Expiration of fixed term contracts and maternity leave

The duration of a fixed term contract is set out in a contract of employment. The contract automatically terminates upon the expiration of the term set out therein. There is no notice requirement as both the employer and employee are effectively on notice of the date of termination from the time that the contract is entered into, unless of course either party seeks to terminate the contract prior to the expiration of the fixed term.

Fixed term employees are afforded the same statutory entitlements as permanent employees including, but not limited to, annual leave, maternity leave, redundancy and wage slips. With the exception of certain agency workers, apprentices, trainee Garda, trainee nurses, members of the Defence Forces and people in publicly-funded employment schemes, fixed term benefit from legislative protections under the Protection of Employees (Fixed-Term Work) Act 2003.

However, a distinguishing factor between fixed term and permanent employees in terms of statutory and legislative protection is provided for by the Unfair Dismissals Act 1977-2015.  Section 2(2)(b) of the Unfair Dismissals Act 1977-2015 provides that the Act does not apply to the dismissal of an employee under a fixed term contract of employment where the dismissal was based on the duration of the contract coming to an end without being renewed. An employee therefore does not have redress under this Act if their employment terminates solely as a result of the expiry of the contractual term, provided that the following conditions are met:-

1. the contract is in writing;
2. the contract specifies that the Unfair Dismissals Act will not apply to a dismissal consisting only of the expiry of the term of the contract without it being renewed; and
3. the contract is signed by both the employer and the employee.

Issues arise when employers or employees do not fully understand the implications of being a fixed term employee as opposed to a permanent employee. One such issue arose in the case Akina Dada Wa Africa and Claudia Horeau UDD/18/237.

In this case, the complainant was a fixed term employee employed on a 2 year fixed term contract from January 2015 to December 2016. In May 2016 the complainant raised a bullying related grievance and subsequently went on sick leave. On 29 August 2016 the complainant went on maternity leave. The maternity leave was due to expire on 1 March 2017 but was extended by an additional 16 weeks maternity leave until June 2017 at the request of the complainant.

During the employee’s maternity leave, and after the expiry of the fixed term, the respondent employer continued to communicate and engage with the complainant. The respondent argued that they had continued their communication and engagement with the complainant beyond the expiration of the fixed term contract as they wrongly believed that the fixed term was automatically extended until the end of her maternity leave, being June 2017, in accordance with the Section 10 (2) of the Maternity Protection Act 1994 (as amended) which states:

“Where an employee is employed under a contract for a fixed term and that term expires before the date which, apart from this subsection, would be the last day of her maternity leave, then –

(a) notwithstanding any other provision in this Part, the last day of her maternity leave shall be the day on which the term expires; and
(b) nothing in this Part shall affect the termination of the employee’s contract of employment on that day.”

The respondent stated that its intention was not to extend the contract indefinitely but rather to abide by, what they believed to be, the requirements of the Maternity Protection Acts.

The complainant argued that, as a result of the respondent’s continued engagement with her beyond the expiry of the fixed term, she was entitled to a contract of indefinite duration. She stated that she never returned to work following the expiry of her maternity leave as she was on stress related medical leave until October 2017, when she felt she had no alternative but to resign because of the respondent’s failure to deal with her grievance raised in May 2016. The complainant believed herself to still be an employee at the date of her resignation in October 2017.

The Labour Court was required to determine whether they had jurisdiction to hear the case. In order to do so, the Court had to consider whether the respondent had extended the complainant’s contract of employment indefinitely resulting in her remaining an employee up to the date of her resignation in October 2017, or whether the employment relationship ended upon the expiration of the fixed term or maternity leave.

The Labour Court rejected the complainant’s arguments. They looked at the entire employment relationship and the intentions of the employer and found that even though the respondent misinterpreted the Maternity Protection Acts as extending the term of the contract to the end of the complainant’s maternity leave being June 2017, they ceased to treat the complainant as an employee at that point. Further, the date inserted by the respondent in the P.45 as the final date of employment was in June 2017.

Therefore, the Court found that while the respondent had misinterpreted and misapplied the law, there was no intention that the complainant’s contract of employment would be extended beyond June 2017 or indefinitely. The Labour Court stated that “it is sufficient for the Court to note that nothing done by the Respondent in that period can be interpreted reasonably to mean that the Complainant continued to have an open ended employment contract beyond the end of her maternity leave.” As the complainant resigned in October 2017, after the completion of her maternity leave, the Court said that they were not required to consider the complainant’s employment status between January 2017 and June 2017. While the Labour Court did not explicitly state the date at which they found the complainant’s employment to have ceased (December 2016 or June 2017), they did determine that the complainant was not an employee at the time of her resignation in October 2017, and therefore was not covered by the Unfair Dismissals Act.

This case provides helpful guidance for employers in respect of the interaction between fixed term contracts of employment and employees on maternity leave. A fixed term contract of employment can automatically terminate notwithstanding that an employee is on maternity leave. Provided the only reason for the termination of the employment is the expiry of the fixed term, employers need not fear a successful claim under the Unfair Dismissals legislation or the Maternity Protection legislation.

While the Labour Court in this case held that failure by the respondent to put in place a new end date did not automatically result in the contract being of indefinite duration and looked at the employment relationship as a whole along with the intentions and actions of the employer, it is not yet clear if this approach will be followed in the future. Therefore, employers should be aware that engaging and communicating with employees following the expiration of a fixed term contract may inadvertently extend the contract if the employer fails to put in place and communicate a new end date.

For further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie