Succession of fixed-term employment contracts and replacement contracts: the Constitutional Court rules on the issue

On 17 June 2021, the Constitutional Court issued an important decision in which it ruled that the fact that there are no statutory prohibitions or limits on alternating fixed-term employment contracts and replacement contracts violates the Constitution. It invites the legislator to regulate this issue.

1. Brief reminder of the principles

1. Fixed-term contract. The law of 3 July 1978 on employment contracts (“the law”) establishes as a principle the prohibition of concluding successive fixed-term contracts.

Indeed, when the parties have concluded several successive employment contracts for a fixed term with no interruption between them on the part of the employee, the parties are deemed to have concluded a contract for an indefinite term, except for various exceptions set out in detail by the law. One of these exceptions provides that a maximum of four contracts may be concluded, each for a fixed term of at least three months, and that the total duration of these successive contracts may not exceed two years.

2. Replacement contract. As a rule, if the parties conclude several successive replacement employment contracts with no interruption between them on the part of the employee, the total duration of these contracts cannot exceed two years. However, there is no maximum number of replacement contracts that can be concluded.

If the two-year period is exceeded, the contract is subject to the same conditions as contracts concluded for an indefinite term.

3. Succession of fixed-term contracts and replacement contracts. The law does not provide for any specific rules or prohibitions when fixed-term contracts and replacement contracts succeed each other. Therefore, in principle, the total duration of the succession of fixed-term and replacement contracts does not have to be limited to two years.

The case law considers that this form of succession is authorized, provided that there is no abuse of law or fraud.

2. The Court's decision

The case concerned a dismissed employee who had been employed by his employer without interruption for more than two years under a succession of various replacement contracts and fixed-term contracts. After his dismissal, he claimed an indemnity in lieu of notice calculated since the first contract, considering that, in view of the duration of the relationship, a contract of indefinite term had been formed since the beginning of the relationship, which the employer contested.

Essentially, the Constitutional Court had to assess whether the fact that there are no prohibitions or limits on successive fixed-term and replacement contracts is compatible with the Constitution.

In its analysis, the Court first recalled that the limits on the use of successive fixed-term and replacement contracts were introduced in particular to ensure that the employee benefits from employment stability, and, in principle, this should apply after two years.

The Court then emphasized that this employment stability is indeed guaranteed after two years, in principle, in the case of a succession of fixed-term contracts only or in the case of a succession of replacement contracts only, but not in the case of an alternating succession of fixed-term and replacement contracts.

The Supreme Court considers that, in view of this objective of stability, this difference in treatment is not reasonably justified and therefore creates a discrimination, contrary to the Constitution.

3. Consequences and implications of the decision

In concluding its decision, the Court urged the legislator to adapt the law in order to determine the conditions and exceptions applicable in the event of a succession of fixed-term employment contracts and replacement contracts lasting more than two years.

While awaiting the legislator's intervention, courts and tribunals facing a similar problem could apply the rules relating to contracts of indefinite term for an employee in such a situation.

Employers will therefore have to be particularly vigilant when alternating between fixed-term contracts and replacement contracts, keeping in mind this maximum limit of two years.