Fixed Term / Pro rata appointments

Fixed Term Contracts / Pro rata appointments

There may be times when it's best for your business to take on somebody on a fixed-term contract. This 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 someone who is on maternity leave.

Pro's and cons

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, any employee who has been on a fixed-term contract for four or more years (excluding any period before 10 July 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 objective, 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.

Tax Matters

You will need to make the same tax arrangements for fixed-term employees that you would for permanent employees.