Human Resource Management: Terms & Conditions of Employment / Contracts, Part 2
Further to the recent ERB Readers Survey and the input received, and as a follow on from the August ERB Newsletter, this month we delve further into the area of Terms and Condition of Employment / Contracts.
The language used to describe contracts of employment is often confusing, and misused. A description of each primary contract type is set out below:
Permanent contract
A permanent contract is a contract of employment contract which is of an indefinite duration, i.e. it is an open ended agreement with no end date. A permanent contract may be terminated provided this is done fairly and in accordance with relevant legislation, e.g. by way of a dismissal, resignation, retirement or redundancy.
Temporary contract
A temporary contract is a contract which is put in place for a temporary period and has a definite duration or purpose. A temporary contract is more correctly referred to as a fixed-term contract, irrespective of whether the end of the contract is determined by reaching a specific date, or a specified purpose being completed. For a contract to be legally considered as a temporary contract, there must be a written agreement which outlines the objective provision which will bring the contract to an end.
Casual contract
A contract whereby the Employee is available to be offered work from time to time subject to Organisational requirements. A casual contract places the Employee on a panel of workers who will be contacted when the Organisation requires additional labour. A casual contract does not require the Employee to be available when called, but rather is an agreement that they may be contacted if and when necessary, and may decide whether or not they are available at the time when work is offered.
Full-time and part-time contracts
Full and part time are terms often used to describe contract types; however these only refer to the working hours of the Employee. These terms are explained below:
Full-time Employee
A full-time Employee is one who works the full-time hours associated with their position in the Organisation. A full time Employee may be permanent or temporary. The term full-time relates only to the hours worked, therefore it is more correct to refer to the worker as full-time permanent or full-time temporary.
Part-time Employee
A part-time Employee is one who works fewer hours than a comparable full-time Employee. A comparable full-time Employee is generally a person doing the same job on a full-time basis. A part-time Employee may be permanent or temporary. The term part-time relates only to the hours worked.
Self Employed Contractors versus Employees
It is important to be able to distinguish an Employee from a self-employed contractor. The difference between the contracts of a self-employed contractor and an Employee are that:
A self-employed person is not an Employee and does not, therefore, enjoy many of the rights bestowed upon Employees, e.g. protection from unfair dismissal, paid annual leave. However, a risk often exists that a self-employed contractor may be deemed an Employee due to the relationship they hold with an Organisation. Care should always be taken to ensure that the lines do not become blurred and that an individual’s status is clearly defined.
Some of the important factors which may influence the Employment Appeals Tribunal (EAT) or The Labour Court in making a decision as regards whether an individual is an Employee or not may include whether the person pays their own tax or whether their Employer deducts tax, whether the individual provides their own tools and equipment, the degree of control exercised by the Employer or service user, and other issues related to this such as whether the individual wears a company uniform or not. It is important to note that each case will be considered on its own merits, and one single factor rarely has an overriding impact on a case where the employment or self-employment status of the individual must be determined.
Specific Considerations For Fixed-Term Contracts – Terms and Renewals
A fixed-term contract must specify the objective condition which brings the contract to a natural end. This may be a specified date, the completion of a specific task, or the occurrence of a specific event. Once this objective condition is satisfied, the natural expiry of the contract occurs.
Notice Clause
In order to be entitled to terminate a fixed-term contract prior to the natural expiry of that contract, there must be a clause providing that either party may terminate the contract with notice. Even in such cases, the termination of the contract must still be undertaken in a fair manner, e.g. through the disciplinary process.
Equal Terms and Conditions
Fixed-term workers are entitled to terms and conditions equal to those provided to comparable permanent workers. Where an Employer can present objective grounds, not related to the fixed-term status of the Employee, which justify a difference in treatment this may be permissible. However, caution should always be exercised in taking such a decision.
Contract Renewals
When renewing a fixed-term contract it is a legal requirement that the Employer advises the Employee, in writing prior to the expiry of the current contract, of the fact that the contract is to be renewed. The legislation requires that the Employer outline the objective reasons for renewing the fixed-term contract and not offering permanent employment. A failure to provide these letters will not leave an Employer liable to a fine. However, where an Employee pursues a claim for permanency before a Rights Commissioner or the Labour Court, the Employer’s case will be severely weakened by the absence of such letters.
