The case of Cheryl Lobo v University College London Hospitals NHS Foundation Trust sheds light on the complex landscape of fixed-term contracts in the UK, highlighting the legal framework governing employee rights and the employer's responsibility to justify the use of fixed-term arrangements. Cheryl Lobo, a locum consultant breast surgeon, challenged her employer to recognize her as a permanent employee after over four years on successive fixed-term contracts, invoking the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.
The case background
Cheryl Lobo worked continuously for University College London Hospitals NHS Foundation Trust, but her employment was structured under a series of fixed-term contracts. After completing four years of service, she sought recognition as a permanent employee, as per the 2002 Regulations. These regulations state that an employee with four or more years on fixed-term contracts should be deemed permanent unless the employer can objectively justify the fixed-term status.
The NHS Trust defended its decision to keep Lobo on a fixed-term contract, citing ongoing departmental restructuring and the need for staffing flexibility. They pointed out that Lobo had applied for a permanent consultant role but was not selected, emphasising that her locum role and the substantive consultant position required different skill sets and levels of responsibility.
Legal framework and Tribunal’s findings
Under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, Regulation 8 stipulates that an employee employed for four years or more under fixed-term contracts should transition to permanent status unless there’s an objective reason for continuation as a fixed-term employee. Here, the burden of proof lay with the Trust, requiring them to show that keeping Lobo on a fixed-term contract was critical to meet legitimate business needs.
The Employment Tribunal (ET) sided with the Trust. It found that the hospital’s comprehensive review and restructuring necessitated flexibility that a fixed-term arrangement provided. The ET also acknowledged that the roles of locum and substantive consultant differed in scope and responsibility, including specific leadership skills the substantive position required.
The appeal and EAT Ruling
Lobo appealed the ET’s decision to the Employment Appeal Tribunal (EAT), arguing that the justification presented by the Trust was insufficient. However, the EAT upheld the ET's ruling, agreeing that the Trust's business rationale was legitimate. The EAT emphasised the differences in role requirements between the locum and permanent consultant positions, affirming that the continuation of the fixed-term contract aligned with the Trust’s operational needs.
This ruling reinforced the importance of objective justifications when renewing fixed-term contracts, underscoring that employers must clearly demonstrate how the fixed-term arrangement meets essential business goals. The decision also highlighted that criteria must be applied consistently to prevent discriminatory practices.
Key takeaways for employers
This case offers critical guidance for employers managing fixed-term contracts:
Conduct regular reviews – Periodically evaluate the necessity of fixed-term contracts, particularly when approaching or exceeding four years.
Document justifications – Maintain clear records detailing the reasons for fixed-term renewals, including any strategic business objectives that make them necessary.
Distinguish roles clearly – Clearly differentiate between temporary and permanent roles, ensuring distinct responsibilities and qualifications to justify the fixed-term status.
Communicate with employees – Engage fixed-term employees in discussions about their status and potential future within the organisation.
Implications of the case
The Cheryl Lobo case is a reminder for employers to carefully assess their fixed-term contracts. Failure to provide sufficient justification for extending these arrangements can lead to legal challenges and possible reclassification to permanent status. By proactively managing contract renewals with transparency and clarity, employers can foster a fair work environment and reduce the risk of disputes.
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