When is it OK to use a fixed term contract?

Tempting as it might appear to use a fixed term contact as a means of “trying someone out” it is neither necessary nor, technically, legal, to use this approach.

The employment rights of any employee are the same, regardless of whether their contract is fixed or long term, when it comes to the right to claim unfair dismissal. The right to claim wrongful dismissal or to claim discrimination, apply from day 1 of employment so nothing is gained from a fixed term contract.  The only difference is existence of a termination date at the end of the contract but the process of early termination is exactly the same as a long term contract.

Good probationary period management is the key, regardless of the duration of the contract, and ensuring a “fair trial” if dismissal becomes a possible outcome during employment is as important for someone who has worked with you for a month as it is for someone who has been with you for 10 years.  As ever, seek advice  early on.

The situations where a fixed term contract is permitted in law are defined as follows:

  • a seasonal or casual employee taken on for up to 6 months during a peak period of work
  • a specialist employee for a project with finite, specific, funding
  • cover for maternity or long term sickness absence leave.

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