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What you need to know about a fixed-term contract

Published 03 May 2022

Successfully securing any employment contract is a good reason to celebrate…and if it is a fixed-term one you should know exactly what to expect.

A fixed-term contract will usually expire automatically and without the need for notice at the end of the specified term, e.g. 12 or 18 months, or at the end of a particular project. Some contracts can be terminated early with notice and prior to the expiry date.

In comparison, permanent employees are hired for a specific role with an employer and do not have a set end date for their employment.

The  fixed-term working agreements are especially useful for absence cover, to meet identifiable business demands that may be short-term or to help with the completion of a specialised project.

Employees are on a fixed-term contract if both of the following apply https://www.gov.uk/fixed-term-contracts:

  • They have an employment contract with the organisation they work for.
  • Their contract ends on a particular date, or on completion of a specific task, e.g. a project

A member of staff may also be a fixed-term employee if they are a seasonal or casual employee taken on for up to six months during a peak period.

The devastating impact of Covid-19 and the ever rising costs associated with the running of a business in the current economic climate, has seen an increasing number of employers using fixed-term contracts as a prudent option.

During the pandemic, the Department for Work and Pensions (DWP) is said to have doubled its number of Universal Credit advisors from 13,500 to 27,000. Many are said to have been on fixed-term contracts https://www.mirror.co.uk/news/politics/12000-dwp-work-coaches-biggest-26143846

It is reported that a staggering 12,000 DWP advisors have now been told to reapply for their own jobs if they want permanent roles.

An increasing number of job roles are now being offered on fixed-term contracts. At the time of writing (2 May) a search for just fixed-term contracts in Greater London on the job site Indeed produced 13,563 jobs https://uk.indeed.com/

What you need to know about fixed-term contracts

Employees have the same general employment rights as permanent employees, which gives them  protection against discrimination https://www.equalityhumanrights.com/en/advice-and-guidance/what-discrimination

Employers can defend a claim for discrimination if they can show any less favourable treatment is 'objectively justified', in that it is to achieve a legitimate objective, is necessary to achieve that objective and is a proportionate way to achieve it.

However, if a fixed-term employee is not receiving equal treatment rights they can make a complaint to an employment tribunal.

The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 protects employees working under fixed-term contracts https://www.legislation.gov.uk/uksi/2002/2034/contents/made

It means that members of staff employed on this basis are entitled to receive:

  • The same pay and conditions as colleagues who have a permanent contract, which includes the opportunity to receive relevant training.
  • The same or equal benefits package.
  • Protection from being unfairly dismissed or made redundant.
  • The right to be notified of any available roles with the employer they are working for.

If a worker is continuously employed on a series of successive fixed-term contracts over a four-years period or longer, they will automatically achieve permanent status, unless there is an objective reason that justifies a further renewal for a fixed term.

Three pros and cons for an employee on a fixed-term contract

Advantage

Can gain important experience and boost CV improving chances of securing a permanent role

As you are hired for a specific short-term need or temporary assignment you can sometimes earn more.

It can provide work opportunities and experience you may not get with a permanent contract in that you get to perform additional related duties.

Disadvantages

There is no long-term job security.

You will spend more time looking for jobs.

There will be no opportunities for promotion as there would be with a permanent role.

A reputation built on success

For employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 

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