What Is a Fixed-Term Employment Contract?
A fixed-term employment contract is a legal agreement used when hiring someone for a set period. It’s great for short-term work, like helping with a special project, busy seasons, or filling in for someone who’s away but coming back. It also works well when the job has set hours or when you’re not sure if you’ll need the role in the future.
The contract explains the job, pay, and how long the person will work. This is different from a permanent employment contract, which doesn’t have an end date. In both contracts, employees typically have benefits and employment rights. They may work part-time or full-time on a fixed-term or permanent basis.
Legal Templates offers a fixed-term employment contract template for your convenience. Fill it out online to create a customized agreement that fits your business needs.
Pros of a Fixed-Term Contract
Here are some advantages of implementing a fixed-term contract:
- Transparency: Both parties know what to expect and when the employee’s role ends.
- Cost-effectiveness: You can hire a fixed-term employee for only as long as needed.
- Specialized skills and knowledge: Fixed-term employees can bring expertise without a long-term commitment.
- Reduced long-term obligations: Fixed-term contracts limit your responsibility for severance and other benefits.
- Workforce flexibility: You can scale your team easily based on business demands.
Cons of a Fixed-Term Contract
Explore some of the potential drawbacks of a fixed-term contract:
- Lower employee morale: Employees may feel disheartened knowing that their time with the company is limited.
- Use of training resources: Training fixed-term employees may consume a lot of their work time.
- Higher turnover costs: Without an ongoing employment relationship, it may be costly to recruit new employees when you need them next.
What to Include in a Fixed-Term Employment Contract
Writing a clear fixed-term employment contract sets expectations for both you and the employee. If you’re wondering how to write a fixed-term employee contract for seasonal work or a short-term project, here are the key elements to include:
- Job title: The role the employee will be performing
- Job description: An explanation of the employee’s duties and why they will only be needed for a certain period.
- Compensation: Amount of compensation, payment frequency, and bonuses, if applicable.
- Benefits: Vacation time, sick leave, paid time off, etc.
- Performance review criteria: The standards that the employee must meet in the work they perform.
- Duration: The start and end dates of the contract, ensuring a clear beginning and end.
- Work schedule: The expected hours an employee will work day to day or week to week.
- Early termination clause: Rules for ending the contract early.
- Renewal terms: Guidelines for renewing the employment arrangement.
- Signatures: Signatures from you and the employee to confirm your agreement to the terms.
Fixed-Term Contract Sample
View a free fixed-term contract example to learn how to write an agreement for a working relationship with a set end period. When you use our template to create your own, it will be available to download in PDF or Word format.
How to Terminate a Fixed-Term Employment Contract
A fixed-term employment agreement automatically ends when its expiration date arrives. However, if you no longer need the employee or have project changes, you may want to end the contract earlier.
Before you do anything, review the original fixed-term contract. See if it has an early termination clause that allows for a premature ending. If it does, ensure you understand the notice periods or terms you must follow.
Once you know the conditions you must follow, you can send the employee an employment termination letter. Explain the reasons for termination and offer assistance as they transition out of their role. Ask them to participate in an exit interview so you can learn how to improve your organization.
Write a Fixed-Term Contract with Legal Templates
Our fixed-term employment contract template makes it easy to hire for short-term roles with confidence. Clearly outline job duties, pay, start and end dates, and more—all in a professional, legally reviewed format. Customize the document in minutes to fit your business needs and protect both parties.
Frequently Asked Questions
Can I end a fixed-term contract early?
It’s possible, but you must review the contract’s terms and local employment laws. If the contract has an early termination clause, you may be able to end it with notice. If not, you may be liable for damages that the employee faces as a result of early termination.
Is a fixed-term contract an at-will employment contract?
No. A fixed-term contract has a set end date, and both parties must fulfill their end of the agreement unless they terminate it early. At-will employment contracts are indefinite contracts. You can end them for any lawful reason.
How is a fixed-term contract different from a casual contract?
A fixed-term contract establishes an exact end date, while a casual contract does not guarantee any set amount of work or hours. Both contracts let you hire for short-term work, but a casual contract comes with less job security.
What happens when a fixed-term employment contract ends?
When a fixed-term contract ends, you can let the employee go. But if the worker did a good job and fits well with your team, you might want to keep them. You can set up successive fixed-term contracts or offer them a permanent contract.
If the employee continues to work, the local labor laws might view it as a regular job. This is called an implied contract for continuous employment. In this scenario, a court might grant the employee legal protections similar to those of a permanent employee.
