Fixed-term contracts: NHSScotland PIN policy

This Partnership Information Network (PIN) policy aims to ensure that fixed-term contracts are only used where necessary and appropriate, and that (unless objectively justified) those employed on fixed-term contracts are treated no less favourably than permanent employees.

This document is part of a collection

2 Main Report

2.1 Scope

2.1.1 This PIN policy applies to staff employed on a fixed-term contract basis as defined below (including locum medical staff where directly employed by NHSScotland organisations and where such employment meets the definition of a fixed-term contract as defined below).

2.1.2 The following groups are outwith the scope of this PIN policy:

  • Agency workers;
  • Apprentices;
  • Bank staff or those with zero-hours contracts (except where such staff are employees and the contract is for a fixed duration);
  • Permanent employees seconded or acting into fixed-term posts; and
  • Students on work experience placements.

The Secondment PIN Policy8 indicates best practice relating to secondment, and the Agenda for Change Terms and Conditions of Service Handbook9 outlines the basis for acting up.

2.2 Principles & Values

2.2.1 All employees within NHSScotland Boards should be valued for the contribution they make to the service. As exemplary employers, NHSScotland Boards must be committed to using permanent contracts of employment as the norm. The benefit of such an approach is that employers can:

  • Provide better continuity of care;
  • Improve staff morale and motivation by providing increased financial and personal security;
  • Reduce staff turnover and improve the retention of skilled staff;
  • Make more effective use of resources invested in staff development and recruitment advertising; and
  • Promote improved workforce planning and staff flexibility by developing the skills of permanent staff in anticipation of changing service needs.

2.2.2 Consideration should therefore always be given to appointing staff on a permanent basis, if a risk assessment shows that permanent employment is highly likely to be available at the end of the fixed-term period (for example, due to an area of recognised skills shortage or to the flexibility of the core skills required).

2.2.3 Fixed-term contracts should only be used in defined exceptional circumstances and will be clearly time- or task- limited. It should be recognised that, while fixed-term contracts need to be used in some circumstances, advertising a post on a fixed-term basis may deter existing permanent staff from applying, thereby potentially limiting career development opportunities.

2.2.4 It is therefore expected that NHSScotland Boards commit to:

  • Ensuring that a partnership approach is used as the vehicle by which local agreement on implementation of this PIN policy is reached;
  • Promoting adherence to these same principles and values by partner agencies;
  • Minimising the use of fixed-term contracts to situations where there is a genuine organisational need for their use;
  • Complying with the terms of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 200210;
  • Reviewing and monitoring the use of fixed-term contracts in partnership with staff and their representatives in line with the Staff Governance Standard11;
  • Ensuring that all fixed-term contracts specify the start date, duration and the reason for the fixed-term nature of the contract;
  • Ensuring that, fixed-term contracts contain the same core contractual terms and conditions of employment as permanent staff;
  • Ensuring that the length of the fixed-term contract reflects the needs of the role to be covered;
  • Ensuring that, for good practice reasons, a fixed-term contract is not renewed on more than two occasions in any one-year period, without first establishing an objective justification;
  • Ensuring good employment practice is implemented on an equal basis for both permanent and fixed-term staff;
  • Ensuring that appropriate communication takes place with individual fixed-term members of staff to discuss issues surrounding their employment status and address any concerns; and
  • Ensuring that, through implementation of the above, all fixed-term members of staff can expect to:
    • Feel valued as employees;
    • Have equal access to development opportunities that meet their identified needs;
    • Have a clear understanding of the current and planned future status of their post; and
    • Be given the opportunity to apply for a permanent contract if a suitable position arises.

2.3 Definitions

2.3.1 Employee

An individual who works under a contract of employment (i.e. a contract of service rather than a contract for services).

2.3.2 Fixed-Term Contract

A contract of employment which:

  • Is for a specific term that is fixed in advance; or
  • Terminates on the completion of a particular task; or
  • Terminates upon the occurrence or non-occurrence of any other specified event.

