Guide to using fixed term contracts

Employers often use fixed term contracts under the misapprehension that they are a less protected form of employment.

The expiry of a fixed term contract which has been in place for over 2 years (less 7 days) without renewal counts as a dismissal for unfair dismissal and redundancy purposes.

To reduce the risk of a potential unfair dismissal claim you should only consider using a fixed term contract in circumstances where;

  • the employee is employed to work on a project that will continue for a specified period; or
  • an employee’s position is funded by a third party for a specific period and/or is dependent on that funding; or
  • a position is to cover for maternity leave or a sabbatical; or
  • or the employee will be employed for a discrete season of work.

To terminate a fixed term contract fairly you need to have a potentially fair reason. If you want to rely on Some Other Substantial Reason you will need to show that you have a substantial business reason for terminating i.e. one of the bullet points above. You will also need to follow a fair dismissal procedure on the expiry (non-renewal) of a fixed term contract.

Also remember that fixed term workers are protected from differing treatment when compared with full time workers and that after four years fixed term contracts may convert to permanent.

If you need advice or have any questions in relation to the use of fixed term contracts, please contact David Greenhalgh on 020 3603 2177.

This article/blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.