The language used to describe contracts of employment is often confusing, and misused. A description of each primary contract type is set out below:
Permanent contract
A permanent contract is a contract of employment contract which is of an indefinite duration, i.e. it is an open ended agreement with no end date. A permanent contract may be terminated provided this is done fairly and in accordance with relevant legislation, e.g. by way of a dismissal, resignation, retirement or redundancy.
Temporary contract
A temporary contract is a contract which is put in place for a temporary period and has a definite duration or purpose. A temporary contract is more correctly referred to as a fixed-term contract, irrespective of whether the end of the contract is determined by reaching a specific date, or a specified purpose being completed. For a contract to be legally considered as a temporary contract, there must be a written agreement which outlines the objective provision which will bring the contract to an end.
Casual contract
A contract whereby the Employee is available to be offered work from time to time subject to Organisational requirements. A casual contract places the Employee on a panel of workers who will be contacted when the Organisation requires additional labour. A casual contract does not require the Employee to be available when called, but rather is an agreement that they may be contacted if and when necessary, and may decide whether or not they are available at the time when work is offered.
Full-time and part-time contracts
Full and part time are terms often used to describe contract types; however these only refer to the working hours of the Employee. These terms are explained below:
Full-time Employee
A full-time Employee is one who works the full-time hours associated with their position in the Organisation. A full time Employee may be permanent or temporary. The term full-time relates only to the hours worked, therefore it is more correct to refer to the worker as full-time permanent or full-time temporary.
Part-time Employee
A part-time Employee is one who works fewer hours than a comparable full-time Employee. A comparable full-time Employee is generally a person doing the same job on a full-time basis. A part-time Employee may be permanent or temporary. The term part-time relates only to the hours worked.
Self Employed Contractors versus Employees
It is important to be able to distinguish an Employee from a self-employed contractor. The difference between the contracts of a self-employed contractor and an Employee are that:
- An Employee is employed under what is referred to as a contract of service.
- A self-employed person works under a contract for services.
A self-employed person is not an Employee and does not, therefore, enjoy many of the rights bestowed upon Employees, e.g. protection from unfair dismissal, paid annual leave. However, a risk often exists that a self-employed contractor may be deemed an Employee due to the relationship they hold with an Organisation. Care should always be taken to ensure that the lines do not become blurred and that an individual’s status is clearly defined.
Some of the important factors which may influence the Employment Appeals Tribunal (EAT) or The Labour Court in making a decision as regards whether an individual is an Employee or not may include whether the person pays their own tax or whether their Employer deducts tax, whether the individual provides their own tools and equipment, the degree of control exercised by the Employer or service user, and other issues related to this such as whether the individual wears a company uniform or not. It is important to note that each case will be considered on its own merits, and one single factor rarely has an overriding impact on a case where the employment or self-employment status of the individual must be determined.
Specific Considerations For Fixed-Term Contracts – Terms and Renewals
A fixed-term contract must specify the objective condition which brings the contract to a natural end. This may be a specified date, the completion of a specific task, or the occurrence of a specific event. Once this objective condition is satisfied, the natural expiry of the contract occurs.
Notice Clause
In order to be entitled to terminate a fixed-term contract prior to the natural expiry of that contract, there must be a clause providing that either party may terminate the contract with notice. Even in such cases, the termination of the contract must still be undertaken in a fair manner, e.g. through the disciplinary process.
Equal Terms and Conditions
Fixed-term workers are entitled to terms and conditions equal to those provided to comparable permanent workers. Where an Employer can present objective grounds, not related to the fixed-term status of the Employee, which justify a difference in treatment this may be permissible. However, caution should always be exercised in taking such a decision.
Contract Renewals
When renewing a fixed-term contract it is a legal requirement that the Employer advises the Employee, in writing prior to the expiry of the current contract, of the fact that the contract is to be renewed. The legislation requires that the Employer outline the objective reasons for renewing the fixed-term contract and not offering permanent employment. A failure to provide these letters will not leave an Employer liable to a fine. However, where an Employee pursues a claim for permanency before a Rights Commissioner or the Labour Court, the Employer’s case will be severely weakened by the absence of such letters.
