Fixed Term Contracts - Contract of Employment

Before considering taking any termination/ dismissal action organisations should review their proposed course of action against the Procedure Check page.

For example an organisation employing someone on a fixed-term on year contract to cover maternity leave must comply with the Statutory Procedure.

Fixed term contracts employment terminates automatically on the expiry of the fixed term period or agreed period of temporary employment. The termination of a fixed term contract without its renewal on the same terms is dismissal. If the contract has lasted longer than 12 months the employer is then liable for a claim of unfair dismissal. If the contract has lasted longer than two years redundancy pay is due.

But see also discrimination section indexed left if fixed term contractual terms differ from other staff contracts.

When selecting individuals for the renewal of fixed term contracts employers should be mindful discriminatory behaviour, discrimination protection applies within no time limits.

Even for shorter contracts there is a requirement to consult with any recognised trade unions. Employers that propose not to renew fixed term contracts should write to recognised trade union in advance giving details of the decision and subsequently respond to any further queries raised.

Making a Fixed Term Offer

There are no particular problems with making an offer of fixed term employment. The normal terms and conditions will apply apart from a clause such as:

You will be employed for a fixed period up to [set a date up to one day short of twelve months] if no further action is taken by either party the contract will expire at the end of that period. During the contractual period either party may give notice of early termination of the contract by giving [? weeks notice].

The principal terms and conditions of the employment contract are set out in the Service Agreement attached.

An example standard clause is included in the sample Managers' Contract.

Pitfalls

Legislation in 2002 means that employers need to offer fixed term employees similar terms and conditions of employment to others unless there are objective grounds to differ. A tribunal decision in 2005 held that fixed term civil servant employees were entitled to the same redundancy terms as permanent staff.

Remember that fixed term staff are also subject to unfair dismissal legislation after 12 months.

Our view is that employers need to take a long and hard look at the value of fixed term contracts - apart from clearly stating the temporary nature of the job there does not seem to be any good reason to use them.