So you employ an individual on a series of fixed term contracts and after four years they seek a declaration that they should have been given a permanent employee job doing basically the same thing. Does that sound fair? Well, in Lobo v University College London Hospitals NHS Foundation Trust, the Employment Appeal Tribunal said, no.

The Law

Before we delve into the facts and outcomes of this case, a high-level overview of the relevant law. Under regulation 8 of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, employees who have been continuously employed for four years or more on a series of successive fixed-term contracts are deemed to become permanent employees in their current roles unless the continued use of fixed-term contracts can be objectively justified. The latter of course pushes the burden onto the employer to provide a good reason why the employee shouldn’t be deemed a permanent employee, i.e. that the fixed term arrangement serves a specific and business critical purpose. However, an important point to be made is that under regulations employees do not become entitled to just any available role on a permanent basis, but only to their role in its existing form that becomes permanent. This of course implies that the business needs that specific role to be permanent. 

Therefore, turning to this case, the Trust had to show that it could objectively justify Ms Lobo’s continued employment under a fixed-term contract, and that the permanent substantive role advertised was sufficiently different that Ms Lobo would not simply be able to move into that role under the Fixed Term Regs. 

The Facts

Ms Lobo was employed by the Trust as a locum consultant Breast Surgeon under a series of fixed-term contracts, starting in February 2016. In 2021, the Trust decided that it would appoint a substantive consultant Breast Surgeon. Ms Lobo applied for it twice but did not get the nod. Although accepted by the interviewers as technically “appointable”, they did not consider her to be as appropriately qualified as the successful candidate.

Given that Ms Lobo had been unsuccessful in attaining permanent employment through the previous application processes, the next logical step for her was for her to seek a declaration under the Fixed Term Regs that she had become a permanent employee of the Trust, and in doing so to push the burden onto the Trust to justify its decision to extend her fixed term arrangement whilst recruiting for a substantially similar permanent role. As we pointed out earlier, the Fixed Term Regs relate to fixed term employees becoming permanent in their current roles, not to entitlements to be given a different role. There were therefore two strands to the claim; first that she was entitled to a role doing her existing job but on a permanent basis, and second, that she should therefore have been given the substantive consultant role.

The Trust’s main objective justifications were that:

1. it required successful candidates for substantive consultant roles to demonstrate the required management and leadership skills in “real time” in an interview process rather than on an application form or in a CV, which Ms Lobo did not do; and
2. it had a legitimate aim to provide a safe, efficient and fully functioning Breast Service and acted in good faith in retaining Ms Lobo as a fixed term employee given that the successive fixed-term contracts were intended to cover temporary, as opposed to permanent, needs.

The Outcome

The Employment Tribunal found in favour of the Trust, which made sense as there were significant differences between the roles, (not so much clinical but in the additional managerial, supervisory and educational responsibility of the substantive post) and the purpose of the fixed term contract was clear and justified. Whilst the EAT had some sympathy with Ms Lobo’s position, it dismissed her appeal, and found that the Employment Tribunal had correctly concluded that the continued use of a fixed-term contract was justified on objective grounds.

Interestingly, when delivering its Judgement, the EAT stressed what the case was not about, in particular, the fairness of the appointment procedure for the substantive post and whether it was unlawful, i.e. whether Ms Lobo ought to have been given that job.

The only key and central question required to be answered by the Fixed Terms Regs was whether renewal of her most recent fixed term contract was justified or not. If the answer to that question was ‘no’, then Ms Lobo’s contract would have been regarded as permanent. However, if the answer was ‘yes’, then no declaration could be made in Ms Lobo’s favour and the status quo remains. The EAT agreed with the Trust’s justifications for the continued use of fixed term contracts and so the status quo remained. The Tribunal and EAT both relied heavily on the differences found between the consultant role as carried out by a locum and the consultant role performed on a substantive basis – had those differences not been material, the outcome could have been different. However, the short point was that the Fixed Term Regulations were not concerned with the fairness or moral claim Ms Lobo might have had to the permanent role – instead, the only entitlement they could confer was to the locum-type consultancy (with the much reduced associated responsibilities) on a permanent basis. As soon as the Trust could show that it had no need for “permanent locums”, her claim under the Regulations was bound to fail even if she were objectively qualified to carry out those additional functions.

An important point to note is that in reaching its decision the EAT found that it was appropriate and necessary for the Trust to appoint a substantive consultant to meet the needs of patients, and to use a fixed term contract for a locum consultant so as not to leave the service under-staffed, but at the same time to be able to respond to peaks and troughs on demand.

It is worth highlighting that if employers require continuous and successive fixed term contracts over a period of four years or more, ensure that there is a sufficiently strong business reason for doing so. If not, that a fixed term employee is likely to be found to be a permanent employee and potentially entitled to all the benefits that come with that. 

Finally, employers should ensure that any new permanent positions are substantively different to roles being carried out by fixed term employees with c.4 years’ continuous service, and that they can show that continued parallel need for the fixed term arrangement as well as for any new permanent position.