2.4 Legal & Strategic Framework

2.4.1 Legal Framework The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 200212

These Regulations implement the European Community (EC) Directive on fixed-term work in the UK, providing protection for fixed-term employees, including:

  • The right not to be treated less favourably than comparable permanent employees because they are on a fixed-term contract, unless there are 'objectively justifiable' circumstances for doing so. This includes the right to be informed of any permanent vacancies in an organisation, and be given the same opportunity as others to apply for such roles; and
  • The right to permanency of employment if a fixed-term employee has their contract renewed, or are re-engaged on a new fixed-term contract, after four or more years of continuous employment, unless there are 'objectively justifiable' circumstances for not doing so. Employment Rights Act 199613

At the time the 2002 regulations came into force, the redundancy provisions set out in this Act were amended to provide that, in certain circumstances, a fixed-term employee would be treated as being dismissed by reason of redundancy.

  • Section 136 states that the employee is "dismissed by the employer if … he is employed under a limited-term contract and that contract terminates by virtue of the limiting event without being renewed under the same contract"; and
  • Section 139 states that, if the contract is not renewed because the need for employees to carry out work of a particular kind has ceased or diminished, the dismissal is by reason of redundancy.

Where a fixed-term employee is dismissed by reason of redundancy, they are entitled to all redundancy rights, including redundancy pay, if they have the necessary length of service.

This does not mean, however, that there is a redundancy situation every time a fixed-term employee's contract ends. For example, if an employee is covering for an absent permanent employee (e.g. a woman on maternity leave), the reason for the contract ending is not redundancy. The need for someone to perform that kind of work has not ceased or diminished. National Health Service Reform (Scotland) Act 200414

This Act amends the National Health Service (Scotland) Act 1978 in a number of respects, including the introduction of a duty in relation to the governance of staff at section 12I.

  • Section 12I

It shall be the duty of every Health Board and Special Health Board and of the Agency to put and keep in place arrangements for the purposes of -

a) Improving the management of the officers employed by it;

b) Monitoring such management; and

c) Workforce planning.

This section aims to ensure that staff governance has equal legislative parity with the rest of the governance framework (clinical and financial governance) within which NHSScotland employers must operate. The Staff Governance Standard15 is the key policy document to support this legislation.

As part of Boards' obligations in relation to Staff Governance, and specifically workforce planning, they should ensure that fixed-term contracts are managed appropriately.

2.4.2 Strategic Framework Staff Governance Standard16

Particularly relevant in the context of the Staff Governance Standard (referred to in the preface of this PIN), is the requirement for staff to be treated fairly and consistently, regardless of employment or contractual status, and to be well informed in relation to their contractual status.

Assessment of organisational progress in relation to the Standard is carried out by each Board's Area Partnership Forum (or equivalent) through the self-assessment audit tool (SAAT) and staff survey. The Area Partnership Forum (or equivalent) then produces an action plan and completes mandatory quantitative (statistical) and qualitative returns - including information and reasons relating to organisational use of fixed-term contracts17 - which are subject to external audit. This information is then used in the Annual Review process by the Scottish Government. National workforce strategy

Explicitly referred to in the National Health Service Reform (Scotland) Act 200418, workforce planning is recognised as one of the key strategic foundations on which organisational development and redesign must be built, and the national workforce strategy sets out how this will be taken forward for NHSScotland. Clearly, appropriate contractual status of staff - including the use of fixed-term contracts - is an integral part of the process of workforce planning and development.

2.5 Appropriate Use of Fixed-Term Contracts

2.5.1 In certain exceptional circumstances, fixed-term contracts may be a valuable tool to enable employers to cover short-term gaps in essential services, enabling consistent standards of service to be maintained. However, such contracts must only be used as time-limited, short-term options, and individuals should not normally be in non-permanent employment for more than two years (unless otherwise objectively justified).

2.5.2 Good workforce planning will help to appropriately identify situations where fixed-term contracts are necessary (NHSScotland guidance on workforce planning can be found at

2.5.3 Circumstances where such contracts might be used include:

  • Protecting posts for staff due to organisational change (e.g. restructuring or redesign of services);
  • Covering leave (e.g. sickness absence; maternity leave; study leave; special or other leave);
  • Project or research posts;
  • Posts which are not funded on a recurring basis; or
  • Backfill for short-term secondment.

