A fixed-term contract is an employment contract that automatically ends on a specified date, on completion of a specified task, or on the occurrence of a specified event, rather than continuing indefinitely.
What it means
Labour law treats repeated or indefinite renewal of fixed-term contracts with suspicion, since it can be used to deny employees the protections of permanent employment. An employee on successive fixed-term contracts for longer than three months, with certain exceptions, can in some circumstances be deemed permanently employed.
Where it fits in
Payroll needs to track the contract end date so pay, leave accrual and final payments are handled correctly when the term expires, and so HR is prompted to either renew, convert to permanent, or properly terminate before the date passes unnoticed.
Key rules
- Ends automatically at the specified date, task completion, or event - no separate notice of termination is required if the term simply expires.
- Employees earning below an earnings threshold gain added statutory protection against indefinite renewal used to avoid permanent employment.
- A contract end date passing without action does not itself constitute valid termination if the relationship in practice continues.
- Distinct from an independent contractor arrangement, which is not an employment relationship at all.
