What is Fixed-Term Contract Rights?

Full Definition

A fixed-term contract is an employment contract that is due to end on a specific date, on completion of a particular task, or on the occurrence (or non-occurrence) of a specific event, such as covering a period of maternity leave. The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 give fixed-term employees the right not to be treated less favourably than a comparable permanent employee doing broadly similar work, in matters such as pay, pension access, training opportunities, and eligibility for redundancy selection or promotion, unless the employer can objectively justify the different treatment. A key anti-avoidance protection prevents employers from using successive fixed-term contracts indefinitely to avoid giving an employee permanent status: where an employee has been continuously employed on two or more fixed-term contracts for four years or more, any renewal after that point automatically takes effect as a permanent, open-ended contract, unless the employer can objectively justify continuing to employ the person on a fixed-term basis (for example, where the role is genuinely tied to a specific, time-limited external funding source or project). An employee who believes they should be treated as permanent under this rule can ask their employer for a written statement confirming their status, and can bring a claim to an employment tribunal if the employer wrongly continues to treat them as fixed-term. When a fixed-term contract simply expires and is not renewed, this is legally treated as a dismissal for unfair dismissal and redundancy purposes, meaning an employee who has two years' qualifying service and whose fixed-term contract is not renewed may have a claim for unfair dismissal (if the reason for non-renewal was not a fair one, properly followed through a fair process) or, if the underlying need for the role has genuinely ended, a statutory redundancy payment, calculated in the same way as for a permanent employee based on age, length of service, and weekly pay. Fixed-term employees also accrue continuous service in the normal way, meaning their time on a fixed-term contract counts towards qualifying periods for rights that depend on length of service, such as unfair dismissal protection or the right to request flexible working.

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