Renewal of Fixed Term Contracts and Unfair Dismissal - A Cautionary Tale for Schools
Does the fact that an employer complies with the Fixed Term Employees Regulations 2002 necessarily mean it acted fairly when deciding against the renewal of a fixed-term contract?
Royal Surrey County NHS Foundation Trust v Drzymala
Dr Drzymala was employed by the Royal Surrey County NHS Foundation Trust (the Trust) as a Locum Consultant in the Oncology department. She was employed on successive fixed term contracts. A permanent vacancy in the department arose before the expiry of her fixed term contract. She applied and interviewed for the role alongside one other candidate.
Following her interview, Dr Dryzmala was informed by the Trust that she had not been successful. However, two members of the interview panel indicated that there may be other roles available for her. This turned out to be crucial.
Dr Dryzmala did not wish to discuss the other vacancies further at the time as the roles mentioned were lower in status. She was subsequently given notice that her fixed term contract would not be extended.
In the letter confirming her contract would not be renewed, Dr Drzymala was not given a right to appeal and no mention was made of any other alternative employment within the Trust. Dr Drzymala was only given a right of appeal after raising a grievance. Following an unsuccessful appeal, she brought various claims in the Employment Tribunal (ET) including unfair dismissal.
The case reached the Employment Appeal Tribunal (EAT). The EAT upheld the ET's decision that Dr Drzymala had been unfairly dismissed. It held that the law on unfair dismissal applies to dismissals which arise from the non-renewal of a fixed-term contract. This means that the same considerations in terms of reasonableness and the need to follow a fair procedure apply.
The fact that the Trust had complied with the Fixed-term Employees Regulations by providing Dr Dryzmala with information about other vacancies within the organisation did not of itself provide a successful defence to her claim for unfair dismissal.
The EAT found that Dr Drzymala had been unfairly dismissed because:
- the Trust failed to pursue a discussion about alternative roles which it had originally raised
- the Trust failed to provide Dr Drzymala with a right of appeal in the first instance
What Does This Mean for Schools?
You might employ staff on fixed term contracts for specific projects or for cover during maternity leave for example.
Where an employee is employed on successive fixed term contracts for a period of two years or more, they will acquire the right not to be unfairly dismissed.
The non-renewal of a fixed term contract will constitute a dismissal for the purposes of establishing an unfair dismissal claim. This means you must have a potentially fair reason for deciding not to renew a fixed term employee's contract in these circumstances and must follow a fair procedure. A best practice procedure involves consultation, an appeal and consideration of alternative employment.
So whilst the Regulations require vacancies to be notified to staff on fixed term contracts, this case highlights that if you do not go further and consider alternative employment in discussion with the employee, the risk of a finding of unfair dismissal is very real where a fixed term employee's contract is not being extended after two years' service.