Using fixed term contracts
Fixed term contracts can be a useful tool for matching workforce resources with service and business needs.
Where there is a specific, business related reason, a fixed term contract may be more appropriate than a permanent contract. Fixed term contracts should only be used in the following circumstances:
- To cover periods of absence of longer than 4 weeks, e.g. maternity, parental or adoption leave, long term sickness or cover an absence due to another employee being on secondment.
- Where there's short term funding for a post or project, which is unlikely to be extended.
- To complete a task/project within a stated period, which cannot be resourced from within the existing permanent workforce.
- To provide specialist expertise or experience in the short term, to support a specific project or piece of work.
The policy attached to this page outlines how to use them within the council, appropriately, effectively, and in line with relevant employment legislation.
Areas covered include:
- when it's appropriate to use a fixed term contract
- the need for 'equal treatment'
- length of fixed term contracts
- renewing, extending or ending fixed term contracts (also see toolkit)
- what happens if a fixed term contract becomes permanent
- organisational reviews and fixed term employees
- manager, HR and employee responsibilities
Ending a fixed term contract
When a fixed term contract ends it is a dismissal in law, and a fair process must be followed.
If you propose to end the contract, you must allow time to follow the statutory process for ending a fixed term contract. This process varies dependant on the reason for, and length of, the fixed term contract, but can start up to 20 weeks before the contract is due to end.
- Employees on a fixed term contract with less than 2 years continuous service will be dismissed for the reason ‘end of a fixed term contract (redundancy)’ at the following times:
- The date on which the fixed term contract is due to expire, including the ‘fair’ reason for this, or The event which the fixed term contract was aligned to has come to an end (for example someone returning to work after an absence which is being covered by the fixed term appointment).
- Employees will receive one month’s notice that their contract will be ending.
- Some other substantial reason (SOSR) will be the reason for the contract ending where an employee has been employed on a fixed term contract for a particular job or project and it has been made clear on appointment about the temporary nature of the post, and/or the substantive post holder has returned to work following a period of leave. A fair dismissal process must be followed, and employees will receive one month’s notice that their contract will be ending.
- Redundancy as the reason for dismissal will apply where an employee was employed on a fixed term contract for more than 2 years (or has continuous service) and the requirement for the work to be undertaken has diminished or ceased e.g. project work dependent on external funding ends, once the funding ceases. Where a fixed term contract ends due to redundancy, the Redundancy, Redeployment and Protection of Earnings Policy should be followed in the same way as it would for a permanent employee individually at risk of redundancy.
A guide and flowchart setting out what managers need to do to end or extend a fixed term contract is attached to this page to supplement the policy. If you have any queries on ending the fixed term contract, email: hr.consultations@derbyshire.gov.uk. They will support you with any queries you might have on ending the fixed term contract and offer redeployment support for the employee where required.
If you are ending a fixed term contract, you will also need to complete a leavers form on Workplace to notify HR of the end date so that the record can be closed.
Extending a fixed term contract
Alternatively, if you are extending a fixed term contract you will need authorisation to do this via the vacancy control and minor variation form.
Extension or renewal of a fixed term contract must be justifiable. It must be clear whether the original reason for the fixed term contract still applies, or whether circumstances mean it has changed.
The reason for the extension or renewal of the fixed term must be clear in the employee’s contract. This will determine the reason for and process to follow when ending the contract.
The employee currently employed under the contract should be offered the extension or renewal.
The successive renewal of fixed term contracts beyond 4 years should be avoided as beyond 4 years fixed term contracts are often converted to permanent.
Once you've obtained authorisation to extend the contract, you must complete a generic employee variation form on Workplace to notify HR Services of the extension and raise a ticket on HALO to extend their IT access. If you do not do this your employee will lose their IT access and they will not be paid when the end date is reached.
Secondments
The temporary movement or 'loan' of an employee to another part of the organisation (to or from an external organisation) to undertake a fixed term or temporary piece of work is a secondment.
A secondment agreement is different to a fixed term contract. The employee's substantive job remains available for them to return to. Guidance on secondments is also available.