Fastened Time period Contract Termination: Authorized Or Not?

As an employer, have you ever ever questioned whether or not you can terminate a set time period worker’s fixed-term employment contract earlier than the top date? Earlier than you do that, you need to be cautious, as doing so may result in some authorized penalties.

On this article, we’ll clarify what a set time period contract is, whether or not a set time period contract will be ended earlier than the expiry date, whether or not mounted time period contracts have discover intervals and solutions to different incessantly requested questions.

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What’s a set time period contract?

Fastened-term contracts are contracts of employment that restrict an worker’s employment to a particular time period. Fastened phrases are usually used when staff are required to work on a particular undertaking, and subsequently they’re usually restricted to a particular timeframe to finish that undertaking. 

For employers they supply an economical approach to broaden the variety of staff they’ve throughout busy intervals and through giant tasks. For instance, retailers will usually rent staff over Christmas on fixed-term contracts with a purpose to handle the vacation rush.

Can a set time period contract be terminated early?

Fastened time period contracts will be terminated early previous to the expiry date of the contract. For the termination of employment to be authorized, there have to be a sound purpose. Usually, fixed-term employment agreements come to an finish when there was a breach of contract by one of many events to the employment relationship.

Different legitimate causes that an worker’s mounted time period employment contract might be ended previous to the expiry date embody misconduct, poor efficiency or if there have been operational adjustments.

What are the important thing issues for employers when utilizing mounted time period contracts?

Employers who use fixed-term contracts ought to keep away from utilizing mounted time period contracts for a similar worker repeatedly. It’s because overusing mounted time period contracts by way of offering a sequence of fixed-term contracts one-after-another to the identical worker as every finish might result in them being thought-about a full-time worker. The consequence of that is if the fixed-term worker turns into a full-time worker, they are going to require totally different therapy and entitlements below the legislation.

The Nationwide Employment Requirements employment entitlements full-time staff have embody the next:

Moreover, though the termination of fixed-term contracts is feasible, employers must be cautious. It’s because whether or not the termination of the contract is feasible will rely on the phrases of the contract. Due to this fact, if the termination of the contract violates the contract phrases, the employer might face authorized penalties or unfair dismissal claims from the worker.

Expectation of employment

Workers below a fixed-term contract will usually have a respectable expectation that the interval of employment will proceed throughout the contract. It’s, subsequently, cheap to keep up the contract for its supposed period. Due to this fact, employers will usually be required to pay out the worker for the remaining time on the contract. 

These ideas will comply with that of Australian contract legislation with regard to the termination of a contract. Specifically, if employment continues for a interval of 6 months prior, or 12 months within the case of a small enterprise, the worker can have a respectable declare for unfair dismissal for untimely termination.

On account of this expectation, the worker is entitled to an relevant discover of termination previous to termination.

Reliable termination

Nevertheless, it is very important notice that employers can terminate mounted time period contracts when there are respectable causes for doing so. As an employer, it’s necessary to stipulate within the mounted time period contracts the grounds on which the contract will be terminated. The commonest grounds which might be included for a contract to be terminated embody the next:

  • Misconduct
  • Breach of the contract
  • Repudiation of the contract
  • Poor efficiency

Moreover employers can legally terminate fixed-term contracts for real redundancies. Section 389 of the Fair Work Act 2009 (Cth) outlines the that means of real redundancy. Real redundancy refers back to the following:

  1. The worker’s job now not requires completion because of adjustments to the employer’s enterprise’s operational necessities
  2. The place the employer has made the worker redundant by way of complying with the related enterprise settlement or trendy award in relation to informing the worker with regard to their redundancy

Contrastingly, an worker’s redundancy won’t be thought-about real if the worker may have moderately been transferred to a special place within the employer’s enterprise or to an related entity of the employer’s enterprise.

Does a set time period contract have a discover interval?

The Australian Government’s Fair Work Ombudsman states that there is no such thing as a requirement for discover intervals for workers who’ve been employed below a fixed-term contract. 

What to incorporate in a fixed-term contract?

As an employer, whenever you’re utilizing mounted time period contracts, you need to be sure you embody clear contract phrases, whether or not the contract is getting used for a particular undertaking or for a specified time period. Due to this fact, you need to keep away from utilizing phrases that require interpretation, akin to ‘vacation interval’. 

Moreover, you need to clearly define the boundaries of acceptable behaviour and the actions that might result in the termination of an worker’s employment contract. That is essential to let you legitimately and legally terminate the contract as a result of worker’s actions. Workers must be made conscious of the motion and conduct that might result in the termination of their employment contract. 

Lastly, you need to guarantee that there’s a clear process for the conclusion of the contract. This must also embody phrases describing how one can lengthen the contract, the way it could also be transitioned into a brand new undertaking and the way the present one will conclude.


Finally, mounted time period contracts will be ended early. Nevertheless, that is solely potential below sure situations and the place there’s a legitimate purpose for the employment contract to be terminated. 

As an employer, for those who’re nonetheless feeling uncertain about whether or not you may finish your worker’s mounted time period employment contract, you need to rent a lawyer for authorized recommendation. 

Alternatively, for those who’re an worker and your mounted time period contract has been ended early, and also you don’t assume it has been ended for a sound purpose, you need to rent a lawyer for authorized recommendation to find out whether or not you need to take authorized motion in opposition to your employer.