Fixed Term Contracts

Contract and employment law

A fixed term contract is, as the name suggests, a long-term contract with a date of expiry. An employer can opt for a fixed-term employee rather than a permanent employee for many reasons. Three of the main reasons are:

• a position with no guaranteed indefinite length, often due to funding uncertainty (contracts ordinarily in this instance are yearly rolling)
• maternity or long-term sickness cover
• secondment cover

When such a contract expires, an employer must always consult the employee. The ending of a fixed term contract comes under an end "by performance". Unless qualifying under special rules (see the Employment Rights Act 1996 s.95(1)(b) for unfair dismissal and s.136(1)(b) for redundancy) there would be no grounds for dismissal or redundancy, as the closure is not technically a dismissal.

In the event that the employer fails to consult the employee before ending by performance, the closure will in fact count as dismissal, opening the road for unfair dismissal claims, especially in the instance that another role may be available.

Special rules do not obstruct or require renewal, they merely provide a rule that proves non-renewal counts as dismissal. Determining whether the dismissal is fair or unfair would then be assessed as by normal rules.

While it is not common knowledge, it is possible for a series of fixed-term contracts to count as a single length of continuous employment, with timescale measured between the start of the first period and end of the last period. This of course can be dependent of the length of gaps between roles, making each case variable and ultimately the decision of an employment tribunal.