A recent Labour Court decision has reiterated the strict criteria to be complied with for an employer to validly rely on the exclusion contained in Section 2(2)(b) of the Unfair Dismissals Acts 1977 – 2015 as amended (“the Acts”), which permits the non-application of the Unfair Dismissals Acts to the termination of fixed-term or specified purpose contracts.

Section 2(2) (b) of the Acts sets out the basis on which the exclusion applies, namely where the fixed-term contract or specified purpose contract has been executed in accordance with the following criteria:-

1. The contract must be in writing;
2. The contract must be signed by or on behalf of the employer;
3. The contract must be signed by the employee;
4. The contract must provide that the Unfair Dismissals Act 1977 shall not apply to a dismissal consisting only of the expiry of the fixed-term or the cesser of the specified purpose.

What is the case and why should employers be aware of it?

The Labour Court case in question is Southside Travellers Action Group - and - Imelda O' Keeffe, Determination No. UDD1828 (18th May 2018).

The case is a reminder that the requirements set out in Section 2(2) (b) of the Acts must be strictly complied with and in the absence of strict compliance, an employer will not be permitted to rely on the exclusion.

What is the background to this case?

Ms. O’Keeffe made a claim of Unfair Dismissal against her former employer. She claimed that she was dismissed for making a protected disclosure and due to her employer’s failure to follow fair procedures.

At first instance before the Workplace Relations Commission, the Adjudication Officer held that the Complainant was not unfairly dismissed.

Ms. O’Keeffe appealed the Decision of the Adjudication Officer to the Labour Court in accordance with Section 8(A) of the Unfair Dismissals Acts 1977 to 2015

The Facts

The Respondent was described in the determination as a small, publicly-funded charity operating in Dublin, providing accommodation support, education and training services, employment, health-care and youth services to members of the Travelling Community.

Ms. O’Keeffe commenced employment with the Respondent as a part-time Youth Worker in July 2013 on a fixed term contract until July 2014. She continued in employment with the Respondent thereafter however no further written contract was furnished to her until July 2015.

The Complainant was presented with a written fixed-term contract by the Respondent in July 2015. The contract had a commencement date of 1st July 2015 and contained a clause which provided that the employment would expire on 31st December 2015.   It also stated that “the provisions of the Unfair Dismissals Acts 1977 to 2001, will not apply to the termination of this contract where such termination is by reason of the expiry of this fixed term”.

The Complainant disputed a number of the terms in this contract, including annual leave and sick leave entitlements, and did not sign the contract when it was issued to her. The Respondent did not sign the contract at the time it was issued either. Accordingly, the contract was not signed by either party at the time of its purported commencement.

Throughout the course of the Complainant’s employment, there was extensive engagement by the Respondent on a number of issues and grievances raised by the Complainant, including protected disclosures made by the Complainant.

The Respondent contended that the Complainant’s fixed-term contract was extended by it, in good faith, after 31st December 2015, on a month by month basis, in order to give sufficient time to address the Complainant’s grievances/issues.

Ultimately, the Respondent wrote to the Complainant on 23rd February 2016 and advised her that her contract was being renewed for one final time, to expire on 31st March 2016.  The letter stated clearly that if she did not:-

• Work inside the terms of her job description
• Communicate fully and constructively with all staff members, and
• Sign her contract of employment

that her employment would end on 31st March 2016.

On 31st March 2016, (being a date on which she was in fact on leave),  the Complainant signed the contract and delivered it to her employer at 2pm, however she maintained that her execution of the contract was under duress in light of her employer’s correspondence.

On the same date, 31st March 2016, the Complainant returned to her home to find a letter had been delivered by courier from her employer stating that her employment was being terminated from that date.

Section 2(2) (b) of the Unfair Dismissals Acts

At hearing before the Labour Court, it was noted that the Respondent was seeking to rely on the exclusion contained in Section 2(2) (b) of the Unfair Dismissals Acts i.e. the employer asserted that the employee did not have the protections of the Unfair Dismissals Acts due to the fact that the fixed-term contract presented to her in July 2015 contained an exclusionary clause.

What was the decision of the Labour Court?

The Labour Court took the view that the making of a protected disclosure by the Complainant was not a factor in the termination of her employment by the employer.

The Labour Court noted that it was clear from the evidence before the Court that the Complainant did not sign the fixed-term contract presented to her in July 2015, nor in fact did the employer sign the contract at the purported commencement of that contract in July 2015.

The Labour Court commented that Section 2(2) (b) “essentially allows an employee who wishes to accept a temporary employment arrangement from an employer to waive his or her rights to protection under the Unfair Dismissals Acts”.   

Recognising the significant implications for an employee of waiving the protections and rights afforded to employees under the Unfair Dismissals Acts, the Labour Court commented that “in a situation where an employee is giving up what would otherwise be very valuable employment protection rights it is essential that the agreement clearly stipulates in writing what is being waived and that the parties indicate, through their signature, express agreement to it. These conditions must therefore be fully and completely satisfied.”

The Labour Court found that in the Complainant’s case, these conditions were not satisfied.  Accordingly, the Labour Court found that the Section 2(2) (b)exclusion permitting the non-application of the Unfair Dismissals Acts did not apply to the termination of the Complainant’s employment.

Although the contract for a fixed term commencing July 2015 was belatedly signed by the employee, she maintained it was signed under duress and on the facts it would seem that her employment was terminated some hours prior to when she signed the contract in any event.

In circumstances where the exclusion does not apply, the onus is therefore on the employer to show that there are substantial grounds justifying the dismissal.  The Court noted that in this case no other substantial grounds justifying the termination of the Complainant’s employment were put forward by the Respondent.

Accordingly, the Court found that the Complainant was unfairly dismissed on 31st March 2016 and measured the appropriate compensation to be paid to the Complainant in the amount of €17,500.00.

What lessons can be learned from this decision by Employers?

This decision is a reminder to employers to ensure that fixed-term or specified purpose contracts are reduced to writing and, where an employer wishes to avail of the Section 2 (2) (b) exclusion, that the written contract contains an appropriate clause in that regard.

The key message from the case, however, is that the exclusionary clause cannot be relied on by an employer unless the written fixed-term or specified purpose contract is signed by both employee and employer.  An employer cannot simply assert that the employee was given the contract, knew the contents of same and that this allows the employer to rely on the exclusionary clause.

The requirement under Section 2(2) (b) for both parties to sign the fixed-term or specified purpose contract is something that can often be overlooked by employers. If the employer has not strictly complied with the legislative requirements they cannot lawfully rely on the exclusionary clause where an Unfair Dismissal claim is made by a fixed-term/specified purpose employee with more than 12 months’ continuous service upon the expiry or termination of their fixed-term or specified purpose contract.   Accordingly, employers may find themselves in a weaker position than might otherwise be the case, and the onus is then on the employer to show that there were substantial grounds justifying the termination of the employee’s employment.

It should be remembered also that an exclusionary clause in accordance with Section 2(2)(b) does not preclude the application of the Unfair Dismissals Acts where the termination of employment of a fixed-term or specified purpose employee occurs for a reason other than the expiry/cessation of the fixed-term/specified purpose.

Read the Labour Court judgment here: 
www.workplacerelations.ie/en/Cases/2018/May/UDD1828.html