Non-renewal of fixed-term contracts and unfair dismissal

Royal Surrey County Council NHS Foundation Trust v Drzymala

Simply complying with the non-discrimination regime of the Fixed-term Employees Regulations doesn’t make a dismissal at the end of a fixed term contract fair.

The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 protect fixed-term employees from being treated less favourably than permanent employees. Fixed-term employees are entitled not to be treated less favourably than comparable permanent employees because of their fixed-term status, both in relation to the terms of their contract and by being subjected to any other detriment by their employer, unless the employer is able to objectively justify the difference in treatment.

Background

Ms Drzymala was a doctor employed on six successive fixed-term contracts for almost three years Before the end of her most recent fixed-term contract, a permanent vacancy came up for which she was interviewed. She was unsuccessful. The Trust did have some discussions with her about the possibility of another role as a ‘specialist doctor’ but these went nowhere. The Trust gave her notice that her fixed-term contract would not be renewed. She was given no right of appeal or any other information on possible other roles with the Trust. She lodged a grievance and was eventually offered a right of appeal. This concluded that she should have been offered an earlier appeal, but it wouldn’t have made any substantive difference and she would have been dismissed in any event. She lodged an unfair dismissal claim.

A tribunal found her dismissal unfair. Non-renewal of a fixed-term contract is a dismissal, and this must be for a fair reason - here the reason for dismissal was a potentially fair one, i.e. her locum contract had come to an end and this was ‘some other substantial reason’ (SOSR). Having initiated a discussion about alternative employment on 28 May 2014 after Ms Drzymala’s unsuccessful interview, the Trust then failed to pursue the discussion about possible alternative roles. Additionally, denying Ms Drzymala a timely right of appeal, which the Trust ultimately accepted she was entitled to, in circumstances when it had other employment opportunities available for her was, in the tribunal’s view, unfair. The Trust appealed.

EAT decision

The Trust’s argument on appeal was that because it had complied with the non-discrimination regime in the 2002 regulations, the tribunal had been wrong to hold that Ms Drzymala had been unfairly dismissed.

The EAT had no difficulty in rejecting this argument. Compliance with the 2002 regulations is not, in itself, sufficient to ensure an employee had not been unfairly dismissed.

The general law on unfair dismissals still applies to dismissals due to the non-renewal of a fixed-term contract, including the usual question of fairness. In other words, it’s the tried and tested fairness test in s. 98(4) of the Employment Rights Act 1996. The EAT reminded itself that each case is fact sensitive and also that while dismissals because of the non-renewal of a fixed-term contract are often potentially fair for SOSR, they are not a special case meriting different considerations. A dismissal by non-renewal of a standard fixed-term contract may, depending on the facts, have some features in common with a redundancy dismissal or, where there is no redundancy situation, with a non-redundancy ‘business reorganisation’ case, or a case where the employer wishes to impose changed working practice or terms of employment on an unwilling or reluctant employee. Possible alternatives to dismissal may need to be discussed as a matter of fairness, where such alternatives are or may be available.

It was not correct that the Trust had to prefer Ms Drzymala over the other candidate in relation to the permanent vacancy; it was a matter for them as to who the best candidate was, but it was obliged to consider if there were any other roles for her. Here the Trust had failed to follow through with Ms Drzymala any potential alternative roles and had failed to provide her with a timely right of appeal. The EAT upheld the tribunal’s finding of unfair dismissal.

Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2018/0063_17_1101.html

Comment

Non-renewal of a fixed term is a dismissal and you must have a fair reason, especially if the employee has been there for more than two years. If the work still needs doing but you are not renewing their contract this is likely to be an unfair dismissal. Ensure that you can produce evidence to show why it is no longer needed. This will usually involve informing the employee in writing of the expiry date, arranging a meeting to discuss the expiry of the contract, and sending a list of vacancies to the employee and giving a right to appeal against the decision. If an employee has been there for less than two years but has been absent with a disability or pregnancy-related condition, and their fixed term contract is not renewed when there is still work to be done, then this will lead to a discrimination claim.