Employment Law Bulletin February 2018

Unfair Dismissal Claims for Fixed Term Contracts

Non-renewal of a fixed-term contract constitutes a dismissal. Employers who opt not to renew such contracts, may still be vulnerable to claims of unfair dismissal provided the contract length exceeds two years and the employee has sufficient continuous service to bring a claim.

The case of Royal Surrey County NHS Foundation Trust v Drzymala involved Dr Drzymala who was a cancer specialist working as a locum for the Trust on a series of six month fixed-term contracts. She applied for a permanent position with the Trust but was unsuccessful and her final contract was not renewed.

The Tribunal held that Dr Drzymala had been unfairly dismissed as the Trust had not properly considered whether she could have been offered alternative work, and because she did not have the opportunity to appeal against the decision not to renew her contract.

The Trust appealed on the basis of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 which requires that fixed-term employees be treated no less favourably than permanent staff and be provided with information about permanent vacancies. The Trust argued that the dismissal was not unfair as it had complied with this obligation.

The EAT dismissed the Appeal. The EAT held that the 2002 Regulations were separate from the rules on unfair dismissal. Compliance with the Regulations did not mean that the dismissal was fair. The same standard of reasonableness that applies to the dismissal of a permanent employee, shall apply to the dismissal of a fixed-term employee. The EAT ruled that a fair reason for dismissal could include the expiry of the fixed term itself, but that in assessing reasonableness the Tribunal was entitled to consider issues such as whether the Trust could have provided alternative work and whether Dr Drzymala should have been given the opportunity to appeal.

The case illustrates an important lesson that employers may be subject to unfair dismissal claims if they opt not to renew fixed-term contracts. If the employees have the requisite two years’ service to bring a claim of unfair dismissal, employers must be careful to act reasonably and follow a proper process in concluding that the contract should not be renewed.