EAT confirms unfair dismissal rules apply to non-renewals of fixed-term contracts

Dismissals by non-renewal of fixed-term contracts do not receive any special treatment and employers are still required to follow general unfair dismissal laws, the Employment Appeal Tribunal has confirmed.

In Royal Surrey County NHS Foundation Trust v Drzymala, a qualified doctor specialising in cancer care was employed on successive fixed-term contracts as a Locum Consultant. The employee was interested in gaining a permanent role with the Trust and applied to the position of Cancer Doctor in May 2014. Following an interview, she was quickly told she had been unsuccessful due to another candidate scoring higher. A conversation then took place where the employee was told she could work in the permanent role of a Speciality Doctor, however, nothing further was mentioned.

Following a period of leave and sick leave, the Deputy Director of Operations wrote to the employee informing her that her fixed-term contract would not be extended. She was given three months’ notice and informed her employment would end on 30th September 2014. The letter did not include a right to appeal but said the employee could arrange a meeting to talk about the decision. In addition, the letter did not mention the Speciality Doctor role or any other alternative positions. The employee submitted a grievance requesting an appeal against the non-renewal decision. The grievance was unsuccessful however, on appeal, the employer upheld the failure to offer a right of appeal but told the employee an earlier appeal would have made no difference. The employee brought a claim for unfair dismissal.

At tribunal, it was judged the employer had a potentially fair reason for dismissal of ‘some other substantial reason’ because her fixed-term contract was coming to an end. They found, however, the dismissal was unfair because of the failure to provide a timely right to appeal the dismissal decision and the failure to discuss any alternative roles, following the previous communication regarding the possibility of obtaining permanent employment.

The employer appealed contending the dismissal was not unfair because they had fully complied with the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 by giving the employee equal opportunity to secure permanent positions.

The Employment Appeal Tribunal (EAT) confirmed employers who do not treat fixed-term employees less favourably than a comparable full-time employee when deciding not to renew their fixed-term contract will not necessarily be carrying out a fair dismissal. Instead, the employer will still have to show the dismissal was fair under the normal unfair dismissal tests. In this case, the EAT agreed the dismissal was unfair because of the failure to discuss alternative roles or provide a timely right to appeal.

What this means for employers:

  • This decision confirms dismissals by non-renewal of fixed-term contracts have to comply with the normal unfair dismissal rules e.g. the employer has to have a potentially fair reason for dismissal and follow a fair procedure
  • In most cases, a fair procedure includes informing the employee of their dismissal by letter, providing the correct notice period and allowing the employee the opportunity to appeal the dismissal decision.
  • Employers will not always be required to consider, or offer, alternative roles when dismissing by non-renewal of a fixed-term contract. It will depend on the circumstances whether this will be fair but, in cases such as this where the employer started discussions about alternative roles and then failed to pursue this conversation, it is likely this failure will be seen as unfair treatment.

Suggested Resources