What 'fixed-term' means
To be a fixed-term employee, two conditions must apply:
- you must have an employment contract with the business you work for
- your employment contract must be ‘fixed-term’, meaning it must end on a particular date, after a certain event or on completion of a task
Examples of fixed-term employees are:
- staff taken on for six months during a peak period (such as agricultural or seasonal shop workers)
- a specialist employee taken on for the duration of a project
- someone employed to cover during another employee's maternity leave
You are not a fixed-term employee if you:
- have a contract of employment or other contractual relationship with an agency rather than the company you are working for (example temporary or agency workers)
- are a member of the armed forces
- are an apprentice, student or other trainee on a work-experience placement or temporary work scheme
- Employment status
- Agency workers
Why employers take on fixed-term employees
Taking on fixed-term employees lets employers bring in people with special skills or employ extra labour when it is needed.
A fixed-term contract allows both employee and employer to be flexible in their commitment. Both can benefit, as the employer has access to specialised skills to meet a particular need, while the employee can gain broader experience.
In some companies, fixed-term employees are paid more than permanent staff, either because of their special skills, or to compensate for the temporary nature of the job.
Protection against less favourable treatment
Your employer mustn't treat you less favourably than permanent employees doing the same, or largely the same, job without good reason.
As a fixed-term employee you have the right to:
- the same pay and conditions
- the same or equivalent benefits package
- access to an occupational (company) pension scheme (except where the fixed-term contract is for less than two years)
- be informed about permanent employment opportunities in the organisation
However, fixed-term employees don't have the right to the same pay, conditions and benefits if their overall terms and conditions, although different from those for permanent employees, are just as good or better.
For example, an employer can choose to give fixed-term employees better pay instead of pension rights.
Not renewing a fixed-term contract is treated as a dismissal, so if the contract is not renewed fixed-term employees also have:
- full redundancy rights (if continuously employed for two years or more)
- statutory protection against unfair dismissal (once they have one year's service)
- Employment contracts
- The employment contract (nibusinessinfo.co.uk website)
How to compare your treatment
As a fixed-term employee, you can compare your treatment to the treatment of a ‘comparable permanent employee’. They should:
- work for the same employer
- work in the same organisation
- be doing the same or broadly similar work
You should also consider their skills and qualifications where they are relevant to the job.
If there is no comparable permanent employee that works in the same organisation, you can use a comparator (comparable permanent employee) in another part of your employer’s organisation.
You cannot compare conditions with someone at an associated employer’s organisation.
'Objective justification' of less favourable treatment
Less favourable treatment of fixed-term employees is allowed if your employer can show that there is a good reason to do so. This is known as ‘objective justification’.
Less favourable treatment will be objectively justified if it can be shown that it is:
- to achieve a legitimate objective, for example a genuine business objective
- necessary to achieve that objective
- an appropriate way to achieve that objective
For example, if you are a fixed-term employee on a three-month contract and a comparable permanent employee has a company car, your employer may not offer you one if the cost is too high. Your business need to travel can also be met in another way.
Your employer should consider whether it is possible to offer fixed-term employees certain benefits in proportion to the time period they will be working (also known as 'pro rata').
For example, if you are not expected to work for the entire period that the benefit is offered for.
What to do if you're being treated unfairly
If you feel you're being treated unfairly, first, raise it with your manager and/or human resource contact. If the matter still isn’t sorted out, ask your employer for a written statement explaining why they are treating you less favourably.
Your next step should be to make a written complaint under your employer’s standard grievance procedure. If you cannot resolve the matter with your employer, the final option is to complain to an Industrial Tribunal.
Ending and renewing a fixed-term contract
Fixed-term contracts normally end automatically when they reach their agreed finishing point, so there is no need for your employer to give you notice. However, your employer must still act fairly and follow any dismissal procedure if necessary.
If you are on a fixed-term contract, no notice of the contract reaching its end date will need to be given by your employer. However, failing to renew a fixed-term contract is considered to be a dismissal. You have the right:
- not to be unfairly dismissed (after one year’s service)
- to a written statement of reasons for the dismissal (after one year’s service)
- to statutory redundancy payments (after two years' service)
- to a minimum notice period of your contract ending before the agreed end date, task or event
The minimum notice period you are entitled to is:
- after one month’s continuous service, but less than two years: one week’s notice
- after two years' continuous employment: two weeks’ notice if you have been continuously employed for two years
If your contract states you should have been employed for one month or less, but you have actually been employed for three months or more, you are still entitled to the minimum notice period of one week.
If you have been employed for one month or longer, then you must give your employer the statutory minimum notice of one week. If your contract states that you should give a longer notice period than the statutory minimum, then you have to give your employer this length of service.
- Employment contracts
- Fair reasons for dismissal
- Unfair dismissal
- Giving and getting notice from a job
Ending fixed-term contacts early
If your employer wants to end your fixed-term contract early you should check the terms of your contract. If it says your employment can be ended early and your employer has given proper notice, there is little you can do. However, if it doesn't say anything, your employer may be in breach of contract.
Renewing fixed-term contracts
An employee can be kept on successive fixed-term contracts for a limit of four years. If your contract is renewed after that you become a permanent employee unless the employer can show a good reason why you should stay on a fixed-term contract.
The limit can be changed by employers and employees agreeing a 'workforce' or 'collective' agreement.
Workplace or collective agreements can vary the limit on the length or number of successive contracts used by an employer. They can also limit the use of successive contracts and set a list of reasons to justify renewals of fixed-term contracts.
Renewing a fixed-term contract on less favourable terms
If you are offered a renewed contract on less favourable terms than the original contract, you can refuse to accept it. You can then try to negotiate with your employer. If they will not change the terms, you will need to choose between accepting the amended contract or treating the contract as being at an end.
If the contract does end, you may be able to claim unfair dismissal.
Working longer than your contract's end date
If you worked past the end of your contract, for example, you were kept on for a year when your original contract was for three months, there is an implied agreement by your employer to change the end date. You would then have the right to be given proper notice if your employer wanted to dismiss you.
If your employer is laying off employees in the type of work that you carried out, this could mean that you have been dismissed on the grounds of redundancy. If you have two years or more continuous service as a fixed-term employee, you have the same redundancy rights as permanent employees.
You are also protected from being selected for redundancy because you are a fixed-term employee, unless your employer can 'objectively justify' the choice. This means they must give you a good reason that is based on the needs of the business.
You cannot waive, or opt out of, your right to receive statutory redundancy payments and your employer cannot exclude you from the statutory redundancy scheme, even if it appears to be objectively justified.
Where you can get help
If you're a member of a trade union, you can get help, advice and support from them.
More useful links