September 29, 2023


Learn Business From Experience

Mounted Time period Contract Termination: Authorized Or Not?

5 min read

As an employer, have you ever ever questioned whether or not you possibly can terminate a hard and fast 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 would possibly result in some authorized penalties.

On this article, we’ll clarify what a hard and fast time period contract is, whether or not a hard and fast 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 continuously requested questions.

Learn alongside!

What’s a hard and fast 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 undertaking, and due to this fact they’re typically restricted to a selected timeframe to finish that undertaking. 

For employers they supply an economical approach to develop the variety of staff they’ve throughout busy durations and through giant tasks. For instance, retailers will typically rent staff over Christmas on fixed-term contracts as a way to handle the vacation rush.

Can a hard and fast 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 motive. Typically, 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 embrace 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 is because overusing mounted time period contracts via offering a sequence of fixed-term contracts one-after-another to the identical worker as every finish could 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’ll require totally different remedy and entitlements underneath the regulation.

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

Moreover, though the termination of fixed-term contracts is feasible, employers must be cautious. It is 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 underneath a fixed-term contract will typically have a professional 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 typically be required to pay out the worker for the remaining time on the contract. 

These ideas will observe that of Australian contract regulation with regard to the termination of a contract. Particularly, if employment continues for a interval of 6 months prior, or 12 months within the case of a small enterprise, the worker could have a professional declare for unfair dismissal for untimely termination.

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

Respectable termination

Nevertheless, it is very important word that employers can terminate mounted time period contracts when there are professional causes for doing so. As an employer, it’s necessary to stipulate within the mounted time period contracts the grounds on which the contract may be terminated. The commonest 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 now not requires completion as a result of modifications to the employer’s enterprise’s operational necessities
  2. The place the employer has made the worker redundant via 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 won’t be thought of real if the worker might have moderately been transferred to a distinct place within the employer’s enterprise or to an related entity of the employer’s enterprise.

Does a hard and fast time period contract have a discover interval?

The Australian Government’s Fair Work Ombudsman states that there isn’t any requirement for discover durations for workers who’ve been employed underneath a fixed-term contract. 

What to incorporate in a fixed-term contract?

As an employer, once you’re utilizing mounted time period contracts, it’s best to ensure you embrace clear contract phrases, whether or not the contract is getting used for a selected undertaking or for a specified time frame. Subsequently, it’s best to keep away from utilizing phrases that require interpretation, akin to ‘vacation interval’. 

Moreover, it’s best 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 help you legitimately and legally terminate the contract as a result of worker’s actions. Staff must be made conscious of the motion and conduct that might result in the termination of their employment contract. 

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


In the end, mounted time period contracts may be ended early. Nevertheless, that is solely attainable underneath sure circumstances and the place there’s a legitimate motive for the employment contract to be terminated. 

As an employer, for those who’re nonetheless feeling not sure about whether or not you possibly can finish your worker’s mounted time period employment contract, it’s best to rent a lawyer for authorized recommendation. 

Alternatively, for those who’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 legitimate motive, it’s best to rent a lawyer for authorized recommendation to find out whether or not it’s best to take authorized motion towards your employer.

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