More on fixed-term contracts

George Aquilina writes:
I have followed developments on the issue of fixed-term contracts in the public sector. There are many public sector workers who are in this situation, having signed contracts renewable every year or after a few years.
What is the latest position? When will this issue be settled?

A few weeks ago the government announced the setting up of a working group to look into how Maltese law on fixed-term contracts can be changed to come in line with EU law. I am not aware that this group has concluded its work. But I am sure that, when it does, this will be announced publicly and the reader will be fully aware of it.

For the benefit of readers who have not followed this issue, according to Maltese law, workers engaged on a fixed-term contract renewed for a period exceeding four years are entitled to an indefinite contract. However, Maltese law only gives this right to private sector workers and specifically excludes public sector workers.

I had pointed out that EU law does not make a distinction between private and public sector workers.

On this issue I have two developments to report.

Firstly, in reply to my latest parliamentary question to the Commission on this matter, the EU commissioner responsible for employment and social policy, Vladimir Spidla, informed me that by letter dated March 13, 2006, the Maltese national authorities had informed the Commission that a decision had been taken by the government of Malta to repeal sub-regulation 7(5) of the Contracts of Service for Fixed-Term Regulations, that is to say, the provision of our law that excludes public sector workers from the same regulation.

The authorities also informed the Commission that a draft legal notice amending the regulations in question had been prepared and sent to the social partners for consultation.

Mr Spidla also told me that the Commission sent another letter to the national authorities on May 8, 2006 asking for further information on the content of the proposed legal notice and a precise timetable indicating when the new text was expected to enter into force. However, the Commission has not yet received a reply from the national authorities.

The second development comes from the European Court of Justice in a judgement handed down just a few weeks ago, on July 4, in the case Konstantinos Adeneler vs Ellinikos Organismos Galaktos (ELOG) [C-212/04].

The case was brought by a group of Greek workers against a public sector company, ELOG, established in Thessaloniki, Greece. The workers had been employed on the basis of fixed-term contracts which had been renewed a number of times over a period of years but which were eventually brought to an end without renewal. The workers claimed that their contracts should, in fact, have been considered as contracts of indefinite duration and that, therefore, their employment should not have been terminated. In so doing, they relied on EU law governing fixed-term contracts.

EU law is intended to prevent abuse arising from the use of successive fixed-term contracts of empoyment rather than engaging workers on indefinite contracts, that is, on a permanent basis. The law obliges EU countries to provide in their law the conditions under which fixed-term contracts renewed successively should be automatically considered as contracts of indefinite duration.

For instance, Maltese law establishes this right after a fixed-term contract has been renewed for more than four years. Greek law gives this right after just two years.

Like Maltese law, Greek law too had initially limited this right to private sector workers, excluding those working in the public sector. However, it had remedied this discrepenancy in 2004.

On this specific point, the European Court of Justice stated in no uncertain terms that EU law "precluded the application of national legislation which, in the public sector alone, prohibits absolutely the conversion into an employment of contract of indefinite duration of a succession of fixed-term contracts that, in fact, have been intended to cover 'fixed and permanent needs' of the employer and must therefore be regarded as constituting an abuse".

The court could hardly have been more clear on this point.

It went on to state that EU laws in this area "contain nothing to permit the inference that their scope is limited to fixed-term contracts concluded by workers with employers in the private sector alone".

This is the first time that the European Court of Justice has come out clearly stating that public sector workers should be covered by the scope of the law and should therefore benefit from EU law on fixed-term contracts rather than be excluded.

This judgement is therefore very relevant for Malta.

EU law also permits member states to determine cases where the fixed-term contracts can continue to be renewed for "objective reasons" rather than automatically converted into a contract of indefinite duration.

On the definition of "objective reasons" preventing a fixed-term contract from becoming a permanent job, the court said that "the concept of 'objective reasons'... must be understood as referring to precise and concrete circumstances charaterising a given activity, which are therefore capable in that particular context of justifying the use of successive fixed-term employment contracts".

It added that "a national provision which merely authorises recourse to successive fixed-term employment contracts in a general and abstract manner by a rule of statute or secondary legislation does not accord with the requirements".

Using "objective reasons" as a pretext for preventing a fixed-term contract from becoming an indefinite-term contract, the court said, "carries a real risk that it will result in misuse of that type of contract and, accordingly, is not compatible..."

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