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Fixed term contracts and permanent employee status

Many industries make use of training schemes to assist in gaining affordable employees; however at what point does the trainee gain employee status? The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (‘the Regulations’) set out that anyone employed under a succession of fixed-term contracts will become a permanent employee after four years “unless employment on a fixed term contract is objectively justified”.

The question which arises is whether the period of service spent as a trainee counts towards establishing the four year period. This was the issue dealt with by the Court of Appeal in Hudson v Department of Work and Pensions.

Background

Ms Hudson commenced working for the Department of Work and Pensions (DWP) on 24 April 2006 on a government scheme for an initial period of 12 months. After the initial period, her contract was extended for a further 2 years because:

  1. Of the difficult economic climate for her to find work;
  2. She had demonstrated particular expertise in her role and
  3. They were experiencing an increase in business and needed to retain her skills.

At a meeting on 22 April 2009, it was agreed that Ms Hudson would be trained to ensure that she gained the knowledge and competence to gain permanent employment within the department. This was achieved by Ms Hudson in October 2009. She commenced an 18 month fixed term contract as a Diary Administrative Support Officer on 19 October 2009.

By April 2010 Ms Hudson had been working for the DWP for four years as a result of successive fixed term contracts. She subsequently wrote to management asking for confirmation of her permanent employee status under Regulation 8. She was informed that she remained a fixed term employee because her service as a trainee, from April 2006 to October 2009, did not count as it was excluded from the Regulations.

The Employment Tribunal (ET) decision

Following an unsuccessful grievance procedure Ms Hudson brought the matter to the ET for a declaration in respect of her permanent employee status.

Ms Hudson’s claim was unsuccessful in the ET on the grounds that she had been working under a Government scheme, which was excluded under Regulation 18, therefore the time spent as a trainee could not be counted towards establishing the four year period.

The ET accepted DWP’s arguments that to hold otherwise would be a disincentive for employers to offer on-going employment to employees under the terms of an excluded fixed term contract. The ET judge concluded that Ms Hudson’s time for the purposes of the Regulations was 19 October 2009.

Ms Hudson appealed to the Employment Appeal Tribunal (EAT).

The EAT decision

The EAT judge held in Ms Hudson’s favour.

DWP appealed to the Court of Appeal.

Court of Appeal decision

The Court of Appeal restored the decision of the ET on the grounds that the exceptions where clearly set out in Regulation 18. It was held that it would not be fair for an employer who participated in a Government scheme to have to await the decision of an ET before knowing whether or not time spent on a particular fixed-term contract counts for the purposes of the Regulation 8.

Conclusion

Fortunately the Court of Appeal has provided protection for employers taking on:

–       Apprentices;

–       Agency workers’ contracts to perform work for an end-user company through a temporary work agency;

–       Employees on Government or institution funded or sponsored training/work experience and

–       Students on work experience for up to a year as part of the higher education course

As they all fall within the Regulation 18 exemption.

If you need advice in relation to employment status please contact a member of our team on 01133 50 40 30 or at hello@scesolicitors.co.uk for a free initial consultation.


Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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