2.5.4 Staff employed on a fixed-term basis are not generally disadvantaged by NHS terms and conditions of service. However, entitlement to redundancy payments may play a role in determining the duration of contracts, and this could disadvantage the employee. The wish to avoid the risk of having to make a redundancy payment in the future would be an inappropriate justification for non-renewal of a fixed-term contract. However, managers need to be aware that the expiry of a fixed-term contract may be deemed to be a redundancy situation in circumstances as set out under the 1996 Act above.

2.5.5 A further important decision, linked to the above, is whether to permit the appointment of those with continuous service within the NHS to fixed-term contract roles, where non-renewal upon expiry may be deemed to be a redundancy situation and given that such service may result in potentially higher redundancy costs. Where such individuals are already permanent employees of the same organisation, and where the organisation wishes to permit their appointment to a fixed-term post, it should be made clear (in writing) to the employee that in doing so their existing permanent contract has come to an end, and their new contract is fixed-term.

2.5.6 Where a fixed-term contract is being used due to services being offered only short-term funding for such posts, agreement should be reached with the funding body that any exit costs associated with the non-renewal of the fixed-term contract will be covered or, alternatively, posts should be offered for a lesser period to ensure that funding is sufficient to cover any exit costs.

2.5.7 When considering whether to appoint to a post on a fixed-term basis, managers should follow the needs assessment framework outlined in Annex A of the model policy attached at Appendix 1. Where the decision is taken to use a fixed-term contract, the reason for doing so must be recorded by the line manager.

2.5.8 Where appointing to a post on a fixed-term contract basis, managers must be able to clearly define the duration of the post, where appropriate, and the reason for the fixed-term nature of the post. The fixed-term nature of the post should be clearly evident in the advertisement, job information package, letter offering employment, and subsequent contract of employment. It should also be discussed at interview. The following paragraph should be inserted as appropriate into the above documentation:

"This contract is for a fixed-term until [date/duration]. The reason for the fixed-term contract is [reason]."

2.6 Reviewing Fixed-Term Contracts

2.6.1 All staff on fixed-term contracts will have their position reviewed mid-term and thereafter as appropriate. The outcome of this review must be discussed directly with the employee and confirmed in writing.

2.6.2 There are three options which may arise during such discussions:

  • There is a requirement to make the post permanent, in which case the process to be followed is set out below; or,
  • There is a requirement to extend the length of the contract. Where there is an objective justification for extending the contract, the process for renewal of a fixed-term contract, as detailed below, should be followed; or
  • There is no change in the plans and expectations of the fixed-term nature of the contract. The contract will run for the duration originally specified, with the process for non-renewal of a fixed-term contract, as detailed below, to be followed.

2.6.3 Requirement to Make the Post Permanent

Where an organisation determines a need for a fixed-term role to be carried out on a permanent basis, the post would require to be advertised in the normal way and any employee currently undertaking such a role on a fixed-term contract basis would be required to apply. However, given that as a result of the above, the employee's fixed-term contract would not be renewed upon expiry, they would be eligible to apply for such a permanent post via redeployment.

However, depending upon whether the criteria set out in 2.6.4 are met, there may not be such a requirement to advertise the post in the normal way, and the fixed-term employee would be automatically appointed to the permanent role.

