LO Negotiating Secretary on fixed-term employment contracts

LO Negotiating Secretary Per Bardh: Companies use fixed-term employment contracts to buffer economic recession
When the recession gained momentum in 2008, the number of fixed-term employment contracts decreased. The companies could easily dismiss workers with fixed-term employment contracts without giving notice and without observing rules regarding order of priority.

A fixed-term employment contract is a kind of contract which enables the company to transfer all the risks to the individual employee in case of economic fluctuations. You can stay at a workplace with a fixed-term employment contract up to five years, but still be dismissed prior to persons with considerably shorter periods of employment. Besides, the time of notice is limited to one month, which makes it a very insecure form of employment, Per Bardh says.

It is stated in the LO report “Forms of Employment in 2009” that the number of fixed-term employment contracts mounts when economic prospects are favourable. When the economic trend then turns downward, the workers with fixed-term employment contracts are the first ones to be dismissed. During the last economic upswing in 2007, the number of workers with fixed-term employment contracts had increased to 16 per cent of all employees and amounted to 662,000 persons. Two years later, the figure was down to 13.7 per cent. The number of fixed-term employment contracts had then decreased by more than 84,000.

As there is no requirement for the employer to justify dismissals of persons with fixed-term employment contracts, it can be difficult for a person with such a contract to lodge complaints and demand reasonable improvements at the place of work. There are no predictions for how the employer will react or what possibilities there are to remain in the company. Furthermore, these forms of employment contracts create problems in other situations. For example, it is tougher for a person with a fixed-term employment contract to be granted a bank loan or a housing lease, Per Bardh comments.

Today the use of fixed-term employment contracts is often routine-like. It should have been possible to employ many of those, who today have fixed-term employment contracts, on a permanent basis. According to the LO view, the system with fixed-term employment contracts should not be applied when there exist logical reasons to offer permanent employment contracts, Per Bardh concludes.