Hudson v The Department for Work and Pensions – fixed-term employees and permanent contracts
This case concerns the application of Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (“the Regulations”) to employment where it is argued that the original employment was offered under a particular Government scheme.
The facts in Hudson v The Department for Work and Pensions
Mrs Hudson (“the Claimant”) commenced employment with the Department of Work and Pensions (“the Respondent”) in April 2006 under a fixed-term contract. Her fixed-term contract was renewed after the initial contract a number of times and the latest fixed-term contract took effect on 19 October 2009. The Claimant sought a declaration from the Employment Tribunal in 2010 to the effect that she was now a permanent employee of the Respondent, as per Regulation 8 of the Regulations.
A Pre-Hearing Review was held. The Claimant claimed that she had completed the necessary four-year period of service referred to in Regulation 8 to allow her to be deemed a permanent employee. The Respondent resisted this on the basis that the Claimant’s employment was excluded from the Regulations as under Regulation 18(1)(a) her employment had originally been designed to provide the Claimant with training or work experience for the purpose of assisting her to obtain or seek work under arrangements made by the Government.
The Employment Judge held that the Claimant could not rely on Regulation 8 because of the exclusion in Regulation 18. The Claimant appealed on three points:
- That she satisfied the conditions of Regulation 8 (she was an employee, was employed under a contract purporting to be a fixed-term contract, and had been previously employed on a fixed-term contract prior to the start of the current contract) and was therefore entitled to the declaration sought
- That there was in the present case no “Government scheme” which she was employed on
- That if she had been employed under a “Government scheme” then the purpose of the scheme was not to help her obtain or seek work
The law relating to fixed-term contracts and permanent employee status
The Regulations have two broad main aims – to protect fixed-term workers from less favourable treatment as a result of their employment status, and to establish how and when a succession of fixed-term contracts is deemed to become a permanent contract (with no fixed ending date).
Under the Regulation 8 of the Fixed-Term Employees Regulations employees who have been employed for a period of four years or more on a series of fixed-term contracts are deemed to be permanent employees unless the continued use of fixed-term contracts (instead of a permanent contract) can be objectively justified. The effect of the change from a fixed-term contract to a permanent contract is simply that the fixed contract term is of no effect – all other terms of the contract remain the same.
Unless the use of fixed-term contracts can be objectively justified or the employment falls within one of the exclusions listed in Regulation 18 then the employee’s contract of employment will be deemed a permanent one.
The Employment Appeal Tribunal’s decision in Hudson v The Department for Work and Pensions
The Employment Appeal Tribunal upheld all 3 points of the Claimant’s appeal. It was held that:
- The Claimant was an employee, she was employed under a contract purporting to be a fixed-term contract, and she had been employed under a succession of fixed-term contracts until the current contract
- She was not employed under a Government scheme in the current contract; and
- That if she had been employed under a Government scheme in the current contract then the purpose of that employment was not to provide her with “work experience”
The EAT also allowed the Respondent permission to appeal to the Court of Appeal.
Our specialist employment lawyers’ thoughts on Hudson v The Department for Work and Pensions
The aim of the Regulations is clearly to prevent the less favourable treatment of fixed-term contract employees, either by virtue of certain tangible issues (such as less favourable contract terms) or by employing them on a succession of contracts “purporting” to be fixed-term contracts when they were actually permanent.
Hudson v The Department for Work and Pensions shows that Employment Appeal Tribunal will take a broad view of whether the employee was employed on a Government scheme and the fact that she may have been employed as part of a Government scheme at first does not preclude her from either relying on that period of continuous service which would otherwise be excluded or asserting that the nature of the employment had changed since.