What is a Fixed-Term Employment Contract?

What is a Fixed-Term Employment Contract?

Explaining FTCs - and how to renew and end them.

By Marcia Smith

Employees are on a fixed-term contract (FTC) if both of the following apply:

  • They have an employment contract with the company they work for
  • Their contract ends on a particular date or on completion of a specific task or project

  • They may also be considered to be on a fixed term contract if:

  • They are a seasonal or casual employee taken on for up to six months during a peak period
  • A specialist employee for a project
  • Covering for maternity leave
  • No need to give employees notice

    Usually a FTC is ended once it has reached its agreed end point and there is no need for an employer to give notice. Employers are obliged to inform fixed-term employees of vacancies for permanent positions and this may be done by a general announcement.

    Rules change after 2 years' service

    If a contract is not renewed, it's considered to be a dismissal. If an employee has 2 years of service, the employer needs to demonstrate that there is a 'fair' reason for not renewing the contract. They may be entitled to statutory redundancy payments after 2 years' service if the reason for non-renewal is redundancy.

    Renew up to 4 years

    An employer can continue renewing a FTC for up to four years. If the contract is renewed after that period, they become a permanent employee unless the employer can show a good reason why they should remain on a FTC.