The European Court of Justice has clarified the rules governing the use of successive fixed-term contracts by employers.

18 July 2006

AMSTERDAM - The European Court of Justice has clarified the rules governing the use of successive fixed-term contracts by employers. The practice is outlawed unless there is a specific set of 'objective reasons' for doing so.

The court ruled this month that the national legislation in Greece, whereby fixed-term contracts are not regarded as successive if a period of at least twenty days lapsed between the end and the start dates of each contracts, could be exploited by employers to avoid giving permanent contracts, and was therefore unlawful.

The implication of this ruling will reach other European nations said Robin Chater of the Federation of European Employers. Spain for instance has been timely in introducing a new law which applies to fixed-term contracts that have involved an individual being employed for the same company for 24 months in any 30-month period or been subject to two or more temporary contracts, said Chater.

In Spain around 40 percent of workers, and as many as 80 percent of new hires, are currently on fixed-term contracts, a trend which is directly linked to the high costs associated with making employees on permanent contracts redundant.

The directive, introduced in 1999, aimed 'to establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships.' It stipulated that Member States could determine under what conditions fixed-term employment contracts or relationships are to be regarded as 'successive'.

Now the European court has clarified that domestic courts must interpret a resulting national law as far as possible 'in the light of the wording or purpose of the directive concerned with a view to achieving the results sought by the directive'.

What HR needs to know, said Chater, "is that in the EU, however a country implements the directive, the court will not agree that this fixed-term contract can be renewed for 'any' reason. You can only renew a fixed-term contract if you have one of three reasons; to replace someone who is absent, to fulfil a defined project, or to complete seasonal work."

[Copyright Expatica 2006]