Extra work no longer required

I would appreciate any help or advice for my colleague.

Background
Employee1 (HSE employee) leaves post (HSE funded - employer=other agency not HSE).

Employee2 (non-HSE employee) commences post (HSE funded - employer - other agency)- through open recruitment.
Employee2 works for 1 year and then takes maternity leave.

Employee3 (non-HSE employee)works part time has her hours increased to full time to cover maternity leave of employee2.
Employee2 does not return from maternity leave.
Employee3 continues to cover work of employee2.
Employee3 is informed by manager today that her services to cover employee2 work are no longer required.
Employee1 is reinstated to cover employee2 work.
Post was not advertised. Employee 3 did not have the opportunity to apply for job. At no point during support and supervision was employee3 informed of any difficulties with her doing job.
Where does employee3 go from here? Bearing in mind that this is a government funded agency using HSE funding for this particular post.

Sorry its so convoluted but I tried to be as clear as possible.
Thanks again in anticipation of your replies,
HP

Were contracts issued based on the availability of specific named individuals or were they worded to cover the work assigned to a particular post? (e.g. 'the Social Worker attached to the Sector G Family Liaison Team')

Was Employee1 on temporary contract assignment / secondment to another agency for a defined period or for the life of a project team or task force?

Was Employee3 issued with 'renewable rolling contracts' once a month?

If the answers to the questions are as I suspect, then it all comes down to the contracts and unfortunately, I believe the most likely outcome is that Employee3 is now looking for a job.

Is Employee3 in a union?

Thanks mathepac for your speedy reply.

AFAIK a contract was not issued to cover maternity leave - employee3 was available for work and when it was offered she took it.

Employee1 was not on a temp contract or secondment to another agency. Her full time post was split between two locations. She opted to reduce her working hours by dropping one location. The post at this location was filled by Employee2.

Employee3 is a permanent employee of the agency - she will remain as an employee (on a part time basis) - no longer covering the post of Employee2.

She is a union member (Impact i think).

Her issue is that she believes she should have been given the opportunity to apply for the job she was doing. There was no stipulation that the post had to be taken by a HSE employee. The post was never adverstised. If there is a ban on recruitment in the HSE can employee1 return to full time work when she has voluntarily opted to reduce her working hours?