September 25, 2023


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Fastened Time period Contract Termination: Authorized Or Not?

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As an employer, have you ever ever questioned whether or not you might terminate a set time period worker’s fixed-term employment contract earlier than the tip date? Earlier than you do that, you need 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 durations and solutions to different ceaselessly requested questions.

Learn alongside!

What’s a set time period contract?

Fastened-term contracts are contracts of employment that restrict an worker’s employment to a selected time period. Fastened phrases are usually used when workers are required to work on a selected mission, and due to this fact they’re usually restricted to a selected timeframe to finish that mission. 

For employers they supply a cheap strategy to broaden the variety of workers they’ve throughout busy durations and through giant initiatives. For instance, retailers will typically rent workers over Christmas on fixed-term contracts so as to handle the vacation rush.

Can a set time period contract be terminated early?

Fastened time period contracts may be terminated early previous to the expiry date of the contract. For the termination of employment to be authorized, there should be a sound purpose. 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 could possibly be ended previous to the expiry date embody misconduct, poor efficiency or if there have been operational modifications.

What are the important thing issues 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’s because overusing mounted time period contracts by means of offering a sequence of fixed-term contracts one-after-another to the identical worker as every finish could result in them being thought-about a full-time worker. The consequence of that is if the fixed-term worker turns into a full-time worker, they’ll require completely different remedy and entitlements below the legislation.

The Nationwide Employment Requirements employment entitlements full-time workers have embody the next:

Moreover, though the termination of fixed-term contracts is feasible, employers needs to be cautious. It’s because whether or not the termination of the contract is feasible will depend upon the phrases of the contract. Subsequently, if the termination of the contract violates the contract phrases, the employer could face authorized penalties or unfair dismissal claims from the worker.

Expectation of employment

Staff below a fixed-term contract will usually have a authentic expectation that the interval of employment will proceed throughout the contract. It’s, due to this fact, affordable to take care of the contract for its supposed length. Subsequently, employers will usually 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 authentic declare for unfair dismissal for untimely termination.

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

Reputable termination

Nonetheless, it is very important word that employers can terminate mounted time period contracts when there are authentic causes for doing so. As an employer, it’s essential to stipulate within the mounted time period contracts the grounds on which the contract may be terminated. The most typical grounds which might be included for a contract to be terminated embody 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 attributable to 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 trendy award in relation to informing the worker with reference to their redundancy

Contrastingly, an worker’s redundancy won’t be thought-about real if the worker may have fairly been transferred to a special 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 is no such thing as a requirement for discover durations for workers who’ve been employed below a fixed-term contract. 

What to incorporate in a fixed-term contract?

As an employer, if you’re utilizing mounted time period contracts, you need to be sure to embody clear contract phrases, whether or not the contract is getting used for a selected mission or for a specified time period. Subsequently, you need to keep away from utilizing phrases that require interpretation, corresponding to ‘vacation interval’. 

Moreover, you need to 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 assist you to legitimately and legally terminate the contract because of the worker’s actions. Staff needs to be made conscious of the motion and conduct that might result in the termination of their employment contract. 

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


In the end, mounted time period contracts may be ended early. Nonetheless, that is solely potential below sure circumstances and the place there’s a legitimate purpose for the employment contract to be terminated. 

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

Alternatively, in case you’re an worker and your mounted time period contract has been ended early, and also you don’t suppose it has been ended for a sound purpose, you need to rent a lawyer for authorized recommendation to find out whether or not you need to take authorized motion in opposition to your employer.

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