Thursday, January 12, 2023
HomeBusiness LawMounted Time period Contract Termination: Authorized Or Not?

Mounted Time period Contract Termination: Authorized Or Not?

As an employer, have you ever ever questioned whether or not you could possibly terminate a set time period worker’s fixed-term employment contract earlier than the top date? Earlier than you do that, you ought to be cautious, as doing so may result in some authorized penalties.

On this article, we’ll clarify what a mounted time period contract is, whether or not a set time period contract could be ended earlier than the expiry date, whether or not mounted time period contracts have discover intervals and solutions to different ceaselessly requested questions.

Learn alongside!

What’s a set time period contract?

Mounted-term contracts are contracts of employment that restrict an worker’s employment to a selected time frame. Mounted phrases are usually used when workers are required to work on a selected undertaking, and subsequently they’re usually restricted to a selected timeframe to finish that undertaking. 

For employers they supply a cheap method to broaden the variety of workers they’ve throughout busy intervals and through giant initiatives. For instance, retailers will typically rent workers over Christmas on fixed-term contracts so as to handle the vacation rush.

Can a set time period contract be terminated early?

Mounted time period contracts could be terminated early previous to the expiry date of the contract. For the termination of employment to be authorized, there should be a sound purpose. 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 might be ended previous to the expiry date embody misconduct, poor efficiency or if there have been operational modifications.

What are the important thing concerns 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 by means of 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 may require totally different therapy and entitlements underneath the regulation.

The Nationwide Employment Requirements employment entitlements full-time workers have embody 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 rely on 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

Workers underneath a fixed-term contract will usually have a respectable expectation that the interval of employment will proceed in the course of the contract. It’s, subsequently, affordable to keep up the contract for its meant length. Subsequently, employers will usually be required to pay out the worker for the remaining time on the contract. 

These ideas will comply with 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 respectable 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.

Legit termination

Nonetheless, you will need to notice that employers can terminate mounted time period contracts when there are respectable causes for doing so. As an employer, it’s vital to stipulate within the mounted time period contracts the grounds on which the contract could be terminated. The commonest grounds which might be included for a contract to be terminated embody the next:

  • Misconduct
  • Breach of the contract
  • Repudiation of the contract
  • Poor efficiency

Moreover employers can legally terminate fixed-term contracts for real redundancies. Part 389 of the Honest Work Act 2009 (Cth) outlines the that 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 by means of complying with the related enterprise settlement or fashionable award in relation to informing the worker with reference to their redundancy

Contrastingly, an worker’s redundancy is not going to be thought of real if the worker may have fairly been transferred to a distinct place within the employer’s enterprise or to an related entity of the employer’s enterprise.

Does a set time period contract have a discover interval?

The Australian Authorities’s Honest Work Ombudsman states that there is no such thing as a requirement for discover intervals for workers who’ve been employed underneath a fixed-term contract. 

What to incorporate in a fixed-term contract?

As an employer, while you’re utilizing mounted time period contracts, you must be sure you embody clear contract phrases, whether or not the contract is getting used for a selected undertaking or for a specified time frame. Subsequently, you must keep away from utilizing phrases that require interpretation, reminiscent of ‘vacation interval’. 

Moreover, you must clearly define the boundaries of acceptable behaviour and the actions that will result in the termination of an worker’s employment contract. That is essential to will let you legitimately and legally terminate the contract because of the worker’s actions. Workers must be made conscious of the motion and conduct that will result in the termination of their employment contract. 

Lastly, you must guarantee that there’s a clear process for the conclusion of the contract. This also needs to embody phrases describing how one can 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 could be ended early. Nonetheless, that is solely potential underneath sure situations and the place there’s a legitimate purpose for the employment contract to be terminated. 

As an employer, in the event you’re nonetheless feeling uncertain about whether or not you may finish your worker’s mounted time period employment contract, you must rent a lawyer for authorized recommendation. 

Alternatively, in the event you’re an worker and your mounted time period contract has been ended early, and also you don’t assume it has been ended for a sound purpose, you must rent a lawyer for authorized recommendation to find out whether or not you must take authorized motion in opposition to your employer.



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