For July 2025, we have asked the employment team at Tughans LLP to provide practical answers to unusual, sensitive or complex work-related queries. We call this feature “How do I handle it?”

The articles are aimed at HR professionals and other managers who may need to deal, from time to time, with the less commonplace disputes at work; issues that may, if handled incorrectly, lead to claims for discrimination, constructive dismissal or some other serious difficulty. 
 

Employing temporary employees on “fixed term” contracts (FTC) can be beneficial in allowing you to fulfil fluctuating staffing demands – for example, by employing someone for the intended duration of a particular project or to cover a colleague on maternity leave. 

If you are in the unfortunate position of having to make redundancies, it may be tempting to make FTC staff redundant before considering your permanent employees. However, this approach is not without risk, given the rights and protections afforded to fixed term employees. 

Firstly, it is important to remember that fixed-term employees share the same basic statutory rights around dismissal as permanent employees. This includes the right not to be unfairly dismissed, which both will obtain after completing one year’s qualifying employment, and the right to a statutory redundancy payment, which both will obtain after two years’ qualifying employment. 

Importantly, the non-renewal of a fixed-term contract is considered as a “dismissal” for statutory purposes. This means that you must establish a “fair” reason for dismissal in the normal way. It is important to distinguish between the contractual end date and the statutory reason for dismissal. 

In many cases, the “fair” reason will be redundancy. However, previous tribunal decisions have accepted that, where the FTC was used for a genuine and specific purpose, which the employee knew about when they entered the contract, and which has now ceased, their dismissal can be for “some other substantial reason.” This fair reason could be used, for example, if an FTC employee has been specifically hired for maternity or long-term absence cover. 

If you rely on redundancy, the normal considerations will apply. You would be expected to follow a fair process for pooling and selection, any scoring, and whether you can offer suitable alternative employment. If an FTC employee is made redundant, they may be eligible for a statutory redundancy payment. 

As well as the usual protections from dismissal, fixed-term employees are protected from less favourable treatment on the grounds of their fixed-term status compared to a comparable permanent employee. This protection covers the terms of their contract and “any other detriment.” The latter is given a wide interpretation and would include dismissal. The exception is where the less favourable treatment can be “objectively justified.” This usually involves demonstrating that there is a legitimate aim and that the less favourable treatment is both necessary and appropriate to achieve that aim. 

Selecting employees for redundancy purely on the basis that they are employed on a “fixed term” contract is most likely to be “detrimental” and therefore unlawful unless it can be objectively justified. This should be given careful consideration. You may be able to select FTC employees for redundancy if they were clearly engaged to complete a particular project or task which has now ended. Otherwise, FTC employees should be pooled with comparable permanent employees in the normal way. If you exclude FTC employees from the pool without objective justification, this will likely constitute less favourable treatment. 

When creating your selection criteria, you could include length of service, so long as you apply the same criteria and weighting to both permanent and temporary employees. There is a reasonable argument that using “last in first out” would also be permissible, even if in practical terms, this would result in FTC employees being selected. 

Overall, it is important to consider the rights and protections afforded to fixed term employees and you will need to carefully consider your individual circumstances before making any temporary employees redundant. It may be the case that some FTC employees can be dismissed for “some other substantial reason” before any redundancies are considered. You may also be able to objectively justify making FTC employees redundant, before considering permanent employees, because they were engaged for a specific temporary task which has ceased. Otherwise, any redundancy process should capture both permanent and temporary employees, though you could use “length of service” in your selection criteria, which may result in FTC employees being selected for redundancy ahead of permanent employees.