Until recently, it has been common practice to include within fixed-term contracts a clause preventing an employee from making a claim for unfair dismissal or claiming a redundancy payment when the term expires and is not renewed.

Now only the right to exclude a redundancy payment survives.The Law Society's prescribed training contract for trainee solicitors is a specific example of a fixed-term contract which will be affected by the changes.

This contract governs the two-year vocational training period which all trainee solicitors must undergo before becoming eligible to be admitted as solicitors.

It has to date included an opt-out clause of the type referred to above.

The basic purpose of a training contract is to ensure that there are ample opportunities for trainee solicitors to undergo the vocational part of their training, rather than to create an ongoing employer/employee relationship for an individual trainee.

In these circumstances it has always seemed logical to include a provision which ensures that both the training establishment and the trainee solicitor alike know where they stand from the outset.The Law Society's training contract review group has taken advice on the legal position when training contracts expire and a summary of this advice follows.The Employment Relations Act 1999Section 18 of the Act (which is not yet in force) repeals ss 197(1) and 197(2) of the Employment Rights Act 1996, which permitted an opt-out from unfair dismissal rights.

In a speech early in August, the Secretary of State indicated a broad intention to bring the 1999 Act into force by the end of this year.

Its application will not be limited to contracts which are entered into on or after the commencement date.

Training establishments therefore must understand that s 18 will apply to those who are already working under a training contract.

Since 1 June 1999, when the government cut the qualifying period from two years to one, current trainees have already potentially acquired the right to complain of unfair dismissal.Section 18 leaves intact the right to opt out from redundancy rights, provided that the opt-out complies with statutory requirements.

However, the statutory redundancy payable to an employee with two years' service is a modest amount (less than £500 at current values) and therefore unlikely to be a source of dispute in practice.The 1999 Act also contains provision for the 'compensatory award' for unfair dismissal (that is, that part of the award of a tribunal which represents compensation for future loss arising out of an unfair dismissal) to be capped at £50,000 rather than the present £12,000, and thereafter to be index-linked.

It is reasonable to assume that this will be brought into force at the same time as s 18.Summary of the present frameworkSo solicitor-employers of trainees will be affected by these changes and increased awards will heighten the incentive to claim.

Furthermore, tribunals are looking with increasing scepticism at devices adopted by employers to circumvent the rights of their employees.

It should be assumed that it is not possible to do so.The general scheme of unfair dismissal law is that once it is shown by the ex-employee that there has been a dismissal, the onus lies on the former employer to show what is the reason or principal reason for the dismissal, and that the reason is one of those permitted by the Act.

Finally, it must be shown that the employer has in general dealt reasonably with the reason.

All four steps must be followed in a claim.DismissalThe statutory definition of dismissal is set out in s 95 of the Employment Rights Act 1996.

The definition is exhaustive.

It includes dismissal with or without notice, or by 'constructive dismissal', or the following: 'An employee is dismissed by his employer if he is employed under a contract for a fixed term and that term expires without being renewed under the same contract'.It follows that where the trainee's employment ends by virtue of expiry of the training contract and without there being a further offer of employment, there is a dismissal.A point which is misunderstood by many employers is that expiry of a fixed-term contract is in general the occasion of a dismissal; it is not necessarily the reason for a dismissal.Given the words 'under the same contract', is there a dismissal where the training contract expires, and the trainee is then retained as a solicitor by the training firm? Technically, yes; since Hogg v Dover College [1990] ICR 39 (EAT), the tribunals have accepted that dismissal is the termination of a contract, not a job.

In practice, cases on this point are litigated where the former contract is replaced by one which offers less favourable terms than previously enjoyed.

It is not envisaged that many claims will be brought by trainees whose firms have kept them on.What is the reason?The reason for dismissal has been defined by the Court of Appeal as 'the set of facts known to the employer .

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or of beliefs held by him, which [caused] him to dismiss the employee'.Where the reason is in dispute, it is for the tribunal to make a finding of fact.

The employer's designation of the reason is not binding before the tribunal; for example, in a case where the employer states that he dismissed for incompetence, it is open to the tribunal to find that the reason was in fact redundancy.Is the reason one permitted by the Act?Section 98 of the Employment Rights Act 1996 sets out the exhaustive list of potentially fair reasons for dismissal.

They are reasons which relate to capability (in the sense of skill or health) or qualifications, conduct, redundancy, the effect of a statutory restriction, or 'some other substantial reason'.

These are dealt with below in the context of the expiry of a training contract without renewal.Conduct/capability/qualificationWhile misconduct, lack of skill or ill health may each arise as issues which affect a trainee, they will do so in exceptional cases on their own facts.

The task of a tribunal will be to assess the principal reason for expiry of a fixed-term contract, and there may be rare cases where expiry is mixed with another rea son.

