Ending fixed term contract

Even where a fixed term employment contract says it will end on a particular date, there is still a risk that if you do not renew that contract, you could be exposed to a successful employee challenge that they have been unfairly dismissed.

It may perhaps sound strange, but the non-renewal of a fixed term contract is defined as dismissal by the Employment Rights Act (ERA); and an employee who’s dismissed at that time may be able to bring a claim for unfair dismissal.

Legitimate reasons for not renewing the contract include where you have engaged an employee on a fixed term contract to assist with a specific task or project, and you then terminate the contract on completion of the task. That scenario is likely to fit the definition of redundancy and you will need to demonstrate that you’ve followed a fair redundancy procedure to ensure this dismissal is lawful. Another common and usually lawful reason is where someone has been employed on a fixed term contract to cover a permanent employee who is on maternity leave. When the permanent employee returns from that leave, dismissal of the replacement is likely to be fair also.

Generally, employees cannot bring unfair dismissal cases at all until they’ve been employed for the qualifying period. However, they may be able to claim they have been unlawfully discriminated against compared with a permanent employee in a comparable situation; for example, if in a redundancy situation you follow a certain procedure for all employees except those on fixed term contracts, that might be unlawful.

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