Renewal of Fixed Term Contracts and Unfair Dismissal - a Cautionary Tale for Employers

Gareth Edwards
Partner - Employment Law | VWV
30th January 2018
Member roleInitiative member

In a recent case, the Employment Appeal Tribunal (EAT) confirmed that the fact that an employer complied with the Fixed Term Employees Regulations did not necessarily mean it acted fairly when terminating a fixed-term contract.

Royal Surrey County NHS Foundation Trust v Drzymala

Dr Drzymala was employed by the Royal Surrey County NHS Foundation Trust (the Trust) as a Locum Consultant in the Oncology department of the Royal Surrey County Hospital. She was employed on successive fixed term contracts. A permanent vacancy in the department arose before the expiry of her fixed term contract and she applied and interviewed for the role alongside one other candidate. Twenty minutes after her interview, Dr Dryzmala was informed by the Trust that she had not been successful. However, two members of the interview panel indicated that there may be other roles available for her. Dr Dryzmala did not wish to discuss this proposition further at the time as the roles mentioned were lower in status to her consultant role. She was subsequently given notice that her fixed term contract would not be extended. In the notice letter, Dr Drzymala was not given a right to appeal and no mention was made of any other alternative employment within the Trust. Dr Drzymala was only given a right of appeal after raising a grievance and, following an unsuccessful appeal against the decision to terminate her contract, subsequently brought claims of age discrimination and unfair dismissal.

The Decision

At first instance, the Employment Tribunal (ET) found that her dismissal was unfair but rejected her claims of age discrimination. The Trust appealed this decision, arguing that the ET was wrong to conclude that Dr Dryzmala had been unfairly dismissed as it had complied with the non-discrimination regime in the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 by providing her with information about other vacancies within the organisation. The Employment Appeal Tribunal (EAT) upheld the ET's decision that Dr Drzymala had been unfairly dismissed. The EAT held that the law on unfair dismissal applies to dismissals which arise from the non-renewal of a fixed-term contract. Therefore, the non-renewal of a fixed term contract attracts the same considerations in terms of reasonableness and fair procedure as any other dismissal. Compliance with the Fixed-term Employees Regulations did not of itself provide a defence to a claim for unfair dismissal where a fixed term contract is not renewed. The EAT therefore upheld the ET’s finding that Dr Drzymala had been unfairly dismissed because:

  • the Trust failed to pursue a discussion about alternative roles which it had initiated
  • the Trust failed to provide Dr Drzymala with right of appeal in the first instance

Best Practice

The non-renewal of a fixed term contract will constitute a dismissal for the purposes of establishing an Unfair Dismissal claim. Employers should therefore always ensure when deciding not to renew a fixed term employee's contract that they follow a fair process, particularly where the employee has over two years' continuous service. Whether employers are required to consider suitable alternative employment where a fixed term employee's contract is not being extended will depend upon the facts of each particular case. The EAT noted in this case that an employer will in many cases not be required to raise the question of alternative employment every time a fixed-term contract expires. However, as in this case the Trust had initiated discussions about alternative employment and then retreated from these discussions, the ET was entitled to find the Trust had acted unfairly.

For more information please contact Eleanor Boyd in our Employment Law team on 020 665 0940.

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