Fixed term contracts – a great way to reduce costs or just a big headache?

Good for business

Fixed term contracts can be a really useful tool for you as the employer in terms  to ensure work is covered in the short-term, whilst you work out whether you need a permanent post. You can cover a period of sickness, or a maternity leave, career break or sabbatical etc.  It can give you a great deal of flexibility for the working arrangements within your practice.

Since the introduction of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, fixed term contract employees have the right to no less favourable treatment than that of a permanent employee.  The requirement for you is that you treat your employees the same;

  • to ensure that they are subject to the same treatment at work,
  • given the same access to jobs,
  • be subject to and protected by the same policies and procedures,
  • be in receipt of the same pay for comparable work,
  • receive the same holidays, and rest-time
  • ensure adequate notice is given to end the contract, to avoid a tribunal claim and
  • be aware of the potential for the contract to be reclassified to permanent, where an employees is employed in a succession of fixed term contracts lasting more than 4 years

What about the employee?

This all depends on the individual’s own circumstances.  Having fulfilled a number of fixed term contracts myself, either to cover a maternity leave, long period of sick leave, to work on a specific project for a set period of time, or to help reduce a heavy workload, this can be hugely rewarding.  It gives you a variety of experience of working in different organisations, meeting and working alongside many new colleagues and gaining exposure to more of the challenges an organisation faces.   As an HR practitioner, I have gained invaluable insight into how varying organisations operate and have seen some of the different aspects of managing people.

But what about the employee who prefers certainty and would like to work in a permanent position?  Working under a fixed term contract for this type of person can be incredibly frustrating if they really enjoy the role and where they work, but they know that their time with that employer will shortly be coming to an end.  Or if they have been given the promise of an extension, which is notified to them at the very last minute, or the promise of an extension just never materialises.  These situations can leave the employee in a really unsettling place, and this is something to be aware of when you make your decisions about continuing the contract or not.

Here’s one to avoid!

I thought I’d share with you an incident that I was advising a Practice Manager on recently, just so you can be careful not to make a similar mistake! The new Practice Manager had started working in a GP practice and uncovered a situation where there was a total mix-up of contracts, and 5 months overpayment of salary to one individual.

In this situation, there were two receptionists, one on a permanent contract working full-time hours and the other who worked part-time (3 days) on a fixed term contract for 6 months. The part-time person had also reduced her hours to 1 day.  As the permanent receptionist was coming up to the end of her probationary period, she asked the manager if she would be having a review meeting.  Upon investigation into the personal files, the manager found that the permanent receptionist was on a fixed term contract which was due to end that week, and the part-time person who was supposed to be on a fixed term contract had in fact been given a permanent post!  Due to the administrative errors here, made by the previous Practice Manager, the part-time person had also been paid for the extra 2 days that she had not been working for the last 5 months.

Fortunately, after a lot of head-scratching, meetings and writing new contracts, the situation was resolved amicably and both parties were put on the correct contracts.  It demonstrates, however, the importance of proper record-keeping relating to the contract types your staff are on, to make sure that they are relevant, accurate and in-date.

For those on fixed term contracts it is essential that you record and monitor the dates, put this somewhere you can access it easily, and regularly review it so that you can see when the dates are due for review and make the decision to end or extend the contract on good time.

You should ensure you can objectively justify the reason why an individual is working under a fixed term contract, so that you can be certain that you are using them appropriately. Also it’s a good idea to make sure they are given the correct contract in the first place to avoid the above situation.

If you need any further guidance on this or on any other contractual issue, please contact the advice line.

Next topic: Changes to flexible working

Stay up-to-date with relevant HR information and employment law by following me on Twitter @Jennifer_fpm

In addition to the above FPM members can obtain further information via the FPM website. Alternatively members can also email specific questions about employment issues to advice@firstpracticemanagement.co.uk where your question will be treated in confidence and will normally be answered (by email) within 2 working days of submission.


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