Fixed Term Contract: meaning and benefits

There is no right answer when choosing how to employ candidates - it all depends on the needs of your business. Sometimes, businesses opt for a fixed-term contract. In this guide, we're covering the top things to know about fixed-term employment.

Fixed-term contract meaning 

What is a fixed-term contract?

A fixed-term contract is a role that has a pre-agreed end date. Employees are appointed for short to medium-term temporary positions. 

This could be seasonal work, maternity cover, long-term sickness cover or where funding has been provided for a specific project. 

Fixed term employees vs temps

Fixed-term employees have employment contracts or another contractual relationship with the hiring company rather than with a temping agency.

Temps or agency workers have an employment contract with their agencies, which means that the agency pays their wages rather than the employer.

Permanent vs fixed-term contracts 

The nature of permanent roles is self-explanatory - there is no end date.

A fixed-term contract comes with a termination date. The contract may contain a provision that an employer can give notice to terminate the employment earlier than the original termination date. If no such provision is included then a fixed-term contract will automatically expire at the end of its term.

Why choose a fixed-term contract?

The purpose of hiring temporary workers is to cover short-term gaps in staffing. 

Temporary workers have the flexibility to take up and leave their positions at short notice. The hiring company enjoys the flexibility to finish the temporary assignment at short notice. 

The benefits of a fixed-term contract

Fixed-term employment can benefit both employers and employees.

Fixed-term: Benefits for employers:

Your company will benefit from a candidate with specialist and expert knowledge for a particular project or period.

Fixed-term contracts can be a great way to increase your team's capacity when required. It's also a way to uphold a probationary period to evaluate employees' work before offering a permanent contract.

Temporary employees can cover secondments and gaps caused by maternity/paternity leave.

The candidate can be offered permanent employment anytime during their fixed-term contract.

Fixed term: Benefits for employees:

Employees hired on a fixed-term basis have most of the same rights as permanent employees. 

They are therefore entitled to; the same pay and working conditions, an equivalent or similar benefits package, protection against redundancy or dismissal, and to be informed of relevant permanent roles within the company.

In some cases, a fixed-term employee can receive higher compensation than permanent staff members, either because of specialst skills or to compensate for the temporary nature of the job.

If temporary workers have worked at an organisation for one month or longer, they are entitled to receive a week's notice period from the employer.

An employer may extend a fixed-term contract or make a temporary position permanent depending on the company's requirements and the worker's performance.

Next steps

Could your business benefit from fixed-term support? We can help.

Get in touch to discuss your recruitment requirements.