2.6.4 Requirement to Renew Fixed-Term Contract

In circumstances in which there is a requirement for employment to continue beyond the initial fixed-term contract expiry period, consideration needs to be given to the following:

  • NHSScotland Boards will commit to the appointment of staff who have continuous service of more than two years (within successive fixed-term contracts) onto a permanent contract if the following criteria are all met in full:
    • The member of staff has held fixed-term contracts consecutively which were used to protect posts for permanent staff due to planned organisational change, service reconfiguration or redeployment; AND
    • The member of staff has been employed for more than two years; AND
    • Recurring funds for the post beyond the two-year period exist, which can be used to retain the member of staff, or a positive risk assessment has been carried out to establish the impact on the organisation should it be non-recurring funding.
    • (In situations where an employee achieves two years' service, and it is known that the contract will not be renewed within three months of the date of achieving two years' service, the individual's contract of employment will remain fixed-term.)
  • However, organisations should also be mindful of the legislation which applies with regard to the use of successive fixed-term contracts. Individuals with a succession of fixed-term contracts of over four years will be entitled to permanent contractual status under employment law, unless this can be objectively justified. In circumstances in which permanency of employment cannot be offered within a particular role, but where continuation of the fixed-term contract cannot be objectively justified, the employee will be deemed to have a permanent contract with the Board, being subject to redeployment in the same way as any other displaced permanent employee when the fixed-term post comes to an end.
  • Fixed-term contracts should not be renewed on more than two occasions in any one-year period, without first establishing an objective justification. Neither the initial contract nor renewal period should be for less than three months other than for clear, objective and specified reasons (e.g. awaiting confirmation of a permanent postholder returning from maternity leave (in which 28 days' notice is all that is required from the employee on maternity leave) - in such circumstances it would be reasonable and justifiable to offer one-month renewals).

Where a fixed-term contract necessarily and appropriately requires to be renewed, the manager should secure agreement from the employee for the fixed-term contract to be extended. The manager will then arrange for a variation to the contract of employment to be issued to the employee using existing organisational procedures such as a change form.

Organisations should be equally mindful of the need to take care to avoid employees on fixed-term contracts working past the specified expiry date, where the contract has not been renewed, as there is a risk of an implied continuation of the arrangement as an 'open contract'.

2.6.5 Non-Renewal of a Fixed-Term Contract

Irrespective of the reason for the fixed-term contract, should a situation arise where the employee becomes displaced from their role prior to its agreed point of expiry, the organisation has a duty to provide suitable alternative employment for the remainder of the fixed-term, during which NHSScotland organisational change protection of earnings will apply.

Where it is known that an employee's fixed-term contract will not be renewed upon expiry, the relevant manager with the authority to dismiss must meet with the employee, ideally three months prior to the expiry date of the fixed-term contract (and no later than the contractual notice period), to discuss the following:

  • To confirm that the fixed-term contract will not be renewed upon expiry;
  • To confirm the grounds for non-renewal of the fixed-term contract (which must be for a legitimate reason - capability or conduct issues, for example, would not be legitimate grounds for non-renewal, with employers instead expected to apply local employment policies, as appropriate, no differently than they would with permanent employees);
  • To serve the employee with notice (in line with their contract of employment) that their contract will be terminated upon expiry of the fixed-term;
  • To advise the employee that they will be placed on the redeployment register, and to discuss the redeployment process. The employee should be advised that they will remain on the register until the date of the end of the fixed-term contract;
  • To confirm, where appropriate, any redundancy payment which will apply should suitable alternative employment not be obtained;
  • To advise the employee of their right of appeal; and
  • To discuss any other matters in preparation for the termination date.

The employee will have the right to be accompanied at the meeting by a representative of their trade union/professional organisation or a work colleague. A representative from Human Resources should also be present.

Confirmation of the above details should subsequently be issued in writing to the employee without unreasonable delay and according to locally agreed timescales.

In addition, the Human Resources department may be able to advise on available support for the individual to help them find alternative employment, such as CV preparation, interview skills etc.

In the case of non-renewal of a fixed-term contract upon expiry (irrespective of the reason for the fixed-term contract), access will be granted to redeployment vacancies, in line with the Redeployment PIN Policy19, no earlier than three months and no later than running concurrent with the employee's notice period. It should be noted that while a legal obligation to explore suitable alternative employment only exists in circumstances where the non-renewal of a fixed-term contract meets the definition of redundancy, this PIN policy goes beyond the legislation requiring that access to redeployment be granted in the case of all instances of such non-renewal of a fixed-term contract. However, employers are advised that, where more than one applicant applies for a post via redeployment and more than one is appointable, prioritisation should be given depending upon the reason for displacement from the original post (particularly whether or not a legal obligation exists to explore suitable alternative employment).

