Quick Guide: Fixed Term Contracts

The Pro’s and Cons in a Candidate Short Market

Managing staffing levels can be one of the most difficult elements of growing a business, all of which can be exasperated in a candidate short market. You will want to stay lean in terms of staff numbers to be able to reinvest in the business’ growth but remember, this can leave you short-staffed during busy periods or when staff are absent.

What can you do when that dream candidate comes along?  That person who is not usually available in the market and you know you can’t really afford them?

One way of managing staff levels in busy periods of the year is the use of fixed term employment contracts.

Below is a helpful list of the pros and cons of employing staff on fixed term contracts compared to taking on permanent staff.

Pros

• Ideal for fulfilling a specific task where the demand for resource is predictable or for a specified period. For example, fixed term contracts are often used for seasonal workers or when employing staff who are working on a particular project to be completed by a specific date.
• Allows for accurate budgeting
• Can be used as a trial/probationary period
• Can be used to fill a specific ‘gap’ in your staff – such as if a member of staff is to be unable to perform their role for a specified period. A good example of this is a member of staff going on maternity leave or secondment. Many employers prefer to employ cover staff on a fixed term during such periods rather than lack of reliability of using casual staff or long-term obligations of taking on a new permanent member of staff.

Cons

• Can be hard to monitor and manage. Where fixed-term contracts are utilised, keeping an eye on dates is vital. Quite often, the expiry date of the contract is missed, and the employment of fixed-term workers then rolls over. This situation can result in conflicts arising between the terms of the fixed-term contract, and those afforded to any other employee under a normal contract of employment.
• Could put off applicants. In today’s difficult/candidate short job market putting a fixed term on the length of employment could put potential candidates off applying.
• Once employed on a fixed-term contract, any employees that don’t work out for any reason can be very problematic. Should there be a need to terminate the employment for any reason, the employer could be legally bound to paying them for the remainder of the contract term.
• The notice period and provisions drafted into the contract therefore need to be completed with specific care so employers do not find themselves left liable to an expensive payout situation.

As outlined above, using fixed-term contracts in your business can be very useful if they are applied with care. For more information or advice on fixed-term contracts, or any aspect of employing staff, please contact us at Horner Recruitment.

The team is always here to help!