A fixed term contract is a contract which has, from the outset, a pre-determined termination date. Alternatively such a contract may state that the employment will continue until a clearly defined event occurs – such as the return to work of an employee that has been on maternity or adoption leave. The fact that the employer may wish to terminate the employment prematurely e.g. if the individual commits an act of gross misconduct, does not remove its “fixed term” status.

Fixed term staff are protected from sex discrimination, racial discrimination, disability discrimination, and discrimination on the grounds of age, religion and belief, and sexual orientation.

There are clear advantages of using fixed term contracts of employment if the employer’s staffing requirements vary significantly over time, or for a start up business that is not yet sure of its longer term staffing requirements. Fixed term employees do have legal protection under regulations which prohibit the employer from treating that employee “less favourably” (i.e. detrimentally) when compared to the treatment of a comparable permanent employee employed by the same employer doing similar work and (where relevant) having a similar level of qualification or skill. Not every difference in treatment is illegal, as a difference will be allowed if the employer can show that it is objectively justified. In examining this, the tribunal will be entitled to look at the whole of the fixed term employee’s contract rather than concentrate on any single term when considering the appropriate comparison and the question of objective justification.

Many employers use fixed term contracts as a means of preventing the particular employee from gaining protection from unfair dismissal, (which arises on completing two years of continuous employment). It must be noted that if the fixed term contract extends over two years the employee will be protected from unfair dismissal. In addition if there is a series of fixed term contracts which extend over a year without a break the employee will also be protected from unfair dismissal. Furthermore if the employee has worked for the employer on a series of fixed term contracts for a total of four or more years unbroken then that employee will usually achieve the status  of “permanent employee”, and will be entitled to all the benefits enjoyed by that employer’s other permanent employees.