Guide

Understanding fixed-term contracts

Fixed-term employment benefits

Some employment benefits such as season ticket loans, health insurance or staff discounts can be offered on an annual basis or over a specified period. Where a fixed-term employee is not expected to work for this period, you might offer it in proportion to the contract duration ('pro-rata').

For example, if the contract is for six months, the employee should receive half of an annual benefit. It the contract is for four months, they should receive one third.

If this is not possible because the cost to you would outweigh the benefit to the employee, you can claim objective justification for not offering the benefit.

You need to consider whether less favourable treatment is objectively justified on a case-by-case basis.

Access to occupational pension schemes

You must offer fixed-term employees access to occupational pension schemes on the same basis as permanent staff, unless different treatment is objectively justified.

For example, if a pension scheme has been closed to new permanent employees, new fixed-term employees need not be offered access, even if their permanent comparator has access. It is important that the point at which employees have joined a company in order to have been offered access to the scheme is the same for fixed-term as for permanent employee, unless a difference is objectively justified.

You do not need to offer special alternative benefits (eg contributions to a private pension scheme) to fixed-term employees who decide not to join a pension scheme, unless this option is offered to comparable permanent employees.

In certain situations, it may not be necessary to offer all fixed-term employees access to occupational pension schemes. For example, where an employee is on a fixed-term contract which is shorter than the vesting period for a pension scheme, or you offer the employee a salary increase equivalent to employer pension contributions paid to permanent staff, you may be able to justify excluding them from the scheme.

In addition, the Pensions (No.2) Act (Northern Ireland) 2008 introduced obligations on employers to provide access to and contribute towards, a workplace pension scheme for eligible employees.

Introduced in October 2012, every employer now also has to enrol workers into a workplace pension if they meet certain criteria. SeeĀ automatic enrolment into a workplace pension.