Fixed Term Employment

Fixed-term employees have employment rights while they are employed. The employer may be able to bring employment to an end when the genuine fixed-term event occurs — but only if the fixed-term arrangement is legally supportable. The key word is genuine.

The reason must be genuine and based on reasonable grounds

A fixed term needs a real and sensible reason connected with the work. The employer should tell the employee the reason and record it in the employment agreement together with how the employment will end — for example, on a specified date or when a particular event occurs.

The reason should relate to the work, not simply the employee's personal circumstances. An employee having a temporary visa, for example, does not by itself create a genuine business reason to make the job fixed-term.

Examples that can be genuine

• Covering a permanent employee's parental leave or secondment.
• Seasonal work with a genuine end to the season.
• A one-off project with an identifiable completion point.
• Temporary work created by a genuinely time-limited business need.

Reasons that should immediately be questioned

• “We want to see if you are any good.” Fixed-term employment should not be used instead of a trial or probationary period.
• “There might not be enough work later.” General uncertainty about future work is not automatically a genuine fixed-term reason.
• Poor performance. Performance concerns are not a proper reason to manufacture a fixed-term expiry.
• The work is plainly ongoing. A role that simply moves from one ongoing project to the next may not have a genuine fixed-term end.

Repeated fixed terms

Repeated extensions do not automatically make employment permanent, but they deserve scrutiny. We look at whether the original reason still exists, whether each extension has a genuine basis, whether the work is actually ongoing, and what the parties' conduct shows about the real employment relationship.

If the employee simply continues working after the stated expiry and the parties carry on as before, the legal position can become quite different from the wording of an old fixed-term agreement.

Ending employment before the fixed term expires

A fixed-term agreement is not a licence to dismiss early without process. If the employer wants to end the employment before the agreed event because of misconduct, poor performance, redundancy or another reason, the relevant dismissal rules and the wording of the agreement still need to be considered.

What happens when the genuine event occurs?

Where the fixed-term reason is genuine and the specified event occurs, employment can usually end in accordance with the agreement without the employer having to invent a separate redundancy or performance reason. But if the employer cannot lawfully rely on the fixed term, treating the employment as automatically finished can potentially amount to an unjustified dismissal.

Questions we ask

• What exact reason is written into the agreement?
• Was that reason genuine when employment began?
• Is the work actually ending?
• Did the employer tell you how and when employment would end?
• Have there been repeated extensions?
• Are other people continuing substantially the same work?
• Did you continue working after the stated expiry?
• Is the employer using the expiry to avoid a performance, disciplinary or redundancy process?

Unfair Dismissal Redundancy

Frequently asked questions

Can an employer put every new employee on a six-month fixed term?

Not simply as a way to test suitability. There must be a genuine reason based on reasonable grounds for the employment itself being temporary.

What if I have had three fixed-term contracts in a row?

That does not automatically decide the issue. The reasons for each term, the reality of the work, continuity and the parties' conduct need to be examined.

What if the project keeps going after I am told my fixed term has ended?

That can be important evidence when testing whether the stated fixed-term reason was genuine or whether the employer can rely on it.

General information only — fixed-term cases are highly dependent on the wording of the agreement and the actual work.