Permanent employment

What it means

Permanent employment is the standard form of employment with no agreed end date. It lasts until one party ends it by agreement, notice, immediate termination or during probation. If the employment contract says nothing about its duration, the employment is deemed to be indefinite.

The Labour Code treats it as the rule and fixed-term employment as an exception whose repeated extension is restricted. If the employer does not meet the conditions for a fixed term, the employment may become indefinite by operation of law.

For the employee it means more security: the employer can give notice of termination only on statutory grounds and with the proper notice period, and on some grounds with severance pay. For the employer it is a stable relationship, though harder to end.

How it works in practice

A probation period can be agreed at the start, during which either party may end the employment without giving a reason. It must be agreed in writing, and the law sets its maximum length, which can be longer for managers.

The simplest way to end it is a termination agreement with a date both parties accept. An employee's notice needs no reason, whereas the employer's notice must state a statutory ground and be properly delivered.

When planning payroll costs, remember that permanent employment brings long-term commitments: wages, contributions, holiday and possibly severance and retirement payments. For seasonal or project work, a fixed term or a work agreement outside employment may be more suitable.

What to watch out for

The notice period grows with length of service, and when the employer dismisses for organisational reasons the employee is also entitled to severance pay. Ending the employment of long-serving staff can therefore be fairly costly, which must be factored into any reorganisation.

Mistakes in a notice, such as a wrongly stated ground or faulty delivery, make the termination invalid and the employment continues. The employer may then have to pay compensation in lieu of wages for the entire period of the dispute.