There may be times when it's best for your business to take on somebody on a fixed-term contract.
What is a fixed-term contract?
A fixed-term contract is one which either:
- lasts for a specified time, set in advance
- ends with the completion of a specified task
- ends when a specified event does or does not take place
For example, if you're a shopkeeper you may want to take on someone for just three months to cover the busy run-up to Christmas. Or you may wish to employ someone specifically to cover for another person who is on maternity, paternity or adoption leave.
Advantages and disadvantages of fixed-term contracts
Fixed-term contracts give you the advantage of bringing in specific skills and labour as and when they are needed.
It's important to remember that unless there are special circumstances that can be justified, you must treat fixed-term employees the same as comparable permanent employees. This means you must give them:
- the same pay and conditions
- the same or equivalent benefits package
- the same or equivalent pension scheme
- the same opportunity to apply for vacancies for permanent posts in the business
Fixed-term employees also have access to the same employment rights as their permanent equivalents.
Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2002, any employee who has been on a fixed-term contract for four or more years (excluding any period before 1 October 2002) will usually be classed in law as a permanent employee if their contract is renewed, or if they are re-engaged on a new fixed-term contract.
The only exemptions to this are when employment on a further fixed-term contract is objectively justified to achieve a legitimate aim, eg a genuine business aim that can be objectively justified, and is also a necessary and an appropriate way to achieve that aim, or the period of four years has been lengthened under a collective or workplace agreement.
These regulations do not apply to apprentices, students on work experience of a year or less or people on certain training courses and temporary work schemes.
You will need to make the same tax arrangements for fixed-term employees that you would for permanent employees.
Know your legal responsibilities
- Do you need a licence?
- Get the right business insurance
- Comply with the law when providing goods and services
- Know your customers' rights
- Distance and online selling rules
- Understand pricing legislation
- Buying goods from outside NI
- Selling goods outside NI
- GDPR compliance checklist
- Pay your business rates
- Understand staff contracts and your responsibilities
- Taking on contractors and subcontractors
- What you need to do about health and safety
- Know your legal obligations on pensions
Understand tax and VAT
Sell and market your products or services