A fixed term employment contract is between an employer and an employee, in an agreement where the employee works for a fixed period of time or a contract that ends on the completion of a specific task, or at a fixed date sufficiently describes a fixed term contract (FTC). This type of agreement has its pros and cons.
Traditionally, fixed term contracts (like most other contacts) can have termination clauses and also continuation clauses. Accordingly, if a set goal is not met within the stipulated time frame, an FTC can stipulate reduced or non-payment of wages. Likewise, an FTC can covenant that if a fixed term employee works for the complete term as agreed upon in the contract, that employee automatically becomes a permanent staff. Therefore, an FTC can serve as a probationary stage of a full time employment.
Additionally, an FTC allows for planning. Employers can have budgetary planning covered for the term of an FTC. Example, if a fixed term contractor is brought in to cover for the period of maternity or sick leave of a permanent staff, then the employer can plan for costs covering only the specific period when the permanent staff is away. This advantage extends also to employees. An employee who is in no doubt about the termination date of a current employment can plan and prepare to take on a new employment once the terms set in an FTC has been reached.
Some FTCs are based on expertise and single projects. These kind of contracts may see an extension in time frame but never extend further than the project being executed. The advantage to this being that, a company or organisation benefits from the knowledge of a specialist or a subject matter expert on that particular project while not having to provide them with full time employment which might be cost intensive. Although, fixed term employees have a right to the same employment benefits enjoyed by permanent employees. Such benefits include health care and feeding benefits.
However, the key to the successful execution of an FTC is the understanding of the contract itself. Prospective employees need to fully understand the clauses inherent in the contracts to prevent triggering a termination or a deduction in wages or even graver legal issues. For example, an employee who works on a project bounded by an FTC as described in the paragraph above. If such a project is a sensitive one and requires the signing of a non-compete as part of the FTC, working on that project may hinder future employment opportunities for the employee long after the completion of the project.
Consequently, it is advised that both parties agreeing to an FTC should have legal representatives going through the contracts before committing to them. These representatives need to look out for loopholes and clauses that may be detrimental to their respective clients or that can be exploited to the disadvantage of their clients. This would prevent wrongful termination of the contract and keep both employers and employees in check. Overall, when diligently and honestly applied, an FTC can be a stop gap to a genuine employment problem.
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Tom Street qualified as a solicitor in 2003 and has over 20 years experience in employment and litigation law. He studied law at the University of Manchester before undertaking the legal practice course at the College of Law in Guildford, going on to complete his legal training at a firm in Chancery Lane, London. Once fully qualified, he moved to a niche litigation practice in the City of London.
In 2010, Tom set up his own legal practice, Tom Street & Co Solicitors and as part of this, in accordance with his strongly held objective to provide everyone with an easy pathway to justice he established the online portals Do I Have A Case? and Tribunal Claim. These websites are trading names of Tom Street & Co Solicitors.