Fixed term contract

What is a fixed term contract?

A fixed term contract is an employment agreement that ends on a specific date, after a project finishes, or when a temporary need comes to an end. UK businesses often use fixed-term contracts to cover maternity leave, seasonal demand, short-term projects, or rapid growth periods.  

The employee usually has the same core rights as permanent staff under UK employment law.

How does a fixed term contract work?

A fixed term contract runs for a set period or until a specific task is completed.  

For example, a Manchester retail business might hire a marketing executive on a 12-month contract to support a new product launch. Once the contract end date arrives, the role usually ends automatically unless both sides agree to renew or extend it.

What must a fixed term contract include?

A fixed term contract should clearly set out the main terms of employment from day one. In the UK, employers must provide a written statement covering key details such as:

• Start date and contract end date  

• Job title and responsibilities  

• Salary and payment schedule  

• Working hours and holiday entitlement  

• Notice periods  

• Sick pay and benefits  

• Any probation or early termination clauses  

Keeping everything in writing helps avoid awkward surprises later, especially when projects change or contracts need extending. GOV.UK and Acas both recommend giving employees clear written particulars at the start of employment.

Fixed term contract vs permanent contract

The biggest difference comes down to time. A fixed term contract has a clear end point, while a permanent contract carries on until either the employer or employee decides to end it.

Fixed term employee rights in the UK

In the UK, fixed-term employees usually have the same basic rights as permanent staff. That includes:

• Equal pay for the same role  

• Holiday pay and rest breaks  

• Statutory sick pay  

• Pension access  

• Protection against discrimination  

• Information about permanent job openings  

After two years of continuous service, employees may also qualify for redundancy pay and unfair dismissal protection.  

Under the Fixed-term Employees Regulations 2002, employers cannot treat fixed-term staff less favourably without a valid business reason.

GOV.UK also states that employees on successive fixed-term contracts for four years may automatically become permanent staff in some cases.

When should you use a fixed term contract?

A fixed term contract works best when the role is temporary, but the workload is very real. UK businesses often use them for:

• Maternity or sickness cover  

• Seasonal busy periods  

• Short-term client projects  

• Temporary funding arrangements  

• Testing a new role before expanding permanently  

For SMEs, it can be a practical way to bring in support without committing to a permanent hire straight away. Just make sure the contract terms and end date are clearly explained from the start.

Can you end a fixed term contract early?

Yes, but only if the contract allows it. Most fixed term contracts include an early termination clause explaining when either side can end the agreement before the planned finish date.  

Without that clause, ending the contract early could lead to breach of contract claims or compensation disputes.

Employers should also follow a fair process, especially where redundancy, performance, or conduct issues are involved. A fixed end date does not remove normal employment law responsibilities.

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