New Rules To Fixed Term Contracts

In recent years, there has been a growing concern over the use of fixed-term contracts in the workplace. These contracts are typically used to hire employees for a specific period of time, such as for a project or to cover a temporary absence. However, some employers have been abusing the use of these contracts by implementing them on a long-term basis to avoid providing access to permanent employment conditions, such as sick leave, redundancy pay and protection from unfair dismissal.

To address this issue, new laws have been introduced to restrict the use of fixed-term contracts with set limitations. These laws aim to protect employees from being stuck in an endless cycle of short-term contracts.

The main restrictions with these new laws are:

Time limitations:

A fixed term contract cannot be longer than a 2-year period. This includes any extensions or renewals.

Renewal Limitations:

A fixed term contract can’t have an option to:

  • extend or renew the contract so the period of employment lasts for longer than 2 years, or
  • extend or renew the contract more than once.

Consecutive contract limitations:

  1. Their previous contract was also for a fixed term.
  2. Their previous contract and the new contract are for mainly the same work.
  3. There is substantial continuity in the employment relationship between the previous and new contracts, and
  4. Either:
    • the previous contract contained an option to extend that was used
    • the total period of employment for both the previous and new fixed term contract is more than 2 years
    • the new fixed term contract contains an option to renew or extend, or
    • there was an initial contract in place (before the previous contract):
      • that was for a fixed term,
      • that was for the same or similar work, and
      • where there was substantial continuity in the employment relationship.

Overall, these new laws represent an important step towards protecting the rights of employees and ensuring that they are not exploited by their employers. While there may be some challenges in implementing these laws, they are an important tool in creating a fair and just workplace for all.

For clarity and guidance around these new laws contact Duffy & Simon today!