knowledge | 1 April 2022 |

Power v HSE: The Death Knell for Acting-Up Arrangements?

Is an existing employee of an organisation who fulfils a more senior role within that organisation on a temporary basis excluded from the benefit of the Protection of Employees (Fixed Term Work) Act 2003 (the “2003 Act”)? This was the question before the Supreme Court in the recent case of Power v HSE.

Background

In this case, the employee was employed by the HSE as CFO of a particular unit of the organisation on a permanent contract of employment when, in 2014, he was employed as the Interim Group CEO for a fixed-term. The employee remained in the latter role until September 2019, having entered a series of further fixed-term contracts with the HSE which confirmed that he would revert to his CFO role upon expiry of the fixed-term. He subsequently claimed that he was entitled to remain in the CEO role on a contract of indefinite duration pursuant to s.9 of the 2003 Act, under which a person employed on successive fixed-term contracts for a duration in excess of four years without objective justification is deemed to be employed under a contract of indefinite duration.

Labour Court approach

The complaint was heard at first instance by the WRC and, on appeal, by the Labour Court, with the latter determining, in effect, an employee who reverted to their original position with their employer after the expiry of a fixed-term contract was, it determined, not protected by the 2003 Act. This position was in accordance with a series of decisions of the Labour Court in which it consistently held that such employees do not enjoy protection of the 2003 Act because their employment status was never at risk during the fixed-term (which it said was merely supplemental to their permanent employment).

High Court judgment

On appeal to the High Court, Simons J disagreed, finding the approach of the Labour Court did not accord with the ordinary and natural meaning of the term “fixed-term employee” under the 2003 Act. He held that the definition of fixed-term employee “merely requires that the end of the contract of employment concerned is determined by an objective condition. It does not require that this must also have the consequence that the employment relationship is brought to an end.” Simons J also held that an interpretation which included workers who have a right to revert to their original permanent post was not precluded by European law. The employee was, accordingly, a fixed-term employee while performing the interim Chief Executive role. The Court also held that the logical conclusion of the Labour Court’s position could be that an employee could be employed in the more senior post under an infinite number of successive fixed-term contracts, provided they have the right to revert to their more junior post, irrespective of how great the disparity between the posts in terms of salary and other terms and conditions. “The bright-line rule is so blunt that it would apply even where the supposedly permanent post is illusory”.

Supreme Court appeal

The Supreme Court has now dismissed an appeal from the judgment of Simons J. It held that as the employee here was a fixed-term employee under the legislation, he could not under the Act also be a permanent employee. On appeal, the HSE had argued that the series of fixed-term contracts entered into were merely an agreed variation of the employee’s permanent contract of employment, with the latter continuing to subsist at all times, and that this reflected the objectively construed intention of the parties. Woulfe J rejected this, noting that this conflicted with the actual understanding of senior officials within the HSE at the time and that the permanent contract had been “either terminated, or at least suspended” when the fixed-term contracts were entered. “If the reversion had been triggered, it would have led to the revival of the [permanent] contract or the commencement of a new contract on the same or similar but equivalent terms”. The permanent contract was, he said in dismissing the argument, “in respect of a particular role” and the temporary appointments were not merely the reassignment of duties but a change to the fundamental role.

Concluding remarks

While it might be argued that the objective of the 2003 Act was to promote stability in employment status (to give those without a permanent position the opportunity to obtain one) rather than to confer enhanced protections on those who are already in permanent employment, there is nothing in the Directive to preclude this inclusive definition. The High Court was influenced by fact that the objectives of the Directive include concerns about the nature and quality of employment and indeed the Supreme Court commented that the removal of an entire cohort of employees (those “acting up”) from the protection of the Act would require “very clear language” which was not contained in the Act.  

It is important to emphasise that the judgment is not authority for the proposition that an existing employee acting in a temporary role for four years is automatically entitled to remain in that post; such a right of reversion will be only one factor in determining whether successive fixed-term contracts are objectively justified. This case will now be remitted to the Labour Court to consider whether the renewal of the successive fixed-term contracts was justified.

The judgment will be of particular relevance to employers in the public sector, in which ‘acting up’ is a common practice whereby an existing employee is promoted on a temporary basis to perform a more highly-graded role. While this judgment does not sound the death knell for such genuinely temporary arrangements, it will prevent such arrangements from being abused. The case is a reminder that successive fixed-term contracts cannot be used to fill permanent employment needs and employers should no longer delay in regularising the permanent position in respect of such posts.

Also contributed by David McCauley

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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