The fixed-term employment contract: when to use it

The fixed-term employment contract has an end date set from the outset. It seems simple, but managing it conceals pitfalls: automatic termination, the ban on “chain” renewals, early dissolution. Let us look at when it is worth using and when an open-ended contract is preferable.

What sets it apart

The key difference from the open-ended contract concerns the end of the relationship:

• the fixed-term contract ends automatically on the agreed date, without notice;
• there is no need to observe notice periods, because the end is already known to the parties;
• the rules on protection against termination at an inopportune time do not apply to the natural expiry.

The duration can be set with a date (“until 31 December”) or anchored to an objectively determinable event (the end of a project, the replacement of a person absent on maternity leave).

No automatic probation period

In a fixed-term contract there is no default probation period. If the parties wish to have one, they must agree it expressly in writing, within the usual three-month limit. In the absence of a clause, there is no probation phase at all.

Early dissolution

Since the fixed-term contract provides for no ordinary notice, as a rule it cannot be interrupted before expiry by simple notice. There are, however, exceptions:

• if the parties have agreed an option of early termination, this applies;
• immediate termination for good cause always remains possible, by either party;
• the parties can always agree on a mutual dissolution.

Outside these cases, a party who breaks the contract early risks having to compensate the other side.

The ban on “chain contracts”

The greatest pitfall is the repeated use of fixed-term contracts to circumvent the protections of open-ended employment. If a series of expiring contracts follow one another without an objective reason, case law considers them abusive (“chain contracts”) and reclassifies them as a single open-ended relationship.

The consequence is heavy: notice periods, protection during blocking periods and the counting of seniority apply retroactively. Renewals justified by real needs (distinct projects, documented seasonal peaks), by contrast, are lawful.

Tacit continuation

If, at expiry, the relationship continues tacitly with the agreement of the parties — the person keeps working and the employer keeps paying — the contract is deemed renewed as open-ended. From that moment the ordinary rules on notice apply. To avoid this, at expiry the termination or a new written contract must be formalised.

The ten-year limit

A very long fixed-term contract does not bind the parties forever: if it exceeds ten years, either party may terminate it by observing a six-month notice period for the end of a month. It is a safety valve against excessively long commitments.

When it is genuinely worthwhile

The fixed-term contract is suited to:

• replacements (maternity, long illness, leave of absence);
• projects with a clear start and end;
• recurring and documentable seasonal peaks;
• experimental collaborations with a defined horizon.

It is risky, by contrast, as a tool to “try out” a person at length or to postpone staffing decisions: in these cases an open-ended contract with a probation period is more solid and transparent.

How we help you

The People division of SIH ONE assesses which contractual form suits your need, drafts fixed-term contracts that withstand reclassification and manages expiries and renewals. Let’s choose the right contract together.