Fixed term employment: Overview, definition, and example
What is fixed term employment?
Fixed term employment refers to a type of employment arrangement where an employee is hired for a specific period or until the completion of a particular project, with a predetermined end date. This type of contract sets the duration of the employment from the outset, and it is agreed upon by both the employer and the employee. Fixed term contracts can vary in length, from a few months to several years, and they are often used for temporary work, seasonal jobs, or projects with a clear end goal.
Once the term of the contract expires, the employment relationship typically ends, although in some cases, it may be renewed or extended by mutual agreement.
Why is fixed term employment important?
Fixed term employment is important because it offers flexibility to both employers and employees. For employers, it allows them to bring in additional workers for a specific period to meet short-term needs, manage seasonal fluctuations, or complete a particular project without committing to permanent employment.
For employees, fixed term contracts provide an opportunity for temporary work or a set period of employment, which can be useful for gaining experience, earning income for a specific time, or transitioning between permanent roles.
However, it is crucial for both parties to clearly understand the terms, duration, and any rights or benefits associated with the fixed term employment.
Understanding fixed term employment through an example
Imagine a marketing agency hires an employee to work on a specific campaign for six months. The employee is hired on a fixed-term contract, with the understanding that once the campaign is completed, their employment will end. During this time, the employee is entitled to the same rights and benefits as permanent employees (e.g., salary, benefits, and working conditions), but the contract specifically stipulates the end date.
After six months, the project ends, and the employee’s contract expires. However, if the agency is satisfied with the employee's work, they may offer to renew the contract for another project, or alternatively, the employee may seek new opportunities.
Example of fixed term employment clause
Here’s an example of how a fixed term employment clause might appear in a contract:
“The Employee is employed on a fixed term basis for a period of six (6) months, commencing on [Start Date] and ending on [End Date]. This employment will automatically terminate on the End Date unless otherwise extended or renewed by mutual agreement of the parties. The Employee will be entitled to all rights and benefits associated with permanent employment during the term of this Agreement, subject to the terms of the contract.”
Conclusion
Fixed term employment offers both flexibility and structure, allowing businesses to hire employees for specific projects, seasonal work, or temporary needs while providing employees with clear terms of employment for a set period. Understanding the nature of fixed term contracts, including their duration, terms, and rights, is essential for both employers and employees to ensure that expectations are met, and the working relationship runs smoothly. This arrangement can be beneficial for temporary or project-based work but requires careful management to ensure both parties are fully aware of their rights and obligations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.