In such a case, it would be for the firm to show that expiry of the fixed term was the principal reason for dismissal.RedundancyAfter years of increasingly complex and unfruitful debate, the House of Lords has recently (see Murray v Foyle Meats [1999] 3 ALL ER 769) sought to take a hatchet to redundancy law, by reducing the question 'is there a dismissal by reason of redundancy' to two narrow questions of fact: (i) have the employer's requirements diminished? (ii) if so, has the individual been dismissed as a result of that diminution?There may well be cases where the firm decides to employ no or fewer trainees, and in those situations, it would be possible to argue that redundancy was the reason for dismissal.

However, in the usual case, where the outgoing trainee is replaced by an incoming trainee, it could not be said that there is a redundancy.Some other substantial reasonThe precise words of s 98(1)(b) are: '.

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some other substantial reason of a kind to justify the dismissal of an employee holding the position which the employee held'.This is of course a catch-all, and it catches that vast range of human behaviour which does not fit into the other categories of s 98.Can expiry of a fixed-term contract be 'some other substantial reason'? Precisely that question was answered affirmatively by the Court of Appeal in North Yorkshire County Council v Fay [1985] IRLR 247.

The issue was whether on the facts a teacher was entitled to a redundancy payment on expiry of her fixed-term contract.

Lord Justice Browne-Wilkinson said: 'Merely to say that this was a fixed-term contract does not by itself establish that there was a substantial reason for dismissal .

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But, in my judgment, if it is shown that the fixed-term contract was adopted for a genuine purpose and that fact was known to the employee, and it is also shown that the specific purpose for which the fixed-term contract was adopted has ceased to be applicable then .

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those facts are capable of constituting some other substantial reason'.In addition, and unlike the Fay case, a training contract is a contract for a particular task (and not just for a particular duration), that is, that of receiving training.

Completion of the formal training stage of a solicitor's career might also separately amount to 'some other substantial reason'.This leads to the conclusion that provided there are no other unusual circumstances, the expiry of the training contract would be a dismissal for some other substantial reason under s 98(1)(b).ReasonablenessOnce the reason has been established, the tribunal turns to the test of s 98(4), which states that fairness 'depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and shall be determined in accordance with equity and the substantial merits of the case'.This is the broad, general question in every unfair dismissal case, and it gives rise to issues of procedural fairness, consistency in the workplace, proportionality between reason and result, and the broad sense of justice.

While these terms are general ones, higher standards are expected of larger workplaces.To assist trainers in the fair treatment of trainees and to avoid claims against firms, the effect of s 98(4), read with the Court of Appeal judgement in Fay, requires at least the following:(1) that employers tell trainees on appointment that there is no guarantee of employment after completing training;(2) that employers update that information openly and in writing as appropriate, and certainly within the last six months of the training contract;(3) that there is no obligation to create a post for an outgoing trainee;(4) however, if a suitable vacancy arises for which an outgoing trainee might be a candidate, there should be a formal consideration of the possible match between trainee and vacancy.On these last two points more recently, in The Labour Party v Oakley [1987] IRLR 79, the Employment Appeal Tribunal decided that failure to consider the outgoing employee for alternative employment did not render expiry of a fixed term without renewal unfair.

However, the case may be confined to its own facts, and in general tribunals' expectations of the standards of employers have risen over the years.Guidance to the professionIt is in the general interests of the profession that solicitors should be good employers, and that newly-qualified solicitors should consider that they have been well treated by their trainers and by the profession.

To achieve this, training establishments are recommended to take the following steps:(1) raise awareness within the firm of the new requirements;(2) review the firm's arrangements for dealing with the expiry of training contract and taking on of trainees subsequently;(3) ensure that trainees are told clearly from the outset that at the expiry of the training contact, the employment will come to an end unless the trainee has applied for, been offered, and accepted an alternative post in the firm;(4) at frequent intervals throughout the training, training establishments should restate the position;(5) ensure that action is taken at the expiry of a training contract.

Fairness is adjudged at the time of dismissal.

If a trainee has been kept on after the end of the training, then expiry of the fixed term is no longer the reason for dismissal, and fairness will be looked at afresh;(6) where a suitable vacancy arises in the firm at or around the time of the expiry of a fixed term, the training establishment should give formal consideration to a possible match between the trainee and a vacancy;(7) where an outgoing trainee is not to be replaced by a new trainee, there is on the face of it a redundancy situation.

The training establishment should consider making a redundancy payment, and should do what it can to assist the outgoing trainee in future career development; and(8) whenever training establishments discuss with trainees the possibility or likelihood of being kept on beyond the training period, it should always be made clear that such discussions are exploratory rather than giving a commitment;ConclusionAt first sight, the coming into force of s 18 of the Employment Relations Act 1999 looks to be bad news for solicitors taking trainees.

In practice however, provided a training establishment acts fairly towards its trainees and follows the simple advice set out above, there should be few practical problems.The training contract review group feels that the proposed changes to the law emphasise the importance of good employment practice within the training contact.

Many of its own recommendations are motivated by exactly the same rationale.

If solicitor-employers act reasonably and have efficient personnel procedures, then they have nothing to fear from these changes to employment law.

However, if they act unreasonably, they will find not only their professional body but also employment tribunals imposing costly and painful penalties upon them.