Successive renewal of short-term contracts not always unlawful, court rules

The systematic renewal of short-term contracts is not necessarily a breach of the employment law even where the posts fulfil a permanent function within an organisation, the European Court of Justice has ruled.

The case, whose outcome suggests a more flexible employer-friendly approach to employment law, was brought by an assistant clerk to the German administrative court who had been continuously employed for 11 years on the basis of 13 short-term contracts.

Under EU law standard employment contracts should be for an indefinite period but the fixed-term work directive allows short-term contracts to be renewed subject to certain conditions.

In particular, the directive provides that 'to prevent abuse arising from the use of successive fixed-term employment contracts', there should be 'objective reasons' for the renewals or a cap on numbers.

But ruling in Case C-586/10 Kücük, the Luxembourg judges said ongoing renewal of fixed-term contracts was lawful even where they corresponded to a permanent function in the employer's business.

'The mere fact that a need for replacement staff may be satisfied through the conclusion of contracts of indefinite duration does not mean that an employer who decides to use fixed-term contracts to address temporary staffing shortages, even where those shortages are recurring or even permanent, is acting in an abusive manner,' the court ruled.

The court said the requirement of an objective justification in such cases precluded the possibility of abuse.

Recourse to successive short-term contracts could nevertheless be regarded as abusive 'where an overall assessment of the circumstances surrounding the renewal of the relevant fixed-term employment contracts or relationships reveals that the work required of the employee does not meet merely a temporary need'.