Replacement of the Fixed Term Contracts Regulations

On the 13^th of March 2007, the Government published the new fixed term workers regulations that replaced those issued in 2002.  The changes to the old regulations that came into effect on the 15^th of June relate mainly to the 4-year period and the exceptions for that rule.

 

Although initial reports on this regulation stated that not much has changed from the old regulations, these new regulations do in fact hold a number of hidden secrets that help the employer solve many of the old queries. At the same time, these new regulations tackle the issue of ‘objective reasons’ for having a fixed term contract for more than 4 years in much more detail than the 2002 regulations.

 

I propose tackling these regulations by answering some hypothetical questions that an employer may be asking after having read the regulations:

 

Has the period of 4 years maximum term for a fixed term contract changed?

 

No, the period remains the same, so that unless proper objective reasons are given, the employer may only employ an employee on successive fixed term contracts for a maximum of 4 years. After that the contract transforms into an indefinite one.

 

So what has been clarified?

 

There have been many clarifications in these new regulations due to the problems that we all had with the 2002 regulations. For starters, the regulations do not apply to temporary, fixed term appointments given to a person who is already employed (usually at a lower grade) on an indefinite term contract with a particular employer. The latter situation is in fact typical with Public Corporations. In this sort of scenario therefore, the appointment can be for more then 4 years.

 

These regulations do specify that any period where the employee was on a fixed term contract prior to the 15^th June 2007, counts towards determining the 4-year term.

 

Also, once the four years are up and no objective reason is given, the contract of employment is deemed to be indefinite from the day following the expiry of the 4^th year of the employee on a fixed term contract. However the first day of employment of the employee with his employer is taken to be the applicable date in order to calculate the notice periods in case of redundancy and in order to determine seniority.

 

It is still doubtful what notice period is to apply to an employee when he or she comes to resign from employment. Must the employee count back from the 1^st day of employment or must one only count the months from the date of conversion in order to compute the notice period? The law seems to indicate that the notice period should be calculated on the basis of all the years of employment, as the regulations specify that although the actual date of conversion is the one following the 4 year period, it also states that for ‘all other purposes’ one must take into consideration all the term of employment with the employer in question. Possibly the latter issue would have to be clarified by our courts.

 

If I want a fixed term contract for, say 5 years, whom can I give it to?

 

You can give it to all types of employees, IF you have ‘objective reasons’ for doing so.

 

So what does the term ‘objective reasons’ mean?

 

The EU Directive on fixed term workers is aimed at protecting the abuse of fixed term contracts with employees as such contracts might create a state of uncertainty as opposed to job security.  The EU Directive therefore, created an escape route for employers who have ‘objective reasons’ for extending the period of a contract beyond the 4-year threshold.

 

The Malta regulations specify that the employer may retain an employee beyond 4 years on a fixed term contract if:

 

1. That worker is a casual or temporary worker
2. The worker occupies a management position
3. The worker is employed for a specific task or until a specific event
4. The worker is employed on diplomatic missions or a specific appointment made to protect the interests of Malta or
5. The worker is employed as a person of trust to serve an office of a publicly elected body or employed as a member of a board of any statutory or public authority, committee, commission or corporation or of a public sector entity.
6. The worker is an advisor, consultant or serves in the public and private sector as a person of trust.

 

It can easily be said that the exceptions to the general rule are quite comprehensive in nature, but we must mention that points no (2) and (6) above on management positions and persons of trust, may run counter to the European Directive in that no such exceptions are found in the text of the Directive for Malta to apply, so we might be expecting an amendment to the regulations in the near future.

 

If an employer wants to apply the ‘objective reason’ to a particular contract of employment, in order to extend it beyond the 5 years, the employer has to do one of the following:

 

1. For new contracts: The employer must write the reasons for extending the contract beyond 4 years in the contract of employment OR ELSE the employer must specify the conditions of employment once the contract is converted into an indefinite one. If the latter is not done, the conversion after 4 years is automatic and the conditions of the indefinite term contract will be the same as those on the fixed term contract.

 

2. For current contracts with private employers and Public Service employees who have been more than 4 years on a fixed term contract with Government: The employer has till the 15^th December 2007 or until the expiry of the current fixed term contract to specify the objective reasons for maintaining that person beyond 4 years on a fixed term contract. If the latter is not done, the conversion after 4 years is automatic and the conditions of the indefinite term contract will be the same as those on the fixed term contract. 

 

Please note that the new rules shall not affect the status of those employees who have already been ‘converted’ into indefinite term employees, prior to the 15^th June 2007.