Employer Resources Newsletter - April 2026

For many nonprofit organisations in Ireland, fixed-term contracts are not just an option, they are a necessity. Driven by project-based work and often dependent on time-bound or uncertain public funding, organisations must balance achieving stated objectives with financial responsibility. While fixed-term contracts can offer flexibility, they also bring a distinct set of HR and employment law challenges that require careful management.

This issue is particularly relevant for organisations operating in an environment where public funding is sometimes unpredictable. Grants may be reduced, delayed, or discontinued entirely, leaving organisations exposed to both operational and legal risks. In these circumstances, fixed-term employees must be carefully considered.

Fixed-Term Employment and Contracts of Indefinite Duration

Fixed-term contracts are commonly used to align staffing with specific funding cycles or project timelines which is a practical and legitimate approach. However, problems can arise when these contracts are repeatedly renewed or where there is ambiguity around the reason for the fixed term.

The Protection of Employees (Fixed-Term Work) Act 2003 prohibits the issue of two or more fixed-term contracts of employment which exceed four years’ duration without “objective grounds” for renewal. Following four years of fixed-term employment, employees may therefore seek to be made permanent, unless there are objective grounds justifying a further renewal of the contract and not offering a permanent post at that time.

For nonprofit employers, this rule creates an inherent tension between the need to retain experienced staff versus the uncertainty of future funding.

The Funding Challenge

Public funding can be unpredictable. Decisions can be influenced by political priorities, economic conditions, or administrative delays. While organisations may issue fixed-term contracts tied to specific grants, the reality is that employees often continue in their roles beyond the original funding period, particularly if new funding is secured at the last minute.

This ‘rolling contract’ scenario can inadvertently expose organisations to legal risk. If the justification for a fixed-term contract is not clearly documented and consistently applied, the organisation may struggle to later defend its position if challenged.

In addition, employees may develop a reasonable expectation of ongoing employment, especially where renewals have been routine for a number of years. If funding ceases and contracts are not renewed, this scenario often exposes organisations to the risk of an employee claim.

Common HR Risks

Some of the most frequent issues arising from fixed-term contracts include:

• Unintentional permanency: Repeated renewals without clear justification can lead to employees asserting their right to a contract of indefinite duration.
• Inconsistent contract wording: Lack of clarity around the objective grounds for fixed-term status can undermine legal standing.
• Poor communication: employees may not fully understand the temporary nature of their role, leading to dissatisfaction or disputes.
• Redundancy exposure: If a role ends due to funding loss, organisations may still face redundancy obligations depending on the length of service.

Best Practice: Managing Fixed-Term Contracts Effectively

To mitigate these risks while maintaining flexibility, organisations should adopt a structured and proactive approach:

Clearly Define Objective Grounds
Each fixed-term contract should explicitly state the reason for its duration, such as linkage to a specific funding allocation or completion of a specific project. This justification must be genuine, documented, and consistently applied.

Monitor Contract Duration and Renewals
Keep accurate records of contract start and end dates and track cumulative service. Establish internal alerts as employees approach key thresholds (e.g., years of continuous service and number of fixed term contracts).

Align Contracts with Funding Realities
Where possible, match contract durations to confirmed funding periods. Avoid extending contracts speculatively without clear justification.

Communicate Transparently
Ensure employees understand the nature of their contract from the outset. Regularly update them on funding situations and the potential implications for their role.

Plan for Different Scenarios
Develop contingency plans for funding changes. Seek advice early to establish any financial exposure and ensure compliance with employment law obligations.

Seek Expert HR Guidance
Given the complexity of employment law in this area, working with an external HR consultancy may be necessary if there is a lack of internal HR expertise within the organisation. 

Conclusion

While fixed-term contracts remain a cornerstone of workforce planning in nonprofit sector, their use must be carefully managed to avoid unintended legal consequences. By combining clear documentation, proactive monitoring, and transparent communication, organisations can strike a balance between flexibility and compliance. 

Adare is a team of expert-led Employment Law, Industrial Relations, and best practice Human Resource Management consultants. If your organisation needs advice, support, or guidance about compliance requirements or any HR issues, please contact Adare by calling (01) 561 3594 or emailing info@adarehrm.ie to learn what services are available to support your organisation.

Dublin Office: (01) 561 3594 | Cork Office: (021) 486 1420 | Shannon Office: (061) 363 805

info@adarehrm.ie | www.adarehrm.ie

‘Volunteer’ Care Worker Awarded €60,000 in Unfair Dismissal Claim

Background:

The Respondent was a registered charity that operated a centre in which the Complainant worked on a voluntary basis. The centre provided residential accommodation, support, assistance and learning opportunities for children and adults with intellectual disabilities.

The Complainant stated that up until December 2018, the Respondent’s staff was made up of long-term care workers (LTCW), short term care workers (STCW), persons described as employees and persons described as volunteers. The Complainant stated there were approximately 450 staff who fell into those categories across the Respondent’s operations. The Complainant described himself as an LTCW having commenced with the Respondent in around 1977. The Complainant maintained that notwithstanding this description, a de facto employment relationship existed and he cited various factors in support of his position.

Summary of Complainant’s Case:

The Complainant stated that he commenced in the Respondent’s centre in or around 1980 and remained attached to that centre until 2018. He outlined his work/role in the Respondent’s centre including as a music therapist, in the areas of physiotherapy, active involvement, construction activities and care work. The Complainant stated that he lived in the centre with his chosen family and worked diligently with the users of the service sometimes up to 72 hours/week. He stated that he was totally committed to his role and the activities he was involved with. 

