The use of fixed term contracts in the workplace has historically been a regular feature ofemployment relationships. However the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations affect the way in which fixed term employees can be treated by employers. They are not allowed to receive less favourable treatment than permanent employees and must have the same access to rights and benefits.

Definition of Fixed Term Employee

A fixed term employee is defined as a person who is employed under a contract of employmentwhere the end of the contract is determined by objective conditions such as reaching a specific date, completing a specific task or the occurrence or non-occurrence of a particular event. Examples include employees covering for maternity leave or peaks in demand and employees on task contracts, such as setting up a database.

Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002

These state that fixed term employees should be treated the same as comparable permanent employees. Unless it can be objectively justified, fixed term employees must have the same rights and benefits as permanent employees in relation to all aspects of the terms of their contract, treatment and indeed statutory rights. Not only therefore are the terms of the contracts to be considered, but also any other treatment of the employee such as the opportunity to receive training and the ability to secure permanent positions.

This last point effectively means that fixed term employees should be allowed equal opportunity to be considered for any permanent positions which arise within the company. Failure to consider such employees on no other basis than that they are currently on fixed term contracts will fall foul of the Regulations. Although pay and pensions are not specifically referred to in the Regulations, these will be covered by the all encompassing clause “terms of the contract”. Unless the use of a fixed term contract can be objectively justified, the Regulations also restrict the use of successive fixed term contracts where the employee has been continuously employed for four years or more. In such a case, the employee will be automatically regarded as permanent.


Fixed term employees can compare their conditions to employees doing the same or broadly similar work but who are not on fixed term contracts. If fixed term employees believe they are being less favourably treated than a comparable permanent employee because they are fixed term or that their employer has infringed their rights under the Regulations, they may present their case to an Employment Tribunal.

Non Renewal Of A Fixed Term Contract

Many employers mistakenly think that there is no legal action which can be taken by the employee if the employment ends merely by the expiration of a fixed term contract. This is not the case and a non renewal of a fixed term contract can result in the employee making a claim for unfair dismissal if he/she has been with the company more than one year and considers that he/she has been unfairly treated.


It is imperative that employers operating fixed term contracts review the terms of such contracts and also consider whether there are any circumstances which might discriminate against fixed term employees. Interestingly the ACAS Code of Practice on Discipline and Grievance does not apply to the termination or non renewal of a fixed term contract. However this does not mean an employer can ignore all best practice procedure when terminating a fixed contract, or not confirming any renewal. A consultation process should still be carried out to ensure the termination or non- renewal is fair.

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