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Fixed Term Contracts – what you need to know

21st Oct 2016
Human Resources, Payroll, Recruitment

A fixed term contract terminates on a specified date or at the end of a particular project or a specific task, fixed term employees could be employed for seasonal work, casual employees taken on to cover a busy period or someone to cover for maternity leave. Here is a round-up of Fixed Term Contracts – what you need to know:

  • Fixed term contract are contracts that last for a specified time, or will end when a specified task or event has been completed.
  • Employers must not treat fixed term workers less favourably than permanent employees doing the same or a similar job.
  • Fixed term workers who work continually for the same employer for 2 years or more may have the same redundancy rights as a permanent employee.
  • Contracts will normally end automatically when they reach the agreed end date.
  • Employees on a fixed term contract for 4 or more years may automatically become a permanent employee.

Fixed term employees should get:

  • the same pay and conditions as permanent staff
  • the same or equivalent benefits
  • information regarding any permanent vacancies within the organisation
  • protection against unfavourable treatment.

A fixed term employee has the right not to be treated less favourably than a comparable permanent employee. However, an employer may be able to objectively justify less favourable treatment in circumstances where they can show that they have a good business reason for doing so.

If an employee feels they have been treated less favourably they should ask for a written statement of reasons for the less favourable treatment from their employer first, however, if the matter remains unresolved they can submit a claim to the Employment Tribunal. Any claim to a tribunal should be made within 3 months of the date the less favourable treatment occurred.

When a fixed term contract ends on the agreed end date; the employer will normally not need to give notice. If the work ends after 2 years’ service the employee may be entitled to a redundancy payment, and will be entitled to the same redundancy rights as a permanent employee.

If the work ends before the agreed end date and the contract allows the worker to be dismissed then the employer should give the appropriate notice period. Employers may be in breach of contract if they wish to end the contract and there is no provision to do so in the contract of employment.

Any employee on a fixed term contract for 4 or more years may automatically become a permanent employee, unless the employer has a good business reason not to do so, or a collective agreement removes the right.

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