This case again concerned an appeal by a respondent employer against a decision of a Rights Commissioner (RC) which found in favour of the claimant employee. The claimant commenced employment as a Resident Engineer (Civil) with the respondent on August 16th 2006 on a fixed purpose contract. Clause 3 of this contract stated that the claimant’s employment was for the purposes of ‘Phase II of the Waterford Main Drainage Scheme’. Clause 5 in turn provided that the claimant’s employment would cease ‘on the date of issue of Certificate of Substantial Completion of the Design Build Operate (Contract 5)’. The expected duration of the contract was to be two years and the contract was confirmed by a ‘Manager’s Order’ in keeping with local authority practice. Further developments of note in this case included the following:

* The completion of the project was delayed and another Manager’s Order of 12/10/2009 extended the claimant’s employment to 1/2/2010

* A further Manager’s Order of 25/1/2010 extended his employment to 30/7/2010. This was accompanied by a letter titled ‘Re Extension of Contract

* On 21/7/2010, the ‘Certificate of Substantial Completion’ referred to in Clause 5 of the original contract was issued

* On the same date - 21/7/2010 – a further Manager’s Order stated that on the recommendation of the Senior Engineer, the complainant was to continue as Resident Engineer until 30/10/2010, subject to the satisfactory performance of his duties

* A final Manager’s Order of 21/10/2010 continued the claimant’s employment until 31/1/2011 when his employment finally came to an end.

In the course of the appeal, it was argued on behalf of the claimant that the fixed purpose contract clearly provided at Clause 5 that it would come to an end when the Certificate of Substantial Completion was issued. This was duly issued on 21st July 2010. A subsequent Manager’s Order then renewed the contract verbally to October 30th, 2010 and this brought the claimant’s employment beyond the four year limit (it having commenced on 16/8/2006) on what was now a series of two fixed purpose contracts. Further, the second contract did not set out any objective grounds to justify the renewal of the first contract. The claimant was thus entitled to a contract of indefinite duration under the terms of Section 9. 

The respondent argued that in reality the claimant’s employment was subject to a single contract throughout its currency. This was shown by Clause 3 of the contract which stated that its purpose was to undertake work associated with Phase II of the Waterford Drainage Scheme. Managerial Orders that were issued merely continued this contract, it was never renewed. Thus Section 9 and the right to a contract of indefinite duration did not apply. In the alternative, the respondent argued that it had an objective justification for renewing the contract. The Senior Engineer had recommended the continuation of the claimant’s employment linked to the main drainage scheme. Even after the Certificate of Substantial Completion was issued, there were outstanding works to be completed and these were matters that were intrinsically linked to that scheme. The respondent produced documentation to show that this work did not form part of the fixed and permanent needs of its operation. Thus, in summary, a further fixed term contract was justified and was an appropriate and necessary measure from the respondent’s perspective.

In reaching its conclusions in this case, the Court began by accepting that if the respondent was correct in its view that only one fixed purpose contract was ever in place, then Section 9 did not apply and there would be no right to a contract of indefinite duration. However, the Court then proceeded to reject this argument in finding that Clause 3 of the contract, which the respondent had relied upon, had merely defined the purpose for which the claimant was being employed. It did not specify the objective condition by which the duration of the contract would be determined, a matter dealt with in Clause 5. That clause ‘plainly and unambiguously’ provided that the claimant’s employment would cease on the date of issue of a Certificate of Substantial Completion. 

The Court was therefore satisfied that the first contract came to an end when that certificate was issued and the claimants contract was renewed pursuant to the Managers Order of the same date, 21st July 2010. This renewal purported to extend the duration of the claimant’s employment beyond the four year period permitted by Section 9 of the Act and the contract as renewed became, in principle, one of indefinite duration by operation of law.

It then fell to the Court therefore to determine whether the respondent had an objective justification for the renewal. For this purpose, the respondent produced the internal memoranda from the Senior Engineer to the Human Resources Manager setting out the reasons for each extension of the claimant’s employment. These were designed to show that the work which the claimant was employed to perform was essentially temporary and transient in nature and did not meet a fixed and permanent need of the respondent. 

However, the Court noted that the claimant had never received any of this documentation. Counsel for the claimant also emphasised that none of the documents relied upon made any mention of objective grounds for the various extensions or renewal of his fixed-term employment. She also argued that the respondent had failed to comply with its obligations under Section 8 of the Act to inform the claimant at the time of the renewal of his contract of the objective grounds justifying the renewal and the reasons for not offering a contract of indefinite duration. 

The Court analysed the relevant case law and statutory provisions at some length before deciding that an employer must commit itself, at the point at which a fixed-term contract is being renewed, to the objective grounds upon which it will rely should it have to defend a claim under the Act. In this case, the respondent never explained to the claimant why his fixed-term contract was being renewed or why he was not being offered a contract of indefinite duration. The Court concluded that this was because the respondent was seeking to retrospectively justify the renewal of the claimant’s fixed term employment (while continuing to deny that there was any such renewal) on grounds that were never advanced at the material time. It determined that this approach could not be accepted and dismissed the respondent’s appeal.

Previous emails on the subject of claims under the fixed term legislation have emphasised the technical nature of this area and the dangers that lurk as a result and this bears repeating. However, it is worth noting that had the Certificate of Substantial Completion not been issued by the respondent in this case, perhaps prematurely, there may have been a different outcome or indeed no claim brought at all.

http://www.labourcourt.ie/labour/labcourtweb.nsf/cb8265a3e1c5c3f180256a01005bb359/80256a770034a2ab80257a920033ad1b?OpenDocument