Under the regulations governing fixed-term employees, anyone employed under a succession of fixed-term contracts will become a permanent employee after four years, unless they are on a government training scheme (among other things). In Hudson v Department for Work and Pensions, the Court of Appeal said the exception prevented all periods worked under such schemes, whether in the past or the present, from counting towards the four years.
Ms Hudson started working for the DWP on a fixed-term contract in April 2006. This was then extended on a number of occasions, with the latest contract coming into effect on 19 October 2009.
In 2010 she applied for a declaration that she had become a permanent employee under Regulation 8 of the fixed-term regulations. The DWP argued that as she had been employed on the government’s New Deal scheme in the period between April 2006 and October 2009, her employment fell within the exclusion in regulation 18.
Regulation 8 of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 states that employees who have been employed for four years or more on a series of fixed-term contracts are deemed to be permanent employees unless the employer can objectively justify the current contract being for a fixed term or they fall within one of the exclusions in regulation 18.
Regulation 18 states, among other things, that the regulations do not apply to a fixed-term employee “who is employed on a scheme, designed to provide him with training or work experience for the purpose of assisting him to seek or obtain work, which is ... provided to him under arrangements made by the Government ...”
Decisions of lower courts
The tribunal judge held that as some previous periods of Ms Hudson’s employment fell within the exclusion set out in regulation 18, she could not claim to be a permanent employee under regulation 8.
She appealed, arguing that the exclusion in regulation 18 should be narrowly construed to relate solely to the person’s current contract of employment and not to any previous fixed-term contracts. The EAT agreed that exclusions should be construed narrowly and that regulation 18 was concerned only with the present circumstances of the employee (see LELR weekly 276).
Decision of Court of Appeal
The majority of the Court of Appeal, however, disagreed, saying that “the more natural reading of the language” of regulation18 meant that regulation 8 did not apply in relation to a fixed-term period under a scheme regardless of when it “began or ended”.
Whilst acknowledging that the exclusion in regulation 18 was drafted in the present tense, the Court pointed out that the exclusions relating to agency workers in regulation 19 were also in the present tense and they were not covered at all by the regulations, whether the work was ”current or completed”.
Finally, it said that the EAT’s interpretation was likely to discourage employers from participating in training schemes. The Court recognised that the purpose of the regulations was to prevent employers from abusing fixed-term contracts. However, it took the view that it was not an abuse to allow those employers who offer training or apprenticeships and who then take on those trainees or apprentices into full time employment, to be subject to precisely the same rules as would have applied if they had done their training or apprenticeship elsewhere.