KKO:2017:55

Conditions of qualification and successive fixed-term employment contracts

Diary number: S2015/615
Issue date: 11.8.2017

Background and the issues to be decided

A had worked for eight years as a social worker in a fixed-term employment relationship with a municipal federation. When the position was declared vacant for applications, she was no longer appointed to the job. A had trained as a basic nurse and had a social instructor’s degree. She did not have a Master’s degree which would correspond to the statutory qualifications required of a social worker.

The issue before the Supreme Court was whether there were legal grounds for A's fixed-term employment contracts, since she did not meet the statutory qualifications required of a social worker. A second issue was whether A's employment relationship was to be deemed to be in force for an indefinite period on the grounds that there was a permanent need for the services of a social worker in the municipal federation. A further issue to be decided was whether the employer had otherwise acted in accordance with the provisions of the Employment Contracts Act (55/2001) in terminating the successive employment contracts with A.

Legal grounds for A’s fixed term employment contracts. Was her employment contract to be deemed to be in force for an indefinite period.

According to the provisions of the Employment Contracts Act, an employment contract is in force for indefinitely, unless it has, for a justified reason, been made for a specific fixed period. An employment contract made for a fixed term at the employer's initiative without a justified reason shall be considered valid indefinitely. The use of successive fixed-term employment contracts is prohibited when the amount or total duration of fixed-term contracts or the totality of such contracts indicates that the employer has a permanent need for labour. According to the Act on Qualification Requirements for Social Welfare Professionals (272/2005), if no person with the statutory qualifications can be appointed to a position as a social welfare professional, a person who, on the basis of the studies that he or she has completed, has a sufficient ability to attend to the position, may be appointed to this position for a maximum of one year. According to the Act, the purpose of the qualification requirements is to promote the right of social welfare clients to quality social welfare.

Since no social workers fulfilling the qualification requirements could be found to fill the position as social worker, there was reason to deem that the lack of qualifications on the part of the applicant was grounds in this situation for concluding a fixed-term employment contract, in the manner provided in the Social Welfare Qualifications Act, for at most one year. Similarly, in principle there was no obstacle to re-appointing this individual to the position as social worker if no person fulfilling the qualification requirements for the position could be found.

Over the course of more than eight years, A had had 16 successive fixed-term employment contracts, none of which had been more than one year in length. The totality of these contracts, together with the fact that the municipal federation had for a number of years actively but unsuccessfully sought to employ a sufficient number of social workers fulfilling the qualifications, showed the permanence of the need for a social worker. The Supreme Court held that in such circumstances the use of successive fixed-term contracts was not, in principle, permitted under the Employment Contracts Act.

However, A did not meet the statutory qualification requirements for the position as social worker. Although there was in itself a permanent need for a social worker, the employer's need to employ an unqualified person as a social worker was temporary, lasting only until a qualified employee could be appointed to the position. Taking further into consideration the intent of the Social Welfare Qualifications Act to promote the rights of the client, the Supreme Court held that A's employment relationship was not to be deemed to be in force indefinitely.

Need for a request for a preliminary ruling

The Supreme Court noted that no case had yet been submitted to the Court of Justice of the European Union that would have concerned the question of the interpretation of the objective reasons referred to in clause 5(1) (a) of the framework agreement annexed to Directive 1999/70/EC on fixed-term work, in a situation in which the objective reasons are expressly linked to the absence of a qualification required by law. However, the Court of Justice has issued a number of preliminary rulings on the interpretation of the objective reasons referred to in the Framework Agreement and on the role of the national court in a situation where it is to decide on matters relating to the abuse of fixed-term employment relationships.

The Supreme Court noted that the Court of Justice, in its case law on the interpretation of the framework agreement, has deemed that the concept of objective reasons is to be understood as referring to specific and actual circumstances typical of a particular activity which are such that, in that specific context, they can be used to justify the use of successive fixed-term contracts. Such circumstances may result, inter alia, from the specific nature of the tasks for the performance of which such contracts have been concluded, and from the inherent characteristics of those tasks or, as the case may be, from the pursuit of a legitimate social policy objective of a Member State (judgment of 14 September 2016, López, C-16/15, EU:C:2016:679, paragraph 38 and the case-law cited therein).

However, the Court has stressed the need to assess whether the renewal of a fixed-term contract actually responds to a genuine need, is capable of achieving the objective pursued and is necessary for that purpose. The renewal of fixed-term employment contracts in order to cover needs which, in fact, are not temporary in nature but, on the contrary, are fixed and permanent, is not justified for the purpose of clause 5 (1) (a) of the Framework Agreement (judgment of 14 September 2016, López, C-16/15, EU:C: 2016: 679, paragraphs 39 to 40 and 48 to 49, and the case-law cited therein).

