Fixed-Term Employment Contract (Specified Term)
A key aspect of labor market participation is understanding applicable legal rules and practical considerations. One of the most common steps at the outset of any working relationship is preparing a written agreement. Employment agreements may take various forms, and a fixed-term employment contract is among the most widely used.
Validity Requirements for a Fixed-Term Employment Contract
Definition of a Fixed-Term Employment Contract
A fixed-term employment contract is typically drafted for the completion of a specific and clearly defined task, and the exact end date is not necessarily known at the time the work begins. Examples include preparing a design plan, weaving a carpet, or completing a construction project such as building a wall.
In practice, the employer enters into an agreement with an individual or a group to perform a particular scope of work. This type of contract is temporary and terminates upon completion of the agreed project or task. Under such a contract, the worker undertakes to perform the employer’s requested work and, in return, receives an agreed wage as set out in the contract.
In many fixed-term contracts, the employer provides the tools, equipment, or raw materials and also arranges the workplace. However, these responsibilities may be allocated differently depending on the parties’ agreement and the specific circumstances.
Important note: In a permanent employment contract, the absence of an end date is a defining feature. However, in a fixed-term employment contract, the agreement is tied to a specific task or project. Therefore, even if no end date is expressly stated, the contract is not deemed permanent and is treated as a temporary employment arrangement.
Key Terms and Conditions of a Fixed-Term Employment Contract
Like any legally valid agreement, a fixed-term employment contract must satisfy general requirements for validity. It must be based on the parties’ mutual intent and consent, and it should clearly state the terms necessary for performance, including items such as:
- the agreed wage or compensation structure.
- the contract date.
- working hours.
- the place of performance.
- The scope of work and deliverables.
The subject of the contract must also be lawful for the contract to be enforceable.
Neither party has the unilateral right to terminate a fixed-term employment contract. The contract generally terminates only by mutual agreement or upon completion of the agreed work.
If a dispute arises between the worker and the employer regarding the contract, the matter must be referred to the competent labor dispute bodies, including the Labor Dispute Settlement Board. Complaints of this nature fall within the jurisdiction of these authorities, and their decisions are generally enforceable and binding on the parties.
Advantages and Disadvantages of a Fixed-Term Employment Contract
Based on three common features of this type of agreement, the primary advantages and disadvantages may be summarized as follows:
- Uncertainty of the End Date: Because the precise completion date may not be known in advance, this uncertainty can create challenges for both parties. For example, the worker’s job continuity and planning may depend on the project’s completion timeline, which may be unpredictable.
- Provision of Tools and Equipment by the Employer: This feature can be beneficial because it allows the worker to begin performing the work without incurring initial costs. However, it may also lead to dissatisfaction if the tools, equipment, or raw materials provided are not of acceptable quality. An additional advantage is that disputes over material costs are less likely, as the employer typically procures the required items directly and the worker is not expected to incur separate costs for them.
- Contract Completion Upon Finishing the Work: From the employer’s perspective, a key benefit is greater assurance that the agreed task will be performed under the conditions specified in the contract. From the worker’s perspective, there is greater job stability during the contract term, particularly because the employer generally cannot dismiss the worker at will before the project’s completion. A potential disadvantage arises when one party becomes dissatisfied. If the worker no longer wishes to continue cooperating, or if the employer is dissatisfied with the worker’s performance, neither party may generally terminate the contract unilaterally; they must continue until the work is completed or reach a mutual termination agreement.
Frequently Asked Questions
A fixed-term employment contract is a temporary agreement between an employer and an employee for the completion of a specific task or project. The contract terminates upon completion of the agreed work.
A permanent contract does not specify an end date. In a fixed-term contract, even if an end date is not stated, the contract ends upon completion of the agreed work or by mutual agreement, and it is treated as a temporary arrangement.
Generally, no. A fixed-term contract ends by mutual agreement or upon completion of the agreed work. Unilateral termination is typically not permitted.
Disputes are handled by the competent labor dispute authorities, including the Labor Dispute Settlement Board, and their decisions are generally enforceable.
For the worker, it typically provides assurance of compensation through completion of the work and limits the employer’s ability to dismiss the worker before the project ends. For the employer, it provides greater certainty that the work will be completed under the contract terms. Tools and equipment are also commonly provided by the employer.
For the worker, uncertainty about the completion date may affect future planning. For the employer, if performance is unsatisfactory, unilateral termination is generally unavailable, and the employer may be required to continue until completion unless a mutual termination is reached. What is a fixed-term employment contract?
What is the difference between a fixed-term contract and a permanent employment contract?
Can the employer or worker terminate a fixed-term employment contract unilaterally?
Which authority handles disputes related to fixed-term employment contracts?
What are the advantages of a fixed-term contract for the worker and the employer?
What are the disadvantages of a fixed-term employment contract?
