In a fixed term contract, employment automatically terminates on the date on which it was agreed that the fixed-term of employment would expire. 

The employer is not therefore required to give notice to terminate the employment.  Effectively, the fixed-term employee is on notice from his/her first day of employment as to when the employment relationship will end.

Section 2(2)(b) of the Unfair Dismissals legislation, under the heading “Exclusions” provides that the legislation shall not apply to a dismissal which consists solely of the expiry of a term of a fixed term contract without it being renewed provided the following conditions are met:-

1. The contract is in writing; 
   
   
2. The contract specifies that the Unfair Dismissals Act will not apply to a dismissal consisting only of the expiry of the term of the contract without it being renewed; and
   
   
3. The contract is signed by both the employer and the employee.

 Section 13 of the Unfair Dismissals legislation provides:-

“A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of this Act) shall be void so far as it purports to exclude or limit the application of, or is inconsistent with, any provision of the Act.”

The High Court considered the application of these provisions The Board of Management of Malahide Community School v Dawn Marie Conaty [2019] 30 E.L.R. 178in respect of an employee who was moved from a permanent contract of employment to a fixed term contract of employment.

Dawn Marie Conaty (“the Employee”), commenced employment in Malahide Community School (“the Employer”) in August 2013. There was no written contract in place until October 2015 when she was provided with an 11 month fixed term contract of employment. The Employee’s contract was not renewed in August 2016 and her employment was terminated.  The Employee took a claim for unfair dismissal and was ultimately reinstated in her position by the Labour Court.  The Employer appealed that decision to the High Court.

At the point when the Employee was provided with a fixed term contract of employment, the Employee had already acquired rights under the Unfair Dismissals legislation, as she had more than one year’s continuous service and had a permanent contract of employment.

The Employer contended that, by signing the fixed term contract, the Employee had relinquished the statutory rights that she had previously acquired under the Unfair Dismissals legislation.

The High Court held that the “reliance which the school seeks to place on the exception for fixed term contracts under section 2(2)(b) is misplaced.  The exception requires a consideration of an employee’s employment in the round, and the exception cannot apply where the employment had been on a permanent basis.”

Ultimately, the High Court held that:-

• section 2(2)(b) of the Unfair Dismissals Act “allows for the waiver, in advance of commencement of employment, of rights which would otherwise have accrued under the Unfair Dismissals Acts.”; 
  
  whereas
  
  
• section 13 of the Unfair Dismissals Act “protects rights which have already been acquired.”

While section 13 precludes an employee from contracting out of their rights, the High Court acknowledged that there is case law, in connection with settlement agreements, which permits an employee to contract of their rights on the basis of informed consent.

The High Court endorsed the Circuit Court judgement of Hurley v Royal Yacht Club [1997] E.L.R 225 which held that an employee can waive a legal right with informed consent.  In order for an agreement to waive legal rights to be valid:-

1. The Agreement must identify the employment protection legislation which is being waived; and
   
   
2. The employee should have been advised in writing that he should take appropriate advice as to his rights.

The High Court in this case held that:-

“There is an implicit obligation on an employer to put an employee on notice that the entering into of a particular contract will entail the loss of statutory rights previously acquired by the employee.  A bald statement in the contract to the effect that the Unfair Dismissals Act does not apply to a dismissal consisting only of the expiry of the fixed term would not be sufficient.  Rather, the contract would have to include an express acknowledgement to the effect that the employee was relinquishing their acquired right to the protection of the Act.  The formula of words used in the contract of October 2015 is deficient in this regard.  It did not put the teacher on notice of the loss or her statutory rights […]

Alternatively, lest I be incorrect in my interpretation of section 2(2)(b), I am satisfied that, as a matter of contract law, an employer who requests an employee to agree to inferior terms and conditions, which involves the loss of statutory rights, is required to explain the precise legal effect of those changes to the employee.  This implied term is part of the implied obligation of mutual trust and confidence between an employer and an employee.  It is also necessary to reflect the unequal bargaining power between an employer and employee.”

Key Points to note:-

1. The provisions of Section 2(2)(b) should be included in a contract of employment prior to the employee commencing employment with an employer. 
   
   Those provisions should be explicitly drawn to the employee’s attention before the employee signs the contract and he/she should be advised to obtain independent advice before signing a fixed term contract of employment.
   
   
2. In circumstances where an employee has already acquired rights under the Unfair Dismissals legislation, the onus on the employer extends to also putting the employee on notice that signing up to a fixed term contract will entail the loss of a statutory right. 
   
   The contract of employment should not only satisfy the provisions of Section 2(2)(b) but should also include a provision to acknowledge that the employee is waiving statutory rights that he or she had previously acquired.