Collective Consultation and the Non-Renewal of Fixed-Term Contracts

Fixed-term contracts are often used by academic establishments where research funding is available for a set period only or when hiring staff to cover for employees on maternity or sickness leave.

In the case of University of Stirling v University and College Union, the trade union argued that the non-renewal of a fixed-term contract at the point at which it was agreed that it would terminate is a dismissal by reason of redundancy. So, if 20 or more such contracts are not renewed within a period of 90 days, the collective redundancy obligations under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) that require employers to consult with the appropriate representatives of affected employees come into play.

At a pre-hearing review, four test cases were considered, all of which related to employees of the University who were employed on contracts limited by time or by reference to a specific event, as opposed to open-ended contracts.

The Employment Judge ruled that the employees had been dismissed as redundant within the meaning of Section 195 of TULRCA, which defines redundancy dismissals for collective consultation purposes as ‘dismissals for a reason not related to the individual concerned or for a number of reasons all of which are not so related’. The consultation provisions therefore applied. The University of Stirling appealed against this decision.

The Employment Appeal Tribunal (EAT) found that the Employment Judge had erred in his approach. In particular, he had failed to ask whether, based on the facts of the four cases being considered, the dismissals were for reasons not related to the individuals concerned. Only if the answer to that question was ‘yes’ was he entitled to find that Section 188 of TULRCA applied.

In the EAT’s view, the words of Section 195 are ‘clear and unambiguous’. A reason relates to an individual if it is something to do with him – such as something he is or something he has done. It is to be distinguished from a reason relating to the employer, such as the need to make changes to the way the business operates. Based on the facts in the test cases, at least one of the reasons for all four dismissals was the individual employee’s own approach to their employment. Each had agreed at the outset that their contract would be for a fixed term, accepting that it would come to an end on a particular date or when a particular event occurred. None of the facts showed that any other reasons applied in any of the four cases and termination had not been imposed on the employees against their wishes. The EAT was therefore satisfied that the facts amounted to reasons relating to the individuals concerned and it followed that they were excluded by Section 195 of TULRCA from the ambit of Section 188.

If you are considering using fixed-term contracts, we can advise you how these should be structured. Contact Martin Bloom for further information.