Fixed term employment is for a set period of time, before it automatically come to an end. There are strict legal requirements for a fixed term clause to be valid. If the legal requirements are not met, an employee my opt to be treated as permanent employee.
What is fixed term employment?
Fixed-term employment is when an employer wants to hire you for a set period of time. A fixed term of employment has a predetermined start and end date (termination date). Employment automatically comes to an end on the termination date without anyone needing to do anything.
The termination date can be a calendar date, or when a particular event occurs (for instance the completion of a piece of work or the conclusion of project).
Fixed term employment can be ideal for employers who looking for an employee to provide cover for a particular period. It can also suit some employees well, for instance if they looking to build up their work experience in a particular industry, or if they have other life commitments (like a planned holiday or upcoming relocation).
What does the law require for a fixed-term employment agreement to be valid?
All employees have the right to a written employment agreement. If employment is for a fixed term, the employment agreement must make this clear. The period of employment should be clearly defined with a start and end date. The end date could be when a particular event occurs (for instance when a project is completed).
The employment agreement must also provide a reason why employment will end on a particular date. The reason must be genuine and based on reasonable grounds.
A genuine reason could include: to cover an employee who will be away (for instance on parental leave) or to deliver work for a particular project that has an end date.
A genuine reason cannot be avoid the employer’s obligations under the employment laws (for instance their minimum entitlements or entitlement to holiday pay or statutory days).
Can en employer use a fixed term of employment to assess the suitability of an employee?
A fixed term cannot be used to asses the suitability of an employee. Instead an employer can rely on a probation clause or a trial period.
What are my rights as a fixed-term employee?
A fixed term employee has the same rights and obligations as any other employee.
The overarching duty is that both parties must act in good faith towards each other. The duty of good faith is broad an includes being honest and open with each other, not misleading and deceiving each other, and being active and constructive in building and maintaining the employment relationship (including being responsive and communicative).
The parties to a fixed term agreement also have to comply with other legal requirements, for instance the obligation to keep themselves and others safe at work (under the Health and Safety at Work Act).
A fixed term employee is also entitled to minimum entitlements like the minimum wage rate (under the Wages Protection Act); and sick leave, annual leave and bereavement leave (under the Holidays Act).
How does holiday pay work for a fixed term employee?
If the term of employment is for less than 12 months, an employee can be paid their annual leave as a separate and identifiable component with their usual pay. Annual leave will be 8% if the employees gross earnings.
If an employee’s fixed term is for more than 12 months, they can request and take paid leave just like an ordinary permanent employee.
Can my employer terminate my fixed term employment agreement earlier that stated in the employment agreement?
An employer can terminate a fixed term of employment if it is justifiable. If for instance an employee seriously misconducts themselves, or they are not performing according to reasonable expectations, the employee could still face disciplinary action (including termination). Any disciplinary process must be fair and the decision must be in line with what a reasonable employer in the same circumstances could have decided.
What happens of the fixed term clause does not meet legal requirements?
If a fixed term clause is not recorded in writing in an employment agreement, or it does not state a genuine reason on reasonable grounds why the term is fixed, the employment agreement is still otherwise valid. That means the employee will still be considered as an employee. However, if the fixed term clause is not valid, the employer may not rely on that clause to end employment.
Instead, an employer will only be able to employee’s employment if there is another good reason to terminate employment (for instance serious misconduct), and the employer has followed a fair process in coming to that decision.
A fair process requires an employer to discuss any proposal to end employment with the employee, after providing them with all the relevant information. The employer must then give the employee a reasonably opportunity to give feedback on the proposal, which the employer must consider with an open mind.
What can I do if an employer wants to employ me on a fixed term employment agreement?
If you are offered employment for a fixed term, it is a good idea to get legal advice to make sure it is compliant with the law. If it is not, you should discuss this with your prospective employer to make sure everyone is clear about their legal obligations and entitlements at the outset of the the employment relationship. You should seek legal advice and representation if the employer is not engaging or is not willing to comply with the law.
