Why the end of a fixed-term contract is not a fair reason for dismissal
In this instalment of our series uncovering some of the common myths and misconceptions in employment law and HR, we are looking at whether a three-month rolling contract is a good idea.
Every now and then, a client will tell us that they’re going to put all their staff on a rolling three-month contract. So, an employee will get a contract for three months. And, if that goes well, they will get another contract for three months. And so on, for ever.
The misconception here is that the company will be able to simply dismiss the employee by saying “Your three months is up – I’m not giving you another contract”. It gives the employer a false sense of control that could land them in hot water.
What is a fair reason for dismissal?
When dismissing an employee, you need to have a fair reason. These reasons include redundancy, misconduct, poor performance, ill health incapability and exceptional other circumstances like a fundamental breakdown in trust or relations.
On its own, the expiry of a fixed term contract is not recognised as a fair reason for dismissal.
A tribunal will ask why you couldn’t renew the fixed term contract. If it is because the work was finished, or funding had run out, then the reason for dismissal is redundancy.
If it is because the employee wasn’t performing well, or has a poor attitude, then the reason for dismissal is poor performance or misconduct.
How to avoid unfair dismissal
In order to avoid a claim for unfair dismissal, you need to identify the reason for dismissal and follow a fair procedure – whether that is redundancy consultation, performance management or a disciplinary process.
If the employee has under two years’ service, they may not be able to bring a claim for unfair dismissal and so you wish to shorten the dismissal procedure.
However, if you’re tempted to do this you must first satisfy yourself that the employee will not be able to allege that they are being dismissed because of a protected characteristic (such as age, race, sex, pregnancy, etc) or because they have raised health and safety concerns, whistleblown or asserted their legal rights.
If in doubt, tread carefully, make sure you have evidence of the reasons for dismissal and follow a full procedure.
If you have any questions on this subject or would like some support on employment law and HR issues, please get in touch with us.