Fixed-term contract clause

When you wish to set up a fixed-term contract with an employee that’s to come to an end on a specified date or when a specific project or task is completed, you will need to insert a clause into their written statement of employment particulars.

In a fix

A contract of employment will be treated as being for an indefinite term unless it specifically states it is for a fixed term. You are obliged to issue all employees (and, from 6 April 2020, all workers) with a written statement of employment particulars not later than the beginning of their employment (or engagement) and, if the employment (or engagement) is not intended to be permanent, it should state the period for which it is expected to continue. If the contract is for a fixed term, it should specify the date when it is to end or, if the length of the employment is uncertain because, for example, it depends upon the completion of a particular task or project, it should again specify the period for which it is expected to continue. Our Fixed-Term Contract Clause, which contains four options to cover a specific end date, completion of a particular project, the return to work of the employee whose absence the fixed-term employee is covering and the cessation of external funding for the post, deals with the essential requirements.

Is it unfair?

Bear in mind that the expiry of a fixed-term contract is still regarded as a dismissal in law, notwithstanding that you agreed with the employee at the outset that the contract would be for a fixed term and regardless of any provision that the contract will terminate automatically at the end of the fixed term. Thus, if the employee works on a single fixed-term contract or a series of consecutive fixed-term contracts for two years or more, they may acquire the continuity of service necessary to claim unfair dismissal in the same way as an employee on a permanent contract. An employee can generally make a claim for unfair dismissal if they have been employed for two years or more. Provided the expiry of the fixed term is the real reason for dismissal, this will normally be fair but you will still need to follow a fair dismissal procedure and you should carefully consider whether the employee could be offered alternative employment within your business. 

Note the notice

Always ensure you put a notice clause into a fixed-term contract, enabling the contract to be terminated early, regardless of the term. This gives you the option to terminate the contract early without being in breach of contract. If a fixed-term contract is terminated early in circumstances where no notice clause exists, the employee will be entitled to claim damages from you equivalent to their pay and benefits for the unexpired portion of the contract. This could result in a significant amount of money being claimed from you! Our fixed-term contract clause includes a suitable notice provision by cross-referring to the standard notice clause in the written statement of employment particulars. However, at the end of the fixed term, our clause provides that employment will terminate automatically without the need for further notice.