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What to consider when employing fixed-term workers?

Our HR Advice team share what to consider when hiring fixed-term workers.

As the modern workforce changes rapidly, the conventional model of employing permanent workers is also changing. More and more organisations are opting for fixed-term workers to fill their staffing gaps. However, this shift comes with its own issues and factors to consider.

Recruitment of permanent workers has been on the decline since the pandemic. Due to budget constraints and a volatile economy, many organisations are reluctant to offer permanent contracts. Some organisations believe that a fixed-term contract is a flexible way to meet their hiring needs during busy business periods. As such, the HR team should be aware of the issues and challenges of hiring fixed-term staff.

Notably, the Fixed-term Employee (Prevention of Less Favourable Treatment) Regulation 2002 provides additional rights to fixed-term workers. It safeguards them by prohibiting less favourable treatment because of their contract type. This legislation says that the fixed-term worker cannot be offered less favourable terms than a permanent or full-time worker doing the same job.

According to the Employment Rights Act 1996, non-renewal of a fixed-term contract is included in the legislative definition of dismissal. A fixed-term worker with at least two years of continuous service may be able to claim unfair dismissal if the organisation does not have a fair reason for ending their contract. This could be redundancy or some other substantial reason that justifies the dismissal.

If the reason for a fixed-term worker’s non-renewal (and dismissal) is redundancy, then the worker will qualify for a statutory redundancy payment given they have at least 2 years of service. Organisations should also consider all the usual principles for a fair redundancy, including assessing the pool for selection, consultation, exploring measures to avoid redundancy, informing the workers of alternative employment vacancies, etc.

Workers who have been continuously employed for four years or more on a series of successive fixed-term contracts are automatically deemed to be permanent workers, unless the continued use of a fixed-term contract can be objectively justified. A gap in time between one fixed-term contract ending and another starting will not necessarily break continuity.
If organisations intend to engage a worker on another fixed-term contract after four years, they should carefully consider whether this is a proportionate way of achieving their business goals. That is, is it objectively justified?

A worker dismissed before the end of a fixed-term contract may have a claim for wrongful dismissal. This is unless the contract contains a provision for earlier termination on notice and the organisation has complied with that provision. Alternatively, a worker has committed a severe breach of contract (such as gross misconduct), which entitles the organisation to dismiss without notice.

Hiring fixed-term workers requires careful consideration on the part of the organisation to facilitate a compliant employment process. Organisations must consider various factors, such as employment contracts, pay and benefits, working hours, and workers’ legal rights, to ensure fair treatment, adhering to UK laws and regulations.

Additionally, for fixed-term workers to have positive work experience, efficient communication, clear job descriptions, and a proper onboarding process are all necessary. Organisations can make the most of their fixed-term personnel by being aware of and attending to these factors.


We can offer HR advice for your organisation as well as Health and Safety, and Recruitment. Please get in touch with us at peopleservices@gcvs.org.uk to speak to a member of the team.

Read more news and advice from the People & Safety team >>

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