The Complainant stated that various issues related to the Respondent’s governance arrangements arose from 2015. This resulted in a decision on 6 June 2017 to transfer the running of the centre at which he worked to the HSE and to phase out the LTCW model in favour of employed staff. 

The Complainant explained that in around 2017 a transition group was established to consider the practicalities for the workers of this change in governance. The Complainant stated that representations were made that LTCWs would be taken on as employees and failing that, would be given assistance in relation to leaving the Respondent, in other words a form of retirement or exit package. In this regard, the Complainant cited various meetings convened at the time, reports and correspondences including a transition document which he completed in November 2018 and on which he stated that he did not wish to be made redundant and reserved all his legal rights. 

Summary of Respondent’s Case:

The Respondent outlined its dealings with the Complainant and the other staff in 2018 in relation to the LTCW transition process. In this regard, the Respondent cited a written statement made by the Complainant on 27 November 2018 which indicated that the Complainant never regarded himself as an employee, that he did not ‘have the requisite intention to create legal relations to enter into a contract of employment’ and that post December 2018, he did not wish to transition into a role that was subject to an employment contract.

The Respondent stated that after the LTCW arrangement came to an end on 31 December 2018, the Complainant was offered a volunteer agreement and an LTCW transition plan which he did not accept. It was the position of the Respondent that for the Complainant to avail of statutory employment rights, he must first come within the definition of an employee and that the Complainant did not satisfy the requisite tests. In this regard, the Respondent submitted there was an absence of the requisite mutuality of obligation, there was no contract of service, there never was an intention to create legal relations and the Complainant was never an employee nor ever saw himself as such.

The Respondent further stated that the Complainant was now retired and excluded from any benefit from the Unfair Dismissals Acts or the Redundancy Payments Acts. In addition, the Complainant had made no attempt to mitigate his losses.

Findings and Conclusions:

The preliminary matter of determining the employment status of the Complainant was the central issue of the evidence and submissions since it also determined whether the Complainant had locus standi to bring his complaints and by extension to come within the jurisdiction of the WRC.

The tests for determining employment status include consideration of the degree of control exercised over the worker, whether the person is integrated into the workplace and whether or not a mutuality of obligation existed in terms of the employer having been required to provide work for the employee and the corollary obligation on the employee to complete that work.

The Adjudicator was satisfied that there were numerous indications to determine that the Complainant was an employee. The evidence indicated that he was integrated into the workplace for some 38 years, he was described as an LTCW and from the evidence presented, there was control over the work he did. The Complainant was obliged to comply with the Respondent’s extensive policies including for example its disciplinary procedure which provided for dismissal. For the most part, the same workplace policies applied to LTCWs and employees in the same manner.

As against that, there were a number of factors which did not indicate that there was any employment relationship such as the fact that the Complainant was not paid wages in the usual manner nor was he subject to PAYE tax, he did not receive payslips and was not a member of any pension scheme. Similarly, no evidence was presented that the Complainant’s working hours or leave arrangements were based on any objective criteria or that there was any alignment with statutory provisions. Nor was there any sick leave scheme.

The Adjudicator disregarded the labels given to the relationship by both parties in evidence and determined the matter on the basis of the de facto relationship between the parties. By using this approach, the Adjudicator found that the requisite elements of mutuality of obligation, integration and control existed to establish a contract of employment and the Complainant was therefore entitled to a range of statutory employment rights. In all the circumstances, the Adjudicator ultimately ruled that the Complainant was entitled to bring his complaints to the WRC on the basis that he was employed by the Respondent.

The Complainant was not afforded fair procedures nor was he provided with any specific justifiable reason for the termination of his employment within the terms of Section 6(4) of the Unfair Dismissals Act other than that the role of LTWC was coming to an end which reason was of a general nature and applicable to the Respondent’s service generally. The Complainant was entitled to be appraised in specific terms of the reasons for his dismissal and afforded a fair process to deal with the matter having regard to the requirements of natural justice and the Respondent’s own Disciplinary Procedure.

Decision:

The Adjudicator determined that the Complainant be compensated €60,000 for his loss of earnings arising from the unfair dismissal. 

Recommendations for Employers

In this Case, the Complainant succeeded with a claim that his relationship with the Respondent had the requisite elements to establish an employment contract.

The case is interesting as the Complainant’s own evidence revealed that he did not consider himself to be an employee. The Adjudicator disregarded the labels given to the relationship by both parties in evidence and determined the matter on the basis of the de facto relationship between the parties. By using this approach, the Adjudicator found that the requisite elements of mutuality of obligation, integration and control existed to establish a contract of employment and the Complainant was therefore entitled to a range of statutory employment rights.

Although not referred to in the decision, the tests for determining employment status laid down by the Supreme Court in Revenue v Karshan are a good starting point for organisations who need to determine the correct employment status of atypical employment relationships. 

New Legislation Update – Protection of Employees (Employers' Insolvency) (Amendment) Act 2025

The President recently signed the Protection of Employees (Employers' Insolvency) (Amendment) Act 2025 into law. The legislation requires a commencement order to come into force.

The purpose of the Act is to make changes to the Protection of Employees (Employers’ Insolvency) Act 1984 which sets out pay-related entitlements of employees working for an insolvent employer. 

The legislation is designed to ensure that the Insolvency Payments Scheme allows former employees of insolvent organisations to recover monies that are owed to them. 

The Department of Enterprise, Trade and Employment will conduct a comprehensive communications campaign to advise former employees of their potential entitlements in connection with historical claims when this new law is coming into effect.