With London winning the race to host the 2012 Olympics, there was much celebration around the capital. However, given that the Olympics are less than 7 years away, London will inevitably see a flurry of commercial activity in preparation for the global event. In particular, there are likely to be numerous contracts awarded for amongst other things the provision of catering, security and transportation logistics services, as well as the obvious building and maintenance projects inherent in getting the new Olympic stadium up and running.

Since the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (“the Regulations”) came into force, employees who are taken on for only a specific period of time (or a specific project) cannot be treated less favourably than permanent employees merely because they are on a fixed term contract.

The Regulations only cover employees (not workers supplied by an agency and apprentices and employees on certain work experience schemes). A fixed term employee is someone who is employed under a contract of employment that will terminate on a specific date. By Summer 2012 the construction projects should (hopefully!) have been completed, and therefore many employment contracts of those who have been involved in the building works will inevitably come to an end. In addition, there are likely to be lots of seasonal and/or casual employees on short term contracts carrying out duties during the summer of 2012 itself.

Purpose

The main principle behind the Regulations is that a fixed term employee has the right not to be treated less favourably than a comparable permanent employee merely because they have a fixed term contract. This means that their contract terms should be the same or similar and also they should not be subjected to any other detriment as a result of their fixed term status.

In order to show less favourable treatment a fixed term employee needs to identify a permanent employee who is employed doing broadly similar work (similar levels of qualification and skills) and is based at the same establishment. A practical example of this would be if an individual was employed on a fixed term contract with a construction company to assist on a big project (say, the design and creation of the lighting systems for the new Olympic stadium), and permanent employees of that construction company were entitled to Christmas bonuses or travel loans. The fixed term employee should be given access to these benefits in the same way, and failure to so provide would amount to a detriment. This not only includes financial or other benefits (such as access to occupational pension schemes or free gym membership), but would also include access to training courses, promotion opportunities and protection against being selected first for redundancy purely because they are on a fixed term contract.

Objective justification

Employers can justify providing different benefits if they can show an objective reason. This could include if the cost to the employer of offering a particular benefit to the fixed term employee is disproportionate when compared to the cost to the employer of providing the same benefit to a permanent employee. For example, if a fixed term employee is on a contract of two months and a permanent employee has a company car, the cost of getting a company car and setting it up for the fixed period of two months may be deemed to be excessive when the travel needs of the fixed term employee could be met in some other way. Another way of getting round this difficulty is if the overall package of a fixed term employee’s contract as a whole is at least as good as the terms of its comparable permanent employee’s contract.

An employer can choose to pay for an employee’s benefits on a pro-rata basis for the amount of time that they are actually employed rather than offering them an annual private health insurance if they are only going to be employed for six months. A fixed term employee also has the right to be informed of any available permanent vacancies that come up with an employer although it is sufficient if the advert is on an internal website or in a publication which the employee is likely to read.

Although fixed term contracts have the benefit of certainty and an end date, employers should be wary of treating such employees differently from those employed on a permanent basis. There is plenty of time to brush up on the Regulations before 2012 although it is likely that as such contracts are already increasing in number, employers would be best to take the Regulations into consideration now if they do not want to face the high jump!

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