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
Section titled “Benefits”Employer
Section titled “Employer”- Hire specialised talent for a defined project or duration
- Scale the workforce up and down with demand
- End the contract at term end without retrenchment compensation (under the Industrial Relations Code)
Employees
Section titled “Employees”- Same wages, benefits, and working conditions as permanent workers doing the same work (parity under the Industrial Relations Code)
- A route to permanent employment based on performance and market need
- Higher pay than permanent staff in some cases
Typical Contract Terms
Section titled “Typical Contract Terms”The terms that need to be included are:
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Employer, address and work Location
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Employee designation, Job Description and Start of Employment
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Salary Structure, Benefits, Social Security entitlements, payment frequency and method for wage calculation
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Work hours and Leave Policy
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Code of Conduct and Disciplinary Action
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Probation Terms and performance evaluation matrix
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Termination and Contract Closure terms
Contract closure
Section titled “Contract closure”You can end the contract early by giving notice, or let it run to term. If the term is two years or more, a clear reason is required for early termination, otherwise the employee may claim unfair dismissal.
An employee can end the contract by serving the notice period in the agreement. If the contract ends and the employee keeps working without a renewal, the contract is taken to have renewed on the same terms.
Under the Industrial Relations Code
Section titled “Under the Industrial Relations Code”The Industrial Relations Code now recognises fixed-term employment as a formal category. A fixed-term employee gets the same wages, benefits, and working conditions as a permanent worker doing the same work. In return, the employer can end the fixed-term contract at term end without retrenchment compensation. This is the key difference from the old model: fixed-term employment no longer automatically converts to permanent after a period of service. See the Labour Codes overview.