Fixed-term employment contract

Fixed-term employment contracts are valid until the end of the fixed period or on completion of the agreed work.

As a general rule, a fixed-term employment contract cannot be terminated by either party, but it will terminate at the end of the fixed period. Early termination of an employment contract of this nature may even lead to liability for damages. If you wish to terminate a fixed-term employment contract, the best course of action is usually to discuss it with your employer; in most cases, you’ll reach the best outcome by agreeing together on how to proceed in such a situation.

A fixed-term employment contract may only be concluded for a justified reason, such as when providing cover for another employee’s absence. Repeated use of fixed-term contracts without a justified reason is prohibited. However, the Employment Contracts Act (55/2001) allows employers to hire long-term unemployed people on fixed-term contracts without any specific justified reason. An individual is considered to be a long-term unemployed person if he or she has been an unemployed job seeker for the last 12 consecutive months. The parties can sign up to three of these so-called job integration agreements over a period of one year and their combined duration may be no more than one year. If an employer wants to hire a long-term unemployed person for a period of longer than one year, or if the employment contracts concluded with this person do not meet the conditions specified in the relevant legal provision in other respects, the employer is required to provide a justified reason for using a fixed-term contract, as specified in the Employment Contracts Act. In the event that several fixed-term employment contracts are used, the employer must provide a justified reason no later than when the employee signs the first employment contract that is not a job integration agreement as referred to in law.

If no proper reason for using a fixed-term employment contract exists, the contract is considered to be valid indefinitely regardless of the fact that it has been specified for a fixed term. However, the Employment Contracts Act does not set restrictions on concluding a fixed-term employment contract on the employee’s own initiative.