Academic Board Insight: Can a permanent worker also be a fixed-term worker?

Anthony Kerr, UCD Sutherland School of Law (Dublin)

In the Irish public sector, it would not be uncommon for vacant senior positions to be filled temporarily on an “acting up” basis pending the outcome of a promotion or recruitment competition. Alternatively, a person might be deployed on or seconded to a particular project outside of their normal duties and/or responsibilities. In either case, the person acting up or on deployment/secondment might be in receipt of higher salary than they enjoyed in their substantive position. On the filling of the vacancy or the conclusion of the project, the person then reverts to their substantive permanent position on the terms and conditions applicable to that post.

Because these persons were permanent employees in their substantive post, it was not considered that the provisions of the Protection of Employees (Fixed-Term Work) Act 2003 – implementing Directive 99/70/EC – might apply and, consequently, the manner in which such temporary arrangements were continued or renewed, sometimes over a number of years, would not always have been in compliance with the requirements of that Act.

So, in Louth County Council v Kelly FTD1320, the Labour Court considered a complaint from an employee who held a substantive position with the Council but who had been engaged on a series of temporary projects for which he had been remunerated at a higher grade. Because the complainant was at all times a permanent employee, the Labour Court ruled that he was at no point a fixed-term employee within the meaning of the Act.

The issue has now come before the High Court. In 2012, the complainant was appointed Chief Financial Officer (CFO) of one of his employer’s healthcare units on a permanent basis. In 2014, he took up the role of interim Group Chief Executive (GCE) until the role was filled on a permanent basis. He was specifically advised that, when his temporary role as GCE ceased, he would revert to his substantive CFO terms and conditions. On various occasions, he was advised that his temporary appointment was being extended to specific dates pending the outcome of a competition to permanently fill the GCE position. The complainant was an unsuccessful candidate in that competition and he reverted to his CFO position in 2019.

His complaint that he had become entitled to remain in the post of GCE, pursuant to a contract of indefinite duration by virtue of his having been employed in that post on successive fixed-term contracts, with an aggregate duration of in excess of four years, was dismissed by the Labour Court. This was done on the basis that the Labour Court considered that the complainant lacked the requisite locus standi to bring a complaint under the Act, as he was not a “fixed-term employee”. A permanent employee, who reverted to their substantive grade and whose employment continued at the end of a series of fixed-term assignments, did not enjoy the protection of the Act.

The High Court did not agree with this analysis: see Power v Health Service Executive [2021] IEHC 346. The Act defined a “fixed-term employee” as a person “having a contract of employment … where the end of the contract of employment is determined by an objective condition”.  Simons J. said that a “contract of employment” might qualify as a “fixed-term contact” notwithstanding that the relevant employee continued in employment thereafter, whether by transitioning to a further contract or reverting to an earlier one.

The judge noted that the terms “employment contract” and “employment relationship” were not defined in the Framework Agreement annexed to Directive 99/70/EC and that clause 2(1) of that Agreement envisaged that those terms fell to be defined in law, collective agreements or practice in each Member State. Consequently, it was for national law to define the category of employees who qualified for protection under the Act.

It followed that, even if the employer was correct in saying that the Agreement’s objective was to promote stability in employment status and not to confer enhanced benefits on persons who already enjoy permanent status, a Member State was entitled to define an employment contract “in such a way as to include an employee who has a right to revert to their original post upon the ending of their fixed-term contract of employment”.

The judge went on to say that he did not accept that the Agreement’s objectives were as narrow as the employer contended. The Agreement had two stated purposes:

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

An employee who was acting-up or who was on deployment/secondment could be discriminated against in respect of terms and conditions such as pension entitlements. It was also difficult to reconcile the employer’s contention with the CJEU case law in respect of the obligation to provide effective measures to prevent and, where relevant, penalise the abuse of successive fixed-term contracts. The logic of the employer’s position was that it would be permissible to use fixed-term contracts to meet “permanent staffing needs”.

The Framework Agreement envisaged that there would be a “measured assessment” of whether the use of successive fixed-term employment contracts gave rise to abuse. This required not only consideration of the aggregate duration of such contracts but also an examination of whether their successive use was objectively justified. The existence of a contractual right to revert to one’s original position, on the terms and conditions applicable to that post, was “no more than a factor to be considered in deciding whether the successive use of fixed-term contracts is objectively justified”.

Simons J. did not feel it necessary to make an Article 267 TFEU reference because, in his opinion, the issue between the parties fell to be resolved purely as a matter of domestic law. He emphasised, however, that the point of law which arose had been “a narrow one”; namely whether the Labour Court had erred in law in dismissing the complaint on the “threshold issue” of locus standi. His decision did not address the broader question of whether the use of successive fixed-term contracts might have been objectively justified. It was “perfectly possible”, he said, for an employer to fill a vacant post on an interim basis pending the carrying out of a formal recruitment process; but that had to be done “within the confines” of the 2003 Act.

The employer has indicated that it intends seeking leave to appeal to the Supreme Court on the basis that the High Court decision involves a matter of “general public importance” and that there are “exceptional circumstances” warranting an appeal.