Fixed Term Contracts
Related Legislation:
Employment and Industrial Relations Act, 2002
L.N. 429 of 2002 – Contracts of Service for a Fixed Term Regulations, 2002
1. What is a fixed term contract?
A fixed term contract is a contract entered into between an employer and an employee where the end of the contract is determined by reaching a specific date, or by completing a specific task, or through the occurrence of a specific event.
2. What happens if an employer terminates the contract before its expiry date?
One has to distinguish between termination during probation, termination after probation and dismissal for good and sufficient cause.
Termination during probation
During probation the employer may terminate employment without incurring any liability. He is however obliged to give one weeks’ notice if more than one month’s employment has elapsed.
Termination after probation
Once the probationary period has elapsed, half the remaining rule applies. This means that the employer would be obliged to pay half the salary of the unexpired period, unless the employee is dismissed for good and sufficient cause. This rule applies only to the basic salary (i.e. it excludes bonuses, allowances, commissions and any other benefits.)
Termination for good and sufficient cause
If employment is terminated for good and sufficient cause, then half the remaining rule does not apply – meaning that the employer does not incur any liability. For an explanation of what does not constitute good and sufficient cause please refer to Article 36 (14) of the Employment and Industrial Relations Act.
3. What happens if an employee terminates the contract before its expiry date?
This depends whether the employee terminates employment during probation or after probation has expired.
Termination during probation
During probation the employee does not incur any liability provided that one week’s notice is given if the employee has been in employment for a continuous period of one month.
Termination after probation
If the employee terminates employment after the probationary period has elapsed and before the contract expires, then the employee will have to pay to the employer half the wages of the remaining unexpired time, unless the employee terminates employment for good and sufficient cause (for example allegations of discrimination, harassment or victimisation).
4. Are employees on a definite period contract entitled to maternity leave?
As a general rule all female employees are entitled to maternity leave, however the employers’ obligations end with the expiry of the contract. For example if an employee is employed on a definite period contract of employment goes out on maternity 5 weeks before the contract expires, the employer is not bound to pay maternity leave beyond the expiry of the contract i.e. in this case, 5 weeks.
The provision stating that the employee would have to refund the maternity leave money if not working for a continuous period of six months (as per Article 36 (20) of the Employment and Industrial Relations Act) following return to work does not apply. For example if, following the 14 week maternity leave period, the returning employee only has four weeks till the expiry of the contract, the employer cannot oblige the employee to pay back the maternity leave money. Nor can the employer coerce the employee into renewing the contract for an additional period that would cover the six months (this is stipulated in Article 10 of Legal Notice 439 of 2003.
5. Are part time employees on a definite contract entitled to maternity leave?
All employees, whether employed on full time or part time basis are entitled to maternity leave.
6. Can an employee on fixed term contract apply for promotions?
Yes. The law states that employee on fixed term contracts cannot be treated less favourably than comparable employees. (Article 4 of L.N. 51 of 2007)
7. Can a fixed term contract be extended?
Yes, however on the lapse of four year’s employment, the contract would automatically be deemed to be one of indefinite duration.
8. Does the probationary period apply for fixed term contracts?
Yes Article 36 of the Employment and Industrial Relations Act clearly states that the first six months of any employment shall be probationary.
9. If an employee is terminated on disciplinary grounds during a fixed term contract, is she/he bound to pay half the remaining period?
Half the remaining period rule does not apply in the case of a breach of contract for good and sufficient cause.
10. Can an employee on a definite period contract be made redundant?
No, but half the remaining period rule still applies.
11. What can constitute an objective reason for extending a fixed term contract beyond 4 years?
It is up to the Director of Employment and Industrial Relations to determine.
12. How much notice has to be given to notify the employee of a contract’s termination?
It is at the employers’ discretion however it is advisable to follow that stipulated by the EIRA in Article 36.
13. What happens if such notice is not given?
Nothing, but ethically it should be given.
14. If an employee on a definite period contract becomes indefinite, does it constitute new employment?
No. In accordance with Art 7 (2) of L.N. 51 of 2007 the effective date when an employee shall be considered to have been employed on an indefinite basis is the date following that when the four-year period has expired, but the period in continuous employment on one or more fixed-term contract or contracts of service shall be taken into account for all other purposes, including seniority and redundancy.
15. Does the time spent on a definite period contract count for purpose of seniority and notice periods?
Yes. Refer to question 14.
16. Does the time spent on successive periods count for purposes of seniority and notice periods?
Yes. Refer to question 14.
17. Can conditions of employment during a definite period contract be re-negotiated?
- If the conditions of employment are more favourable for the employee then yes they may be re-negotiated.
- If however the conditions of employment are less favourable for the employee then the employer cannot impose them unilaterally but there has to be mutual agreement.
