Applicable legislation
Facts
Lower court decisions
Supreme Court decision
The Supreme Court recently issued a judgment concerning the chaining of fixed-term employment contracts.(1) The court found that the defendant had no justification for making consecutive fixed-term employment contracts with an employee who had worked as a research assistant at a municipal federation for almost seven years. Thus, the employee's employment relationship was to be considered valid indefinitely.
Applicable legislation
According to the Employment Contracts Act, an employment contract is valid indefinitely as a starting point. The conclusion of a fixed-term employment contract always requires objectively justified grounds from the employer, whereas fixed-term contracts which concluded without such a reason are considered valid indefinitely. Since the law does not define 'justified grounds', answers must be sought in preparatory materials, legal literature and case law. According to these sources, justified grounds include the seasonal nature of work or uncertain funding prospects.
Facts
An employee had worked continuously as a research assistant at the municipal federation of the Pirkanmaa district hospital based on 11 consecutive fixed-term employment contracts concluded between January 2002 and December 2008. The research projects were funded externally, partly domestically and partly by foreign foundations engaged in funding of projects similar to the ones at hand. The foreign funding was based on procurement taking place every five years and the annual funding was granted based on the satisfactory performance of the work. The projects were scheduled to end in 2016 and 2023.
At issue was the question of whether the project-like nature of the work, as well as its external funding, constituted justified grounds to conclude consecutive fixed-term contracts, or whether the employee's employment relationship was to be considered valid indefinitely.
Lower court decisions
The Tampere District Court noted that since the employee's duties had been ongoing for almost seven years, the work could not be considered seasonal or temporary, regardless of its project-like nature. The court stated that the mere uncertainty of the funding did not constitute justified grounds to conclude fixed-term employment contracts. Consequently, the court ruled that the municipal federation lacked justified grounds to conclude consecutive fixed-term employment contracts with the employee.
The municipal federation appealed to the Turku Court of Appeal which, contrary to the district court, found that the continuation of the employee's duties was completely dependent on the annual funding of the projects. Thus, the court of appeal found that there had been justified grounds for conclusion of the fixed-term contracts and reversed the district court's judgment.
Supreme Court decision
The research assistant was granted leave to appeal. The Supreme Court stated that in the case at hand, the nature of the work as well as the risk of cessation of funding could constitute justified grounds for conclusion of fixed-term employment contracts. However, the essential question to be answered was whether the risks related to the permanence of the work differed from those typically related to work performed on the basis of an indefinitely valid employment contract.
The court found that the long-term commitment required by the projects, the scope and cost of each, as well as the fact that the majority of the funding was granted by foundations which were engaged in funding projects similar to those at hand, strongly indicated that the abovementioned risks were not substantially greater than those arising from, for example, rapid economic fluctuations in the demand for other work. The fact that several consecutive fixed-term contracts had been agreed indicated a permanent need for work. Therefore, the Supreme Court reversed the court of appeal's judgment and upheld the district court's decision.
For further information on this topic please contact Seppo Havia at Dittmar & Indrenius by telephone (+358 9 68 1700), fax (+358 9 65 2406) or email ([email protected]).
Endnotes
(1) Decision 2011:73.