Some jobs just tick away

There's a small percentage of the workforce who, despite all appearances, are on a different wicket to most of us. Some of them may come and go from your workplace next year, next month or next week.

They're the "fixed-termers" who the boss has hired on a time-specific basis - from the moment they start work the clock is counting down to the day they leave.

While they look and behave like regular employees, their terms of employment are quite different.

Permanent employment agreements - like the ones most of us are on - are of an indefinite duration. But the Employment Relations Act allows employees and employers to enter fixed-term employment agreements - often for less than 12 months - under certain legitimate circumstances.

So what are the genuine reasons for offering someone a fixed-term employment agreement (FTA)?

Employment lawyer John Hannan says they are usually allied to project-based tasks with a specific beginning and end. For example, many of the 100 or so fixed-term employment agreements Telecom has on its books cover two common types.

One is filling-in while someone is on parental leave. But most of Telecom's FTAs relate to event-based projects. For example, the telco's IT department often has extra FTAs to help implement new systems.

Employers can also lawfully justify having FTAs to boost numbers during seasonal peaks.

Hannan also says the fickle nature of tertiary courses means that education providers can justify offering lecturers FTAs.

"But if FTAs are constantly rolled out they are arguably not genuine," says Hannan, partner at Phillips Fox.

Employees who enter into such agreements have no automatic right of renewal once an FTA comes to an end unless it is part of the agreement. And while most FTAs wouldn't include a right for the employee to terminate early, employers are unlikely to sue for damages.

Employees on FTAs have the same employment law rights as any other employee and can call for mediation at any time during their employment.

But there are some things they're not entitled to. For starters, they don't qualify for redundancy compensation when the fixed term ends and those on FTAs of less than six months are not entitled to sick leave. People with FTAs of less than a year usually receive a proportionate holiday entitlement as a lump sum when their leave.

What exactly are an employer's obligations before offering an employee an FTA?

Hannan says the employer must tell the employee - before entering into the agreement - how and when the FTA will expire. What also needs setting out in writing is the way in which the employment will end and the genuine reasons for offering the FTA in the first place.

In addition to providing a written copy of the proposed agreement, employers must give employees sufficient time to seek independent advice. An employer must respond to issues raised by the employee, but it may have no bearing on the final agreement.

An employee's ability to negotiate favourable terms depends on the individual's bargaining power. But Hannan says employers must bargain with their employees in good faith. That means certain minimum requirements must be included within the employment agreement - for example, remuneration and a description of how and where the employee will be required to work.

Unless the FTA is longer than a year, it is highly unlikely it will include any provision for salary review.

Although there is nothing to stop an FTA employee asking for more pay, there is nothing to stop the employer saying no.

Amanda Hastrop head of employment solutions for Telecom, says the telco's premium rate for those on FTAs compensates for the fact they receive neither bonuses nor benefits.

Is an individual employee on an FTA entitled to go on strike for better conditions?

Michelle Banfield, an employment lawyer with Bell Gully, says the limited situations when a strike would be lawful relate exclusively to bargaining for a collective agreement within certain circumstances. While only unions can bargain for collective agreement, there is nothing to stop two or more employees on FTAs becoming an incorporated society and then registering as a union.

There might not be anything to stop FTA employees standing outside their boss' business with placards demanding a better pay deal.

However, Banfield says they should first check their employment agreement and the employer's policies and code of conduct to see whether this type of action is expressly condoned.

"In a practical sense, the employee should also consider what effect this action would have on their bargaining power," Banfield says.

In Hastrop's experience, problems occur when employers either fail to explain to the employee in writing how their FTA works and why it's being entered into or fail to keep the communication channels going for the duration of the agreement.

Employers can also come unhinged if they use FTAs as a "pseudo" probationary period that can be implemented on any permanent job. "The key for employers is to ensure FTAs are correctly drafted to ensure the job doesn't end up being a permanent job," she says.

There's nothing to stop companies reapportioning more of their work into projects, but Hannan warns employers that if they're doing this so they can contract their way out of employment law they're in for an expensive wake-up call. "FTAs were not designed to help employers shrink and contract staff numbers according to market demand. So if a job has no grounds for coming to a natural conclusion an employee at the end of an FTA could turn around and say, 'You have no genuine grounds to get rid of me - I'm staying'."

An employee on an FTA is not legally required to broadcast the fact that the agreement is about to end. Hannan says that means the onus is on the employer to wind up matters at the appropriate time.

If an employer lets the expiry date of an FTA pass without acting on it, the employment could be considered indefinite. "And the longer the employee continues working after the agreement expires the stronger their argument for permanent employment."

What you need to know about fixed-term agreements

* Employers can't use FTAs to contract their way out of employment law.
* FTAs can't be used as a "pseudo" probationary period.
* Explain genuine reasons for offering FTA, plus terms & conditions in writing.
* There's no such thing as permanent fixed-term work.
* Employees on FTAs are not self-employed contractors.
* Work done during an FTA must come to a natural end.
* Premium pay for those on FTAs typically compensates for lack of bonuses/benefits.
* Employees on FTAs aren't entitled to sick leave or annual leave unless agreements exceed 6 or 12 months respectively. All other employment law obligations apply.
* Employees who continue working after an FTA expires could argue for permanent employment.
* The onus is on employers to wind up FTAs when completed.
Source: Phillips Fox