{"id":16473,"date":"2020-04-30T13:28:05","date_gmt":"2020-04-30T11:28:05","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=16473"},"modified":"2025-04-10T11:28:41","modified_gmt":"2025-04-10T09:28:41","slug":"fixed-term-employment-contract","status":"publish","type":"post","link":"https:\/\/factorialhr.com\/blog\/fixed-term-employment-contract\/","title":{"rendered":"Fixed Term Employment Contract: Benefits + Template"},"content":{"rendered":"

Fixed term employment contracts can be a great way for businesses to secure talented workers for a finite period of time. If your organization needs additional help, hiring temporary workers is a great way to scale fast or reduce the workload for your permanent employees.<\/p>\n

The “gig economy” is changing the landscape of U.S. employment rapidly. We saw in 2023 that 4.3% of workers had temporary jobs,<\/a> which is on the rise. Although this doesn’t mean fixed-term contracts are the right choice for your organization.<\/p>\n

In this article, we cover everything you need to know about fixed-term employment contracts,<\/strong> what to include in them<\/strong>, and provide you with a free template<\/strong>.<\/p>\n

\u2705 Download your free fixed-term employment contract template<\/strong><\/span><\/a><\/p>\n

\"e-signatures<\/a><\/p>\n

What is a fixed term contract?<\/strong><\/h2>\n

A fixed term contract meaning a short term contract<\/strong> for a specific period of time. <\/strong>This type of contract is used for\u00a0temporary or seasonal workers whose skills are not needed year-round. Unless renewed, a fixed term contract will expire by a predetermined end-date.<\/p>\n

While other countries may have more restrictions, American labor laws<\/a> do not limit the duration of a fixed term employment contract or the circumstances under which it can be offered.\u00a0 Though is not regulated, these contracts typically last between one and three years.<\/p>\n

What are some positions which require a fixed term contract?<\/strong><\/h3>\n

Fixed term employment is ideal for temporary positions such as:<\/p>\n

Project work<\/strong> – If a business is in need of a specific skill to complete a project but will no longer require a specialist when the project is complete.<\/p>\n

Seasonal work <\/strong>– When a business requires more employees during a high season. This may be around the winter holidays for retail stores or summer holidays for hotels.<\/p>\n

Maternity cover<\/strong> – If a permanent employee goes on maternity leave, a business may need a temporary team member to take over her duties.<\/p>\n

Are fixed term employment contracts \u201cAt-Will\u201d Agreements?<\/strong><\/h3>\n

In the US, if there is no written contract or if the term of the contract is not specified, it is considered to be \u201cat-will.\u201d<\/a> This means that either employee or employer can sever the relationship at any time for any reason so long as it is not discriminatory.<\/strong><\/p>\n

To avoid complications down the line, employees on fixed term contracts should not be considered \u201cat-will\u201d workers. However, employers may include \u201cearly termination\u201d clauses in fixed term employment contracts to the same effect. (We\u2019ll get into that a little later.)<\/p>\n

How is a fixed term contract different from permanent contract?<\/strong><\/h3>\n

Permanent employees<\/a> are hired to work on an ongoing basis in what is called indefinite term employment<\/strong>. A fixed term employment agreement meanwhile comes with an end date.<\/p>\n

Fixed term contract employee benefits may be similar to those of a permanent employee, but a fixed term employee lacks the long term job security.<\/p>\n

How is a fixed term contract different from a casual contract?<\/strong><\/h3>\n

A casual contract<\/a> is also a shorter term contract,<\/strong> although casual contracts would be more typical for freelancers<\/strong>\u00a0who may technically be self-employed. Casual contract employees may fill similar positions to full or part time fixed term contract employees, but a casual employee may not be guaranteed a minimum number of hours or ongoing employment.<\/strong><\/p>\n

\"types<\/p>\n

Fixed term employment: Risks and Rewards<\/strong><\/h2>\n

Fixed contracts allow employers to build a more flexible workforce on a budget<\/strong>, but they also come with serious risks. Left unmitigated, these risks can do a business real harm. Businesses that prepare adequately, however, should have nothing to fear.<\/p>\n

Risks<\/span><\/strong><\/h3>\n

Early termination of fixed term employment<\/strong><\/h4>\n

A fixed-term employee dismissed before the expiration of their contract may be entitled to the compensation<\/strong> they would have received if they had worked to the contract\u2019s end date. Employers can avoid this pitfall by including an \u201cearly termination clause.\u201d This will provide guidelines for ending the relationship early \u201cwithout cause\u201d and state clearly the severance amount the employer will pay in lieu of the term\u2019s full salary.<\/p>\n

Unfair dismissal fixed term contract<\/strong><\/h4>\n

According to employment law fixed term contracts may make employers who violate the terms are liable for larger sums than they would be without a contract.<\/strong> However, it\u2019s important to remember the opposite can also be true: a thoughtfully-written contract will protect the employer\u2019s interests as well as their employees.<\/p>\n

Implied contracts<\/strong><\/h4>\n

As we\u2019ve previously written<\/a>, employers must be careful that their words match their actions. Implied contracts are those which are not written or verbalized, but which can be extrapolated from the employer\u2019s behavior. For example, if an employee works beyond the end date without having a new contract in place,<\/strong> whether intentionally or inadvertently, the employment relationship may be considered indefinite.<\/strong> Employers may also wish to avoid implementing a series of successive, fixed term contracts for the same reason.<\/p>\n

Rewards<\/span><\/strong><\/h3>\n

If an employer can manage these sticky situations, a fixed-term contract can offer a business many benefits:<\/p>\n