What you need to know about Employment Law Contracts

Sunday, September 7th, 2014

Employment Law Contracts

Employment law in Ireland is vast and varied. There are no less than 16 separate statutes governing employment rights and obligations in Ireland, in addition of which there are also a number of European employment law Directives. Below is a quick run through what employees should be aware of and what employers should definitely know:

Employment contracts are subject to the Terms of Information Employment Act, 1994. Section 3 of this Act provides that all employers must provide their employees, and within two months after the commencement of employment, a written statement containing such terms and conditions of employment as the name of the employer, the place of work, the title of the job, the method of pay.

Adherence to this law is far from universal amongst businesses and compliance usually depends on the size of the organisation you work for. Generally speaking, large organisations have at least one HR officer or HR department which ensures the business properly applies the legislation. Many smaller businesses however either tend to overlook this obligation or are uncertain how to formalise their employment relationships with their employees. Even though terms and conditions of contracts can arise from practice and custom, the fact remains that if a written statement is not provided then the employer will be considered to be in breach of the legislation.

The failure to provide this statement may lead to a claim being made against an employer by an employee who can make a complaint to the Rights Commissioner, which is a division of the Labour Relations Commission. If the case is well founded, the Rights Commissioner can make an award of up 4 weeks pay. While this complaint usually only arises in conjunction with a separate complaint, for example a claim for unfair dismissal, it is an issue that all employers should be mindful of.

Interestingly, the obligation to provide an employment statement also applies where someone takes over a business from someone else. In that scenario, the second business owner is still liable to the employees for a written statement of employment and cannot rely on the argument the original owner should have provided it.

Fixed Term or Specified Purpose Contracts

These contracts are slightly unique and are sometimes described as ‘atypical’ employment contracts. They are distinguishable from ‘open-ended’ contracts. With fixed term and specific purpose contracts, there is a starting date and a defined finishing date. If fixed term, it is as the name suggests for a fixed duration e.g. one year contract only. If the contract is for a specific purpose, the ending of that purpose brings the contract to the end. Common examples include the purpose of covering for an employee who is on maternity leave or for the purpose of completion of a specific project.

Employers should take care when utilising these types of contracts as there are many statutory obligations. For example, the Protection of Employees (Fixed Term Work) Act, 2003 provides that fixed term workers may not be treated less favourably than comparable permanent employees unless the employer can objectively justify the different treatment.

If an employer wishes to renew a fixed term contract, then it is essential that a written statement is provided to the employee notifying them that the contract is to be renewed and the objective reasons why the employee is not receiving an open ended contract. This written statement must be given to an employee either before or on the date of the expiration of their current fixed term contract or else the employer will be in contravention of the law.

Also, employers cannot continuously renew fixed term contracts in order to benefit their business. If an employee, whose employment has been employed on 2 or more continuous fixed-term contracts, the total duration of those contracts may not exceed 4 years. After this, if the employer wishes to renew the employee’s contract, it must be an open-ended contract unless there are objective grounds justifying the renewal of the contract for a fixed term only.

In the event there is non-compliance with the obligations under fixed term contracts, again a complaint may be made by the employee to the Rights Commissioner where the Rights Commissioner can award compensation up to two years remuneration.

Conclusion

In conclusion, good business management means ensuring your business is fully compliant with your obligations in providing your employees with their correct employment contracts. This assists your business by ensuring your employees know their duties and obligations while also protecting you from claims which could otherwise have been easily avoided.