Introduction

This article considers the important Labour Court case of National University of Ireland Maynooth and Buckley (FTC/10/22, Determination No FTD1015, 15th November, 2010). Although this email focuses on fixed-term work and just one case, which as you will see was unusual, it covers many angles of the legislation and jurisprudence in question. Simple, it is not.

We start with a review of the legislation.

First introduced in July 2003 to transpose the EU directive on the rights of fixed term workers agreed by the European social partners, the Protection of Employees (Fixed-Term Work) Act 2003 has caused considerable difficulties for many employers, particularly for publicly funded organisations such as the Health Services Executive (HSE) who have routinely used fixed term contracts for some medical staff employed in HSE areas across the country. It has also affected numerous schools, colleges and universities who initially rely to some extent upon fixed-term contracts for new staff and then proceed to renew or roll over those contracts. On the other hand, its impact upon commercial organisations has been much more limited as this type of contract is not nearly as prevalent in private sector companies.

In brief, this legislation allows a fixed-term employee to compare his/her treatment, in relation to terms and conditions of employment, with the treatment of a comparable permanent employee. A fixed-term employee is a person working under a contract that will terminate:

* by a fixed period of time coming to an end;
* by the completion of a specific task such as finishing a project; or
* by the occurrence of a specific event such as the return of another employee from sick leave or maternity leave.

An employer is prohibited from treating such a fixed term employee less favourably than a comparator unless there are ‘objective grounds’ not related to the person’s fixed term status that might justify such treatment.

The Act is also designed to prevent the abuse of employment rights that may arise from the repeated use of fixed-term contracts. It does this by placing a limit on the amount of time that a fixed-term employee can be asked to serve under a series of two or more fixed-term contracts before s/he becomes entitled to a contract of indefinite duration, i.e. permanent status. For example, any fixed-term employee first employed after the Act came into operation may not be employed for more than four years under a series of such contracts, unless the employer can show that there are objective grounds justifying a further contract or contracts beyond this threshold. For an existing fixed-term employee when the Act came into operation, once a three year threshold of fixed-term employment had been reached, only one further fixed-term contract could be offered for a maximum duration of one year, again unless there were objective grounds justifying further renewals.

The legislation also obliges an employer to inform a fixed-term employee in writing as soon as possible of the ‘objective condition’ that will bring a fixed-term contract to an end. Where a fixed-term contract is being renewed, an employer must also inform the fixed-term employee in writing of the ‘objective grounds’ justifying the renewal of that contract and the failure to offer a contract of indefinite duration at the latest by the date of renewal. In other words, where an employer proposes to issue a further fixed term contract, s/he must explain why a permanent position is not being offered. These statements are admissible in any case that may be taken by an employee under the Act and, in practice, the failure to issue them at all will make it difficult for an employer to argue objective grounds at a later stage.
The case reviewed below in today’s email provides a vivid illustration of the complexities (and no doubt the mounting legal costs) encountered with litigation under this Act, especially where the additional factor of redundancy is added into the mix. This example and others like it should serve to remind employers that the use of successive fixed-term contracts may be fraught with danger from a legal perspective. It is therefore vital that employers using such contracts have a clear rationale for their use and make themselves fully aware of the rights of employees under the legislation.


Background – The First Complaint

The claimant was first employed by the respondent university on either 1st October 2002 or 2003 (two different dates are given in the decision) on a fixed term contract due to last until September 30th 2006, although this contract depended for its continuation on funding for a third party. The research project in which she was engaged had not been completed by the end of this contract and funding was obtained from the third party for a further contract to complete the research, to run from 1st October 2006 until 30th September 2008.

Although the claimant continued to work for the respondent, she argued that this renewal was a breach of the Section 9 of the 2003 Act and made a complaint as provided for to a Rights Commissioner (RC). On 6th August 2008, the RC adjudicated in her favour and decided that she should have received a contract of indefinite duration. The respondent university appealed this decision to the Labour Court.

Shortly afterwards, and before the appeal could heard, the respondent served notice of redundancy on the claimant, dated 27th August 2008, to coincide with the expiry of the second fixed term contract at the end of September, claiming that it had no further work for her. In response to representations made by the claimant’s trade union, however, the respondent agreed to place the claimant on what it called administrative leave. This involved the payment of salary but no duties being performed by the claimant and was originally to last until the Labour Court determined the appeal.

Nonetheless, on 19th November, the respondent offered the claimant a redundancy package comprised of four weeks' pay per year of service, in addition to statutory redundancy entitlements. This offer was to be in full and final settlement of her existing claim and, critically, salary that she had been paid whilst she had been on administrative leave was to be subtracted from it. Unsurprisingly, she refused this offer.

By letter of December 18th, the respondent then wrote to the claimant’s union to say that it intended to stop paying the claimant’s salary, even though the Labour Court appeal under the fixed term legislation had still not been decided, and payment of her salary ceased on 12th January 2009. The claimant applied for an injunction in the High Court, seeking continued payment of her salary and a prohibition on any dismissal. On 13th February, the High Court refused to grant this application, on the basis that the university was not bound by the Rights Commissioner’s ruling until the Labour Court had determined its appeal against that decision. Finally, the Labour Court issued its determination on 24th February, reversing the RC’s decision and finding that the claimant was not entitled to a contract of indefinite duration. The claimant did not appeal either the High Court or Labour Court decisions.


