Breach of contract - fixed term appointments

Case ref: 11.2 / Feb '06

Summary of case

Our member Mr R and others responded to an advert for a permanent position with a major Government department.

However, prior to their interview they were told by letter that due to job cuts in the department over a four year period, the positions would no longer be permanent, but instead would be fixed term contracts of up to eighteen months.

The letter stated that if the applicant decided not to attend the interview, they should contact the named person, on the telephone number given. 

Mr R was subsequently interviewed and was offered a post. The appointment letter offered him a post of fifty one weeks, starting on 13 April 2004.

A letter dated 14 July 2004 subsequently sent with a contract, stated that he would be employed for up to fifty weeks, from 13 April 2004. The contract refers to the notice he is entitled to, being a period of two weeks.

Advice requested

The solicitor was asked if the Department's breach of procedures constitute a breach of contract and if Mr R and his colleagues have rights and/or a legal route to challenge the treatment?

Key advice provided by Thompsons

In providing advice the solicitor noted other monthly paid staff should receive 5 weeks notice. The solicitor was also working on the assumption that Mr R's contract had been terminated. 

The key advice provided was as follows: 

"Where a contract is fixed term, and the end date is identifiable from the contract, there is usually no need to give notice, where the intention is that the contract will simply expire at the end of the fixed term. In Mr R's case, and those of his colleagues, the end date of the contract is clearly identifiable, by calculating a period of fifty weeks (or whatever else is stated in the contract) from the start date of the employment. In Mr R's case, whilst the initial letters said fifty one weeks, the contract offered referred to a period of fifty weeks, and assuming that Mr R returned that contract, signed and dated, that is the period which will apply to his appointment. 

"I note that some of the contracts referred to the appointment being "up to one year". If the contracts are allowed to run for a period of one year, those individuals will have the right to take an unfair dismissal claim (though whether such claims would be successful would be another matter). I imagine that in those cases, the Department will be seeking to terminate the contracts of employment, with notice, prior to them gaining one year's employment. 

"The Department's policy on temporary and fixed term appointments is a guidance note. It is unlikely to have any contractual status. Paragraph 10 states that "it is not objectively justifiable to simply terminate either temporary or FTAs to manage a reducing head count situation unless they have been recruited for the reasons outlined in…paras40-41…of this guidance and these reasons were detailed in both the advert and the individual's offer letter and contract". Paragraph 41 includes the situation "where permanent surplus staff are known to be available for redeployment at a certain time and they will take up the post/s the FTA/s are occupying. For example where a business has announced they will have surplus permanent staff from a known date an FTA can be recruited to cover a permanent position until the surplus permanent staff become available for redeployment".

"I note that the guidance states that this information should be contained in the advert and in any other recruitment information sent to applicants, though given that this is guidance only, and given that the Chancellor's announcement in relation to the job cuts occurred after the advert had been placed, I do not consider that that in itself would be sufficient to render the dismissals unlawful. In any event, those taking up the positions would have been clearly aware, assuming that they received similar letters to Mr R, that they were only being offered a fixed term contract, and not a permanent post. 

"Given the contents of paragraph 41, quoted above, in my view the Department would be able to successfully argue that the dismissal of the fixed term employees, did not amount to less favourable treatment under the Fixed Term Employees Regulations (FTER) on the basis that they were recruited for a specific period, with the intention that their post would not continue, but instead would be offered to surplus employees from elsewhere in the Department. 

In any event, in the case of DWP -v- Webley, a PCS case which I have been personally involved with, the Court of Appeal held that the dismissal of fixed term employees by failing to renew their contracts, at the completion of the fixed term, does not amount to less favourable treatment under the Regulations.

"The only recourse for such employees is therefore to take indirect sex or race discrimination claims, or, if they have twelve months or more employment, to take an unfair dismissal claim. 

"It is unlikely that the individuals concerned will have the requisite twelve months service to take unfair dismissal claims. In any event, in my view, the dismissals would probably not be unfair, given the specific circumstances in which the individuals were recruited. 

"Further, the failure to inform Mr R and others of other vacancies, is probably justifiable under the FTER, given the circumstances in which they were taken on to carry out the fixed term appointments."

Legal Department comment

Officials will no doubt note with some disappointment the unfavourable legal position for members on fixed term contracts when job cuts are being made.

Reference is made to the Webly case for which PCS provided representation. Since the advice highlighted above was given, leave to appeal to the House of Lords was refused and the legal position as set out in the Court of Appeal judgement remains.

Further details on the Webly case can be obtained from the Legal Department.

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