Fixed-term employment

What it means

A fixed-term employment is an employment relationship agreed only for a certain period, which ends when that period expires without notice. The term must be clearly set in the employment contract, by a date or an event, such as the return of the employee being covered.

The Labour Code restricts such arrangements: they may be agreed for at most a statutory maximum period and, within that time, extended or renewed only a limited number of times. Beyond that it is possible only for reasons the law lists, such as covering maternity leave, seasonal work or work where a specific regulation requires it.

Fixed-term employees must not be treated less favourably than permanent ones. They are entitled to equal pay for equal work, leave, benefits and training, in line with the principle of equal treatment.

How it works in practice

When preparing contracts we track the history of employment with the same person together with the client. The payroll system warns when a further extension would exceed the statutory limit, because the relationship then becomes permanent by law, whatever the contract says.

A fixed-term contract may include a probationary period, but it may not exceed half the agreed length of the employment. For short contracts we therefore recalculate the probation length.

As the term draws to an end, we settle with the client in advance whether it will be extended and prepare the leaving documents: leave settlement, employment certificate and deregistration from the insurers. If work continues after the term without a new agreement, a permanent employment arises.

What to watch out for

If the employee keeps working after the term expires with the employer’s knowledge, the employment becomes permanent. An employer who does not want that must deal with the ending in good time, not on the last day.

Repeated short fixed-term contracts instead of a permanent one may be treated by the labour inspectorate as circumventing the law. For roles needed in the long run a permanent contract is usually more suitable, or agency work where the need really is temporary.