The Second Complaint

The claimant’s union then wrote to the respondent on 11th March seeking payment of the previous redundancy package. By letter of 27th March, the respondent rejected this request. This triggered a second complaint under the Act by the claimant on 2nd April; that she had been treated less favourably in terms of her conditions of employment, i.e. access to redundancy payments, than comparable permanent employees who had worked as catering assistants, who had been made redundant and had received the relevant package.

Before a Rights Commissioner, the respondent argued that this claim was out of time, as it had been made more than six months after her last date of employment – 30th September 2008. The RC nonetheless found that there was reasonable cause to extend the time limit under Section 14 (4) of the Act and she upheld the claim for four weeks pay per year of service in addition to statutory redundancy entitlements, as well as making a general compensatory award of €2,500. The respondent than appealed to the Labour Court on both the RC’s decision to extend the time limit and the award of the redundancy package itself. The claimant in turn appealed on the adequacy of the general compensatory award of €2,500.


Identifying the Date Employment Ended

On appeal, the Labour Court turned its attention first to determining the date of the claimant’s dismissal for the purpose of deciding whether the second claim had been made within six months of it or not. The respondent argued that the High Court had effectively decided that the claimant’s employment had ended on 30th September 2008, the date when her second fixed-term contract had ended. Counsel for the respondent further suggested that as it was the claimant who had sought the injunction in the High Court, she was now legally prevented from arguing otherwise, a legal doctrine called ‘issue estoppel’.

The claimant argued on the other hand that her employment had lasted until 12th January 2009, the date when she ceased to be paid by the respondent whilst on administrative leave. The Labour Court closely examined the judgment of Murphy J in respect of the injunction application and decided that the kernel of that decision was that the continuance of the claimant’s contract of employment beyond 30th September was dependent upon the respondent’s appeal in relation to the first claim not being successful. As the Labour Court in that claim had overturned the RC’s decision, the Labour Court decided on this issue that the claimant’s employment had not extended beyond 30th September and therefore the second claim had been lodged four days beyond the six month time limit.


Extension of the Time Limit

The next issue that then fell to be determined was whether ‘reasonable cause’ existed to extend the time limit to claim beyond the six month period. The Labour Court referred to the general test it had set down in relation to reasonable cause in the case of Cementation Skanska and Carroll (DWT 03 38), namely that the claimant must show that there are reasons which both explain the delay and provide a reasonable excuse for it. It noted in this case that the administrative leave the claimant was placed on would be generally understood as a suspension rather than a severance of the employment contract and that therefore it was not clear to her that her employment had been terminated on 30th September 2008.

It further noted that the High Court decision in relation to the injunction application was open to the interpretation that if the Labour Court had upheld the RC’s decision in the first claim, a contract of employment would still exist. The claimant could not therefore have known her status until the appeal on the first claim had been decided. Finally, the Court felt that it was very relevant that the claimant acted very quickly in making the second complaint, once the appeal had gone against her and the respondent had rejected her request for the redundancy package. Taking all these factors into account, it concluded that the claimant had met the ‘threshold of reasonableness’ to justify a short extension of the six month limit and so allow the claim to proceed.


Substantive Issues

The first issue to fall for decision here was the appropriateness of the catering assistants as comparable permanent employees for the claimant. Once it was accepted that they shared the same employer, the claimant was required to show that she was engaged in work equal to or of greater value than the catering assistants and this was conceded by the respondent. The respondent then argued that the claimant had been offered the same redundancy package in November 2008 and had rejected it. Thus, she had not been less favourably treated than the catering assistants. The Court rejected this argument in finding that what the claimant had been offered in November 2008 was a ‘payment in consideration of discontinuing legal proceedings’ and that this was qualitatively different from the redundancy package now being sought.

The respondent then argued that there was an objective justification for treating the claimant less favourably, in that the redundancy of the catering assistants came about as a result of a fire in the premises where they work, whereas the claimant was employed to undertake research that was externally funded and so was well aware that this funding would come to an end leading to a loss of her employment.

The Court subjected this argument to the three-tier test for objective justification set out by the European Court of Justice in the Bilka-Kaufhaus case, namely that the measure being justified must meet a ‘real need’ of the employer and must be both ‘appropriate’ and ‘necessary’ for that objective. It concluded that, although the circumstances giving rise to redundancy in both cases were undoubtedly different, the respondent had not identified how those differences had given rise to a legitimate aim it was seeking to pursue or how withholding the redundancy package from the claimant might be appropriate and necessary to achieve such an aim.

It also noted that the submissions of counsel for the respondent on this issue seemed to suggest that such less favourable treatment might be justified because the catering assistants were permanent and had not expected their employment to come to an end, whereas the claimant’s employment was temporary. This, the Court pointed out, was a consideration based on the claimant’s status as a fixed term employee, which was not permitted by the Act.

The respondent’s final argument that it should be allowed to set-off payments of salary it had made to the claimant during her period of administrative leave against her redundancy payments also failed on the basis that there was no evidence of any intention or agreement to this effect. The Court therefore upheld the RC’s decision that the claimant was entitled to the same redundancy payments as the comparators. It also left the additional compensatory award of €2,500 unaltered.