December 1, 2023


Rich Inside You

Mounted Time period Contract Termination: Authorized Or Not?

5 min read

As an employer, have you ever ever puzzled whether or not you may terminate a set time period worker’s fixed-term employment contract earlier than the tip date? Earlier than you do that, you have 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 may be ended earlier than the expiry date, whether or not mounted time period contracts have discover intervals and solutions to different steadily requested questions.

Learn alongside!

What’s a set time period contract?

Mounted-term contracts are contracts of employment that restrict an worker’s employment to a selected time frame. Mounted phrases are typically used when staff are required to work on a selected mission, and subsequently they’re typically restricted to a selected timeframe to finish that mission. 

For employers they supply a cheap strategy to increase the variety of staff they’ve throughout busy intervals and through massive tasks. For instance, retailers will typically 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?

Mounted time period contracts may be terminated early previous to the expiry date of the contract. For the termination of employment to be authorized, there have to be a legitimate cause. 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 may very well be ended previous to the expiry date embrace misconduct, poor efficiency or if there have been operational modifications.

What are the important thing concerns 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 is because overusing mounted time period contracts by means of offering a collection of fixed-term contracts one-after-another to the identical worker as every finish might result in them being thought of a full-time worker. The consequence of that is if the fixed-term worker turns into a full-time worker, they may require completely different remedy and entitlements beneath the legislation.

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

Moreover, though the termination of fixed-term contracts is feasible, employers needs to be cautious. It is because whether or not the termination of the contract is feasible will rely upon 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 beneath a fixed-term contract will typically have a reputable expectation that the interval of employment will proceed all through the contract. It’s, subsequently, cheap to take care of the contract for its meant period. Due to this fact, employers will typically be required to pay out the worker for the remaining time on the contract. 

These rules 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 may have a reputable declare for unfair dismissal for untimely termination.

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

Professional termination

Nevertheless, it is very important be aware that employers can terminate mounted time period contracts when there are reputable causes for doing so. As an employer, it’s vital to stipulate within the mounted time period contracts the grounds on which the contract may be terminated. The most typical grounds which can be included for a contract to be terminated embrace 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 which means of real redundancy. Real redundancy refers back to the following:

  1. The worker’s job not requires completion resulting from modifications to the employer’s enterprise’s operational necessities
  2. The place the employer has made the worker redundant by means of complying with the related enterprise settlement or fashionable award in relation to informing the worker with regard to their redundancy

Contrastingly, an worker’s redundancy is not going to be thought of real if the worker may have fairly been transferred to a distinct 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 isn’t any requirement for discover intervals for workers who’ve been employed beneath a fixed-term contract. 

What to incorporate in a fixed-term contract?

As an employer, once you’re utilizing mounted time period contracts, you must be sure you embrace clear contract phrases, whether or not the contract is getting used for a selected mission or for a specified time frame. Due to this fact, you must keep away from utilizing phrases that require interpretation, reminiscent of ‘vacation interval’. 

Moreover, you must 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 because of the worker’s actions. Workers needs to be made conscious of the motion and conduct that might result in the termination of their employment contract. 

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


Finally, mounted time period contracts may be ended early. Nevertheless, that is solely doable beneath sure situations and the place there’s a legitimate cause for the employment contract to be terminated. 

As an employer, when you’re nonetheless feeling not sure about whether or not you may finish your worker’s mounted time period employment contract, you must rent a lawyer for authorized recommendation. 

Alternatively, when you’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 legitimate cause, you must rent a lawyer for authorized recommendation to find out whether or not you must take authorized motion towards your employer.

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