Under common law, expiry of a fixed term contract simply brings the contract to an end "by performance". There is no dismissal and therefore (without special rules) there would be no compensation for unfair dismissal or dismissal by reason of redundancy

ERA 1996 provides the special rules. These ensure that if an employee is employed under a fixed term contract and the term expires without the contract being renewed, then for the purposes of unfair dismissal and redundancy law he is treated as dismissed (see ERA 1996 s.95(1)(b) for unfair dismissal and ERA 1996 s.136(1)(b) for redundancy).

The rules neither require nor prevent the contract being renewed. What they do is provide that non-renewal counts as dismissal. Whether that dismissal is unfair or not must then be decided according to the normal rules (see Unfair dismissal/fair or unfair? and for an example of a case in which such a dismissal was held to be fair see Simpson v Van den Bergh Foods Ltd 2001 , EAT on 5th February 2001).

Save in exceptional circumstances, employers must always consult with employees before dismissing them - failure to do so will normally make the dismissal "unfair" (see UNFAIR DISMISSAL/consultation ). This rule applies even on expiry of a fixed term contract, especially if the employer might have alternative work available.

It is possible for the total time between the start of the first and end of the last of a series of fixed term contracts to amount to one single period of continuous employment . Whether this is so or not in any particular case will turn mainly on the duration (ie the shortness) of the gaps relative to the contract periods. The House of Lords has held that the answer to this question is essentially one of fact and degree and therefore it is one in respect of which the decision of an employment tribunal will normally be final (see Ford v Warwickshire County Council HL 1983 ICR 273, House of Lords, and notes at Continuous employment/time off work not breaking continuity/absence on account of temporary cessation of work )

Since 25th October 1999 (in respect of unfair dismissal) and 1st October 2002 (in respect of statutory redundancy pay) it has not been possible for an employee and employer to come to a legally enforceable agreement that the employee waives any unfair dismissal or statutory redundancy pay rights on expiry of a fixed-term contract ( subject to transitional arrangements in respect of pre-deadline agreements) - see notes at Fixed term contracts/rights on expiry of/exclusion of rights )

As from 1st October 2002, several other important changes to the rules affecting fixed term contracts were made by Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, SI 2002/2034. In particular

• fixed term contracts are automatically converted to contracts of indefinite length after four years (the four years cannot start before 10th July 2002) (FTER 2002 reg 8);
  
• the completion of a limited-term contract (an expression which includes fixed term and task contracts) counts as dismissal for unfair dismissal purposes (FTER 2002 reg 1(2), FTER 2002 sch 2 para 3 and ERA 1996 s.235(2A))
  
• it is unlawful for an employer to treat a fixed-term employee less favourably than he treats a comparable permanent employee unless the treatment is objectively justified (FTER 2002 reg 3 and FTER 2002 reg 4).
  
• a fixed term employee who considers he is being treated unfairly can require his employer to provide a written statement setting out the reasons for the treatment complained of (FTER 2002 reg 5).

The effect is that from an employment law point of view, fixed term contracts no longer have the same benefits for employers which they had until October 2002.

For notes on the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, SI 2002/2034 generally see Fixed term contracts/2002 regulations .