Offering employees repeated fixed-term contracts when there is a need for permanent employment goes against EU law, Europe’s highest court has ruled in a decision which could have ramifications for UK businesses.
In a case concerning a nurse at the University Hospital of Madrid, the Court of Justice of the European Union said temporary replacement of workers to satisfy temporary needs may be permitted, but that contracts cannot be renewed for tasks ‘which normally come under the activity of the ordinary hospital staff'.
The case arose after nurse Maria Elena Pérez López was retained from 5 February to 31 July 2009 on the understanding that she would ‘provide certain services of a temporary, auxiliary or extraordinary nature’.
Her contract, which was identically worded each time, was renewed seven times until she was told in March 2013 that her employment would be terminated.
López appealed against the termination at the Madrid administrative court, arguing that her appointments were not intended to meet an extraordinary need but in fact were related to permanent activity.
The court asked the CJEU whether Spanish legislation that allows for the renewal of fixed-term contracts conflicted with EU law.
In judgment in María Elena Pérez López v Servicio Madrileño de Salud (Comunidad de Madrid), published this week, the court said the successive appointments ‘do not appear to relate to simple temporary needs of the employer’.
‘Such renewal of fixed-term contracts creates a situation of insecurity,’ the court said.
‘It appears from the findings made by the referring court that the permanent posts created are filled by the appointment of "temporary" replacement staff, without there being any limitation as to the duration of the replacement contracts or the number of renewals thereof,’ the court added.
Matthew Hodson, an associate at London firm Waterfront Solicitors, told the Gazette that renewing a fixed-term contract can already amount to unlawful treatment under the UK’s Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002.
‘The courts are likely to interpret our own regulations purposively to give effect to this judgment,’ he said.
‘If they do not already do so, employers who use successive fixed-term contracts should ensure they have legitimate reason for doing so or else they could fall foul of domestic and EU law. It is best practice to consider the reasons and document them before renewing fixed-term contracts.’