Agreement & Contract

Decoding a Fixed Term Employment Contract

LegalKart Editor
LegalKart Editor 05 min read 32594 Views
Last Updated: Feb 01, 2024
Employment Agreement for fix term have its own understanding.

A fixed-term employment contract is a contract in which a firm or organisation employs a worker for a specified amount of time on a contractual basis. Typically, such a contract is for one year; however, it depends on the company's or organization's needs and judgement. Under the terms of this agreement, the payment is predetermined and cannot be amended prior to the expiration of the period.


Permanent employees are entitled to the same salaries and working conditions as temporary workers. At the conclusion of the fixed-term employment agreement, the employer is not required to offer notice. However, if the employee continues to work after the expiration of the fixed-term employment contract, an implicit contract exists between the employer and employee. 


What elements must be included in a Fixed-term Employment Contract if you are drafting it in 2023?

The only difference between a fixed-term contract and a permanent contract is the period of time. An employee hired on a fixed-term employment contract is hired for a fixed period of time and cannot be removed except on account of some misconduct. Some of the key elements that need to be included in an employment contract are-:

  1. Job Title and Job Description: This includes a brief but specific description of the work one is expected to do.
  2. Duration or term of employment: Duration or term of employment becomes very important in a fixed-term contract. This lays down the term for which the employee has been engaged. 
  3. Hours of work: This clause lays down the work timings of the employee. 
  4. Place of work: The place of work or the location where the employee is stationed is required to be mentioned. 
  5. Leave and holidays: Typically, leaves and holidays, legally mandated, should be provided to the employee.
  6. Wages: The amount of wages, the mode of payment, etc., should be included in the contract. 
  7. Termination: Provisions that entitle both the employer and the employee to terminate the contract should be included in the contract. Termination upon expiry of the contract should also be provided. 
  8. Renewal: A provision for the renewal of the contract based on mutual consent of the parties should also be included in the contract.
  9. Boilerplate Clauses: Standard clauses such as jurisdiction, waiver, severability, etc., should also be included in a fixed-term contract.

 

Advantages of Fixed-term Employment Contract  

  1. Although a person is hired for a specific period of time, he/she is entitled to equivalent benefits that a permanent employee enjoys, such as safe and secure working conditions, similar pay, or sometimes more considering the skills of the concerned person. 
  2. A person hired under a fixed-term contract may be made permanent depending upon their performance.
  3. It is affordable for the employer when he needs an employee for a short term. 
  4. It helps get more specialized resources. 

 

Disadvantages of Fixed-term Employment Contract

  1. There is no stability, as the employment contract is time-bound and once the contract expires, the employee loses his job. 
  2. Typically, benefits such as promotion, good professional growth etc. are not available to fixed-term employees. 
  3. It is not an assurance of permanent employment. 
  4. For an employer, it may be more beneficial to have a talented pool of permanent resources. This will save the efforts of looking for an employee, every time the contract expires.

Conclusion

A fixed-term employment contract should be designed so as to prevent any post-termination obligations. There should be no indication that the contract will be automatically renewed or that the employee will be promoted to a more permanent position. A lawyer should be consulted while drafting such a contract.

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