Notice of potential dismissal (FTC expiry)

The expiry of a fixed-term contract without it being renewed is still a dismissal in law and therefore can still be an unfair dismissal if you fail to deal with the situation properly, notwithstanding the fact you agreed with the employee at the outset that the contract would be for a fixed term. Our letter can be used to set up a meeting with a fixed-term employee to discuss your proposal to dismiss them on the expiry of the fixed term. Take care to deal with the situation as you would in relation to any other type of dismissal and follow a fair procedure.

In a fix

If an employee has been employed two years or longer, they have the general right to claim unfair dismissal. A dismissal also includes the expiry of a fixed-term contract without it being renewed. Thus, if an employee works on a single fixed-term contract or a series of consecutive fixed-term contracts for two years or more, they will acquire the continuity of employment necessary to claim unfair dismissal in the same way as an employee on a permanent contract. Therefore, you need to take the same level of care in relation to fixed-term contract dismissals as you would with any other dismissal. The legislation provides that it is potentially fair to dismiss an employee for “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held” (known as SOSR dismissals) and it is into this SOSR dismissal category that the expiry of fixed-term contracts without renewal will generally fall.

Fair procedure

As with other types of dismissal, a dismissal due to the expiry of a fixed-term contract will be fair only if a fair procedure is followed and the dismissal is reasonable in all the circumstances of the case, i.e. it comes within the “band of reasonable responses” open to the employer. Provided the expiry of the fixed term is the real reason for dismissal and the work is no longer there to justify renewing it, this will normally be fair but you will still need to follow a fair dismissal procedure. As part of this, you should also consider whether the employee could be offered alternative employment within your business. Our Notice of Potential Dismissal (FTC Expiry) letter will guide you through a fair procedure. It sets out the proposal to terminate the fixed-term employment on its expiry and the reasons why and then it arranges a meeting with the employee to discuss the proposal. Meeting with the employee before a final decision is taken is a necessary part of a fair procedure.

Alternative employment

Our letter also raises the issue of searching for alternative employment - it assumes you have explored this but have so far been unable to find anything. If you have found possible alternative employment, you need to amend our letter accordingly and then enclose details of the alternative positions. These don’t need to be at the same level of seniority or on the same rate of pay as the current post - what’s important is that you consider the employee for anything available and if they’re qualified for the post, let them decide whether they think it’s a suitable role to undertake. If there’s any doubt as to whether they’re sufficiently qualified or experienced to undertake a particular alternative position, then interview them for it.