The Employment Relations Authority has upheld the fixed term nature of an employee’s contracts despite the employee being employed on a series of fixed terms from 2010 until 2019.  To be on a fixed term contract the employer and employee must sign a written agreement which details the fixed term nature and the reasons for it.  Those reasons must both be genuine reasons and based on reasonable grounds.

The ERA decided that the employer here did have genuine reasons and they were based on reasonable grounds.  The employee was a teacher aid for special needs children in a school and the fixed term nature of the agreements offered to her was because of the funding arrangements for special needs children.  The school could not be sure of the number of special needs children attending nor of the funding provided for each teacher aid.

The ERA held that these were genuine and reasonable reasons to offer fixed terms because there was no other mechanism for employing the teacher under the collective agreement which would enable her employment to be terminated without having to pay redundancy pay which the school was not funded for.

The Employment Relations Authority distinguished an earlier case where a special needs teacher had been found to be a permanent employee.  In that case there was a waiting list of special needs children and therefore no danger that the funding would cease where as in the present case the funding could cease at any time that a student or students stopped being enrolled at the school and there was no waiting list of students.

When considering whether there are genuine reasons on reasonable grounds it is important to work through those justifications to ensure that they will stand scrutiny of the Employment Relations Authority should the nature of the employment be challenged by the employee.  It may not be possible to rely on the fixed term nature of the agreement if the reasons are not upheld.  That would expose the employer to an unjustified dismissal claim and substantial damages for lost wages and hurt and humiliation.

Alan Knowsley

Employment & Education Lawyer
Wellington