Expiry of fixed term contracts: what does a fair procedure look like?

Fixed term contracts, and successive extensions, continue to pose a thorny issue for NHS organisations, and were the focus of the Tribunal’s attentions in the case of Royal Surrey County NHS Foundation Trust v Drzymala

In this case Dr Drzymala was a locum consultant, engaged on a six month fixed term contract which had been extended five or six times. The Trust advertised her post as a permanent vacancy and although Dr Drzymala applied and was interviewed for the post, her application was unsuccessful. The Trust then served notice on her fixed term contract, negating to mention any right of appeal or that the Trust would search for alternative employment during her notice period. Some information was provided to Dr Drzymala about potential vacancies within the Trust, but this was largely after her unsuccessful interview and there was no actual search for vacancies for her.

After lodging a grievance, Dr Drzymala was given the right of appeal against her dismissal, but this did not lead to the overturning of the decision not to renew her fixed term contract and it was determined that an earlier appeal would have made no substantive difference to Dr Dryzmala’s situation.

Non-renewals of fixed term contracts are dismissals in law and are subject to the ordinary principles of unfair dismissal (subject to the employee having sufficient continuous service to bring a claim of unfair dismissal). 

The employer has to establish one of the five potentially fair reasons for dismissal laid down in statute law and that the dismissal was fair in all of the circumstances, including in the procedure followed. Employers typically rely on either redundancy or ‘some other substantial reason’ as being the potentially fair reasons justifying dismissals by reason of non-renewal of a fixed term contract.

In this case, Dr Dryzmala’s locum post was made permanent, and therefore this was not a redundancy situation. Her employer instead relied on ‘some other substantial reason’ as being the potentially fair reason for dismissal.

Dr Drzymala, having the requisite two years’ continuous service, brought a claim of unfair dismissal which succeeded. She also brought a claim of age discrimination, which failed. The Trust appealed against the Tribunal’s decision on the claim of unfair dismissal, but the Employment Appeal Tribunal declined to interfere with the decision.    

One of the arguments put forward by the Trust was that it had complied with the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, in that Dr Dryzmala was provided with information about potential vacancies and therefore this was indicative that she had been treated fairly. The Employment Appeal Tribunal disagreed. 

It found that the Employment Tribunal had been properly concerned about two issues:

(1) that Dr Dryzmala had not been given a right of appeal against dismissal; and

(2) that the Trust had not searched for alternative employment.

The Appeal Tribunal did not state that these factors would be relevant in all cases, and in particular reiterated that fairness does not dictate that alternative employment has to be discussed in every case where a fixed term contract expires. However, in this case, the Trust had engaged in some discussions with Dr Dryzmala around potential vacancies and the Tribunals felt it was then unfair to change course and cease such communications.

Comment

This case provides a useful reminder to take care about the process followed when fixed term contracts are expiring, particularly when post holders have over two years’ service. 

In some circumstances, fairness will require a right of appeal against the decision not to extend, and it may be necessary to consider whether alternative employment should be sought.

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