Fixed Term Contracts
THE EMPLOYMENT (JERSEY) LAW 2003 - Guidance note 8
This statement is intended to explain to employers and employees the principal requirements of the Law. It is not intended to cover all the requirements of the Law, nor does it represent a statement of the Law.
Fixed Term Contract (FTC)
Interpretation Article 1
1. A fixed term contract means a contract of employment that will end on:
(a) the expiry of a specific period of time e.g. six months.
(b) a specific date e.g. 7th June 201x.
(c) the occurrence or non-occurrence of a specific event e.g. the return to work of an employee from parental leave whose role has been temporarily covered by a fixed term contract employee.
(d) the completion of a specific event e.g. when the sale of XYZ Limited has been completed.
Entitlement to annual leave Article 11
2. As a minimum, FTC employees are entitled to 3 weeks paid leave per annum (a week's leave should equate with an employee's normal working week), or any longer period of paid leave specified in a relevant agreement or contract, and to leave on Public and Bank Holidays, or alternative days off in lieu if required to work on these days.
Provided the employee has worked at least 28 days, then in any leave year they are entitled to pro rata paid leave for the period of time worked i.e. 1/12th of annual leave for each month completed, rounded up to a whole day.
E.g. If an employee is entitled to 20 days holiday with pay each year then each whole month of service equates with 20 ¸12 days entitlement i.e. 1.67 days holiday with pay. In calculating pro rata entitlement, it is important to know when the "holiday year" begins. (e.g. January 1st). If the holiday year runs from January to December and the notice period ends on the 31st May, the employee's proportionate entitlement for the five months worked during the holiday year would be calculated as: 5(months) x 1.67(days) = 9 days (paid holidays for the period January 1st to May 31st rounded up from 8.35 days due).
In this example if the employee had taken five days holiday, then in addition to the relevant notice period they would be entitled to 9- 5 = 4 days pay in lieu of holidays not taken.
If, however, in the same example, at the date employment is terminated they have taken 15 days holiday then the employer is entitled to receive payment from the employee equivalent to the 6 days excess holiday taken.
Calculating a week's pay for leave purposes Schedule 1
3. In determining what a week's pay is for paid holiday purposes, where a person is paid a regular wage for the hours normally worked, then a week (or a day) of paid holiday will be the same as that regular wage.
If, however, pay is variable depending on the amount of work done in normal working hours then the amount to be paid will be calculated by working out the average hourly rate of pay for the previous 52 weeks (see 4. below), ignoring any commission or similar variable payment.
If working hours vary from day to day, week to week or month to month so that the amount paid varies, the average number of weekly hours shall be the average for the past 52 weeks and the average hourly rate of pay shall be the average hourly rate for the previous 52 weeks (see 5. below).
(Note that in abnormal situations e.g. reduced pay during sickness or enhanced pay for some reason, where the calculation would be distorted, the calculation should take account of the normal situation that would ordinarily have existed).
4. Some contracts of employment do not contain "normal" hours. In such cases a week's pay for paid holiday purposes will be the average weekly pay for the previous 52 weeks during which some payment has been made i.e. weeks in which no payment was made should be discounted (see 5. below), providing that continuous employment, as defined in Article 57, applies.
5. In cases where the employee has not been employed for a long enough period for the average wage to be determined as in 3 & 4 above, the calculation should be undertaken fairly in a manner as close to formula above as is possible. If the calculation results in a figure below the minimum wage, then the minimum wage rate prevails.
Computation of period of employment Article 57
6. Two or more fixed term contracts with the same employer, separated by a period of not more than 26 weeks, will count as continuous employment. The break in between is not counted when determining the length of continuous employment.
Termination of Employment Article 56
7. An employer is under no obligation to give notice to an employee who is employed under a FTC (subject to certain provisos, see 8. below). In the absence of a notice period (which would allow early termination of the FTC should this be necessary) the employer may be under an obligation to pay the agreed salary for the duration of the FTC, even if due to circumstances no work is available. The employer may wish, therefore, to include an appropriate notice period within the FTC.
8. There are exceptions that require statutory notice to be given:
a) If a FTC is for 4 weeks or less, but due to circumstances actually continues for 13 weeks or more, then statutory minimum periods of notice will apply (Article56(4)).
b) If, however, the FTC period is unspecified but is expected to be for 13 weeks less, statutory notice periods do not apply unless the employment has been allowed to extend beyond 13 weeks (Article 56(5)
Either of these situations could arise if, due to circumstances, the original contract was extended or allowed to continue beyond 13 weeks, or in cases where continuous service i.e. the aggregate of more than one FTC separated by less than 26 weeks, results in aggregated continuous employment of more than 13 weeks.
9. In order to avoid the artificial use of fixed term contracts by employers, the non-renewal of fixed term contracts will amount to dismissal, except where the job has come to an end (which will be construed as redundancy. Under article 64 (1) it is for the employer to prove it is a genuine redundancy).
The basic policy is that subject to: fair redundancy; conduct; lack of ability or qualifications;
where to continue to employ the person would be breaking the law (e.g. a driver who loses their driving licence);
some other substantial reason (e.g. the return to work of the person for whom the FTC employee was covering for parental or ill health reasons), employees will be entitled to continuous employment.
Unfair dismissal - Articles 61 to 73
Qualifying period and hours of employment
10. any employee starting work with an employer on an FTC will have to accrue 52 weeks' continuous service in order to qualify for the right not to be unfairly dismissed.
Automatically unfair dismissal - Articles 64 to 70
11. Some dismissals will be automatically unfair if they;
a) relate to the membership or non-membership of a trade union or taking part in union activities at an appropriate time.
b) result from selection for redundancy on grounds related to union membership or activity.
c) result from the employee insisting upon a statutory right e.g. written particulars of employment, payslips, uninterrupted rest periods or minimum wage.
d) result from a selection procedure for redundancy, which was unfair.
e) are by reason of pregnancy, childbirth or parental rights.
f) are dismissed for representing (or proposing to represent) another employee, or for asserting the right to be represented in a disciplinary or grievance hearing.
g) are subject to an act of discrimination as per the Discrimination (Jersey) Law 2013.
Regardless of age or length of service, dismissals for reasons a), b), c), e) or f) will be automatically unfair.
Where an employer has failed to allow (or threatened not to allow) an employee to be represented, the Tribunal may award up to 4 weeks pay as compensation and quash any action taken by the employer in respect of the disciplinary or grievance matter (other than dismissal). In an unfair dismissal claim, the Tribunal may take into account an employer's failure to allow the employee to be represented in deciding whether a dismissal was fair or unfair.
Effective date of termination Article 63
12. The effective date of termination is:
a) the date on which the notice expires, whether given by employer or employee.
b) when termination is without notice, the date termination took place.
c) in relation to a fixed term contract that is not renewed under the same contract, the actual date of expiry.
When giving notice (when notice is required), it must be remembered that the statutory notice period may be longer than that set out in the contract of employment. In such situations, the statutory period of notice is the one that must be applied and the effective date of termination will be the date on which the statutory notice period would end.