In its case-law, the Court of Justice has held that, in certain areas, it is inevitable that temporary replacements will be necessary, for example as a result of many staff members being on family leave. In those circumstances, there may be objective reasons for the temporary replacement of workers, justifying both the use of fixed-term contracts and the renewal of those contracts as the need arises, subject to compliance with the relevant requirements laid down in the Framework Agreement. According to the Court of Justice, this conclusion applies, in particular, to the case when the national legislation justifying the renewal of fixed-term employment contracts also pursues objectives recognised as being legitimate social policy objectives (judgment of 26 November 2014, Mascolo and Others, C-22/13, C-61/13-63 /13 and C-418/13, EU:C:2014: 2401, paragraphs 90-93, and judgment of 14 September 2016, López, C 16/15, EU:C:2016: 679, paragraph 45 and the case-law cited therein).

The Court of Justice has further held that Member States, in implementing the Framework Agreement, may also take into account the particular needs of the specific sectors, provided that this is justified on objective grounds. In a judgment that concerned the educational sector, the Court of Justice held that education is a fundamental right guaranteed by the constitution of the Member State concerned and that the constitution obliges the state to organize the school service in such a way as to ensure that teacher-pupil ratios are constantly appropriate. Such factors are indicative of the particular need for flexibility in the education sector, which in this specific sector provides an objective justification for concluding successive fixed-term contracts in order to meet educational needs in an appropriate manner and in order to avoid a situation where the State, acting as the employer in this sector, needs to employ a significantly greater number of teachers on permanent contract than is actually necessary for it to fulfil its obligations in this sector (judgment of 26 November 2014, Mascolo and Others, C-22/13, C-61/13 - 63/13 and C-418/13, EU:C:2014: 2401, paragraphs 70 and 94 - 95 and the case-law cited therein).

In the López judgment, which concerned the public health sector, the Court of Justice held that the public administration has the obligation to organize the health services in such a way as to ensure a stable size of the medical staff that corresponds to the number of patients, and that this involves a large number of factors that may reflect a particular need for flexibility. This need can constitute objective justification for recourse to successive fixed-term employment contracts. By contrast, it cannot be concluded that fixed-term employment contracts may be renewed for the purpose of the performance, in a fixed and permanent manner, of tasks in the health service which normally come under the activity of the ordinary hospital staff. The application in practice of objective reasons must be in accordance with the requirements of the Framework Agreement in relation to the specific characteristics of the sector in question and the conditions for the conduct of its activities (judgment of 14 September 2016, López, C-16/15, EU:C:2016:679, paragraphs 46 to 49 and 54 and the case-law cited therein).

Given the case law of the Court of Justice as outlined above, the Supreme Court held that there was no real doubt in this context as to the interpretation of European Union law. Consequently, it was not deemed necessary to request a preliminary ruling from the Court of Justice.

Obligation to offer work and training

A had further argued that the municipal federation had failed to ascertain whether she could have been offered other work or been trained for a new position. A had argued that, as a result of this negligence, her employment relationship had been terminated in breach of the Employment Contracts Act.

In the case of an employee who is employed indefinitely, the provisions of the Employment Contracts Act require that the employer ascertain whether dismissal of the employee could be avoided by placing him or her in, or training him or her for, other duties.

In accordance with the Employment Contracts Act, less favourable employment terms than those applicable to other employment relationships may not be applied to fixed-term employment relationships merely because of the duration of the employment contract, unless there is a proper and justified reason for this. The provision is based on the corresponding non-discrimination clause in the framework agreement on fixed-term work. In its case-law, the Court of Justice has held that the prohibition of discrimination constitutes a ban on differences in treatment as between fixed-term workers and permanent workers in a comparable situation (judgment of 14 September 2016, López, C-16/15, EU C: 2016:679, paragraphs 63-65, and the case-law cited therein). The prohibition of discrimination is complemented by the provision of the Employment Contracts Act on the obligation of the employer to treat its employees equally.

If A had had the qualifications required by the law of a social worker, A's employment relationship should have been deemed to be in force indefinitely. The Supreme Court ruled that, in respect of the provision in the Employment Contracts Act regarding the employer’s obligation to offer work and training, A's status under these circumstances was comparable to that of an employee whose employment relationship was in force indefinitely. Accordingly, before the expiry of A's fixed-term employment contracts, the municipal federation should have ascertained whether she could have been offered other work or the appropriate and reasonable training required for new tasks. The municipal federation should, already on the basis of its duty of loyalty, and on its own initiative, have ascertained whether work could have been offered to A.

The municipal federation had not presented grounds that would have shown that it had fulfilled its obligation to offer work and training. Consequently, the municipal federation was deemed to have terminated A's employment contract in breach of the criteria laid down in the Employment Contracts Act and was required to pay compensation for the unjustified termination of the employment contract.