Skip to content
Knighthood Documentation

Fixed-Term Employment Contract

When an employee is hired for a defined time under a contract, it is called Fixed-term Employment Contract. In most of the cases, it is 1 or 2 years and renewed, depending on the requirement. Here, the payment is fixed and not altered during employment.

The labour laws of the nation govern these contracts to ensure that employer doesn’t follow unjust practices such as non-payment of wages, unjust dismissal, etc. Employer has an option to convert it into a permanent contractor terminate employment by giving a notice along with a valid reason.

Benefits

Employer

  • Hire specialized candidate with expertise for a particular project or duration

  • Increase labour when there is a high demand for manpower and evaluating them prior to hiring them as a permanent employment

  • Employers have ability to define their own rules for Maternity and Paternity leaves

  • Higher commitment from the employees

Employees

  • Enjoy same rights, benefits and entitlements as Permanent employees of the organisation

  • Higher Pay than Permanent employees in certain cases

  • Possibility to become permanent employee based on performance and market situation

Typical Contract Terms

The terms that need to be included are:

  • Employer, address and work Location

  • Employee designation, Job Description and Start of Employment

  • Salary Structure, Benefits, Social Security entitlements, payment frequency and method for wage calculation

  • Work hours and Leave Policy

  • Code of Conduct and Disciplinary Action

  • Probation Terms and performance evaluation matrix

  • Termination and Contract Closure terms

Contract Closure

Employers can choose to terminate the contract early by giving notice or complete the contract period. If the term is 2 years or more, a clear justifiable reason for early termination has to be provided else company can be liable for Unjust dismissal claim from the employee

As an employee, you can choose to end the contract by giving the notice period as specified in the contract agreement

However, in case no renewal is given and employee is working even after contract end, it is implied that contract has been renewed on similar terms as earlier.

One has to bear in mind that If the employee continues to work for four years or more, the fixed-term employee is automatically converted into a permanent employee and is subjected to all the benefits of permanent employees within the organisation