of a fixed-term contract which is tainted by discrimination in connection with any protected characteristic, such as sex, race, disability or age, will continue to be unlawful. Universities should take extra care to minimise these risks after April 2013 as there may be an increase in these claims from employees seeking redress by other means.

If you have any questions regarding fixed-term contracts or if you would like some more information, please get in touch with Clare Young at Clare.Young@dwf.co.uk or on +44 (0)151 907 3272 or Tim Scott at Tim.Scott@dwf.co.uk or on +44 (0)151 907 3152

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Tim Scott

Partner - Head of Employment (Liverpool)

I specialise in employment law and have wide experience of giving practical advice to employers in the private and public sectors on both contentious and non-contentious issues.

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