20 Years Protecting Fixed-Term Employees: The Fixed-Term Work Act 2003

Objectives of the Act

There are two primary objectives in the Framework Agreement and the Directive:

• To improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination; and
• To establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships.

At European level the vast majority of caselaw is concerned with the anti-discrimination objective of the Directive. However, the overwhelming majority of caselaw in Ireland focuses on those persons who are seeking permanence in their employment, but who have been subjected to temporary fixed-term contracts for periods of time. Most of these cases involve public sector employment. 

Power v HSE

A prime example of the Irish application of the Act is shown in the recent decision of the Supreme Court in Maurice Power v Health Service Executive [2022] 33 E.L.R. 125, [2022] IESC 17. Mr Power was a permanent pensionable employee of the HSE holding the role of Chief Financial Officer of the Saolta Hospital Group. With effect from 2014, on the invitation of his employer, he took on the role of interim Chief Executive Officer on an acting-up basis. The Supreme Court agreed with the High Court that Mr Power, notwithstanding his permanent contract with the HSE, was a “fixed-term worker” for the purposes of the Act, and was entitled to the protection of the Act.

Objective Grounds

The decision does not however mean that all acting up arrangements, or the use of fixed-term contracts generally, are contrary to the Act. The CJEU confirmed in Mangold v Helm Case C-144/04 [2005] E.C.R. I- 09981 that the Directive and the Act aim to prevent the abuse of fixed-term contracts, not their use. However, where an arrangement is in place pursuant to two or more consecutive contracts for a combined period of more than four years, the employee will have a contract of indefinite duration, unless the employer can provide “objective grounds” justifying the renewals. In Mr Power’s case the question of objective grounds fell to be determined by the Labour Court.

Objective grounds are defined in s.7 of the Act as grounds “for the purpose of achieving a legitimate objective of the employer and such treatment is appropriate and necessary for that purpose.” Case law from the CJEU indicates that the “objective reasons… must be understood as referring to precise and concrete circumstances characterising a given activity” and is specific to the task at hand (Adeneler v Ellinikos Organismos Galaktos Case C-212/04 [2006] E.C.R. I-6057). National courts have a wide discretion in undertaking this analysis, as shown recently in Schuch-Ghannadan v Medizinische Universität Wien Case C-274/18 [2019] where the CJEU found that that the employment of an employee for 12 years on 11 consecutive fixed-term contracts did not necessarily conflict with EU law.

Effective Remedies?

By the time the Supreme Court delivered its decision, Mr Power had already been replaced in his acting-up post by a new appointee. He had initially sought injunctive relief in the High Court, but this was refused on the basis that the High Court has no jurisdiction to make interim or interlocutory orders in cases in which it has no jurisdiction to decide the substance of the dispute.

The question of injunctive relief was previously addressed by the Supreme Court in Maha Lingham v Health Service Executive [2005] IESC 89. In this decision, Fennelly J set out the context of such interlocutory applications and the test to be applied, but in doing so also noted that there were two major obstacles to the granting of an interlocutory injunction. First, the Act contained its own statutory scheme of enforcement, and it did not appear to be envisaged by the Act that it was intended to confer independent rights at common law or to modify in general the terms of contracts of employment to be enforced by the common law Courts.

Efficacy of the Act

A review of annual reports from the Workplace Relations Commission since its inception in 2015 up to and including 2022, indicates that complaints under the Act on average equate to only 1% of the overall complaints before that body. Is it the case that the Act has little relevance, given the small percentage of complaints brought under it? Alternatively, has it been so effective that it has caused employers to be more mindful of the potential abuse of fixed-term contracts? Those early decisions of the WRC and the Labour Court were predominantly concerned with persons employed in the public sector – very often doctors and teachers. Perhaps state employers are more mindful of their obligations under the Act than was the case 20 years ago? If so, this may have contributed to the reduction in complaints. The predominance of such claims from the public sector cannot however be interpreted as meaning that the abuse of fixed-term contracts is not a feature in the private sector. It is possible that the technical nature of complaints under the Act, together with the relatively low level of available compensation and the need to progress a claim initially before the WRC without the benefit of legal aid has resulted in relatively few complaints from private sector fixed-term workers. Such workers often work pursuant to precarious and low paid fixed-term contracts of employment.^[1] Through this lens, the low level of complaints under the Act cannot be considered a success. This is an issue that can only be resolved by the extension of legal aid to such workers.

Conclusion

It is likely that initial decisions under the Act have contributed to an overall reduction in the abuse of fixed-term contracts. On that basis, the Act can be viewed as one which to some extent has achieved its objective. However legal aid for low paid fixed-term workers in precarious employment is required if the Act is to fully achieve its objective. Separately, the question of remedies under the Act, remains a concern. The remedies available to a complainant who is entitled to a contract of indefinite nature under the Act, rarely constitute effective remedies. The reality is that, given the timeframe involved in making a complaint under the Act, a hearing being convened, and decision becoming available, together with the exhaustion of appeals, by the time such litigation is concluded, the role will likely have been filled permanently by another candidate. Remedies in statutes which transpose EU Directives are required to be “effective, proportionate and dissuasive”. It may be that the issue of whether the Act provides effective remedies, will be the pertinent issue for consideration in the 21^st year of the Act and beyond.

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This Viewpoint is based on a full paper delivered to the Employment Lawyers Association Ireland in February 2023.

The views expressed above are the author’s own and do not reflect the views of The Bar of Ireland.

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Footnotes

[1] Gallagher, P. and Nugent, C. (2022) Temporary Employment, Low Paid Work and Job Security amongst Young Irish Workers – Evidence from the UCD Working in Ireland Study, 2021, College of Business, University College Dublin.