Reasonable time off will be given by the manager for the employee to attend interviews during the above period.

If the employee has not secured an alternative post prior to the end of their notice period, their employment will be terminated as per the earlier meeting.

2.6.6 Termination Which Meets the Definition of Redundancy

In circumstances where the termination of a fixed-term contract meets the definition of redundancy (as described above), the following additional requirements apply in order to ensure that the fixed-term contract is ended safely:

  • Where an employee has been unable, as at the termination date, to obtain suitable alternative employment, their contract will be terminated as detailed above. Additionally, however, where they have more than 104 weeks' continuous service, they will be entitled to a redundancy payment in line with Agenda for Change Terms and Conditions20. Previous NHS service will count as reckonable service for the payment due where there has been a break of less than 12 months and redundancy has not previously been payable for any part of that service.
  • Depending on the difference in terms and conditions, and therefore whether any alternative employment opportunity is deemed 'suitable', NHSScotland organisational change protection of earnings will apply.
  • An employee may choose to apply for, and accept, an alternative post where the difference in terms and conditions is such that protection of earnings will not apply (i.e. a post which would not be deemed by the organisation to be a suitable alternative). In such circumstances, the employee should be advised that, if they choose to accept such a post, they will forfeit any entitlement to a redundancy payment which would otherwise apply should their employment be terminated on grounds of redundancy and with no suitable alternative employment opportunities having been identified.
  • Employees should be advised that, should they unreasonably fail to apply for suitable alternative employment opportunities which may arise or to accept any such post offered, they may forfeit any entitlement to a redundancy payment.

2.6.7 Further details on the process to be followed is contained within the Redeployment PIN Policy21.

2.7 Training

To support full implementation of this PIN policy locally, it will be essential for NHSScotland employers to ensure full awareness and understanding of the issues relating to fixed-term contracts. This may best be achieved by incorporating this into local management development programmes.

2.8 Monitoring

The use of fixed-term contracts will be monitored at national, Board and service level.

2.8.1 National

All NHSScotland employers are required to submit information on the use of fixed-term contracts as part of the staff governance self-assessment audit tool (SAAT). This forms part of the performance assessment framework for NHS Boards and is used to promote consistent standards across NHSScotland.

2.8.2 Board

The Area Partnership Forum (or equivalent) will monitor the development of integrated workforce plans and the organisational learning plan, with a view to promoting the successful redeployment of staff across the area. Part of this monitoring may include analysing qualitative information gained from exit interviews or questionnaires completed by fixed-term staff (see Section 2.9 below). Divisional partnership structures may also wish to discuss this.

2.8.3 Service

Arrangements will be agreed locally for reviewing fixed-term contracts, in partnership, on a quarterly basis within each service area or directorate.

2.9 Success Criteria

This policy aims to encourage NHSScotland employers to:

  • Use fixed-term contracts only in appropriate circumstances; and
  • Ensure staff on fixed-term contracts are fully aware of the current and planned future status of their post, and are provided with equal access to development opportunities.

While the reduction in the use of fixed-term contracts largely depends on the development of integrated workforce plans and service learning and development plans, the success of a policy on the appropriate use of fixed-term contracts will be measured through:

  • Quantitative data supplied in the SAAT (numbers of, and reasons for, fixed-term contracts); and
  • Qualitative data.

Qualitative data to measure application of Boards' local policies may be gathered through the use of exit interviews/questionnaires. This type of questionnaire should explore the extent to which individual fixed-term employees felt that they:

  • Had equal access to development opportunities;
  • Were kept informed about the current and likely future status of their post;
  • Had the opportunity to discuss any issues of concern; and
  • Had the opportunity to apply for suitable alternative employment within their employer's organisation.

Each organisation will wish to analyse the information from exit interviews/questionnaires, for the Area Partnership Forum (or equivalent) to consider along with other workforce information and issues.


Email: Darren Paterson

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