While fixed-term contracts are an effective way for employers to feel safe with newly hired employees, employees on fixed-term contracts often feel insecure and search for ways to convert their fixed-term position into a permanent one.
Employers use fixed-term contracts for employees who either work a certain time on specific projects, or cover for permanent employees who are on leave. They also use them to assess new hires to see if they meet the requirements of the current or future employment with the organisation.
Fixed-term contracts expire automatically at the end of the term or on the
occurrence of an event that can be, for instance, appointment of a permanent employee on the post, or return to work after a longer sick leave or maternity/paternity leave, and many others.
From Fixed-Term Employee to Permanent
A fixed-term contract can be renewed for a maximum of four years. Then it can either close or convert into a permanent contract.
After being continuously employed for four years or more on successive fixed-term contracts, an employee will automatically become permanent, unless an objective reason is provided which justifies another fixed-term appointment.
Sometimes organisations create permanent positions from fixed-term positions.
If the organisation has offered you a fixed-term contract, while you want to secure a long-term employment, you should explore the circumstances surrounding a fixed-term job carefully before declining the offer.
If the opportunity for a permanent position exists and the organisational behaviour matches your own values, ethics and expectations, you may want to accept the fixed-term status and demonstrate what you could offer in a permanent position.
If you perform well during a fixed-term contract, you will have a chance of being hired permanently by the same employer.
Let us now look at some examples of how these rules are put into practice.
A fixed-term contract in the fourth year
If a fixed-term contract was supposed to last a few months and up to three years but continued into the fourth year, the fixed-term employee automatically becomes permanent.
Renewing a fixed-term contract by following ‘The Four Year Rule’
If an employee was hired on a fixed-term contract for three years, and the contract is renewed for another two years, then the employee will obtain permanent status on the date on which they accrue four years of service. In this case, the ‘Four Year Rule’ applies.
Discontinuation in service
If an employee has been dismissed or the fixed-term contract has not been renewed so far as to form a continuous service of four years, they will not be given permanent status because the fixed-term contract was not part of a series of contracts that lasted more than four years.
Continuous Service
When an employee works for the same employer without a break, this is referred to as continuous employment.
Although an employee may have completed one or more fixed-term contracts, their continuous service begins on the first day of the first fixed-term contract with the employer.
Converting Fixed-Term Contracts Into Permanent
When circumstances change and an organisation decides to keep a fixed-term employee for a longer period of time, the contract can be converted to a permanent one. This is normally accomplished by establishing a new contract that recognises service continuity or by changing the terms of a fixed-term contract with a letter.
It is beneficial to have an efficient tracking system for fixed-term contracts in the organisation, as well as a procedure for managing fixed-term contracts and converting them to permanent contracts.
Case Evaluation and Compliance
Start by assessing the employee’s work history and the terms and circumstances of their contracts when examining situations of employees on fixed-term contracts and planning next moves.
Continue by checking data from performance appraisals and reviewing the employee’s performance.
Speak with the employee’s line manager. Request that they assess the employee’s performance on the job and discuss the plans for the employee.
To reduce risks and ensure compliance throughout the process, take into account the following legal acts:
- Employment Rights Act 1996 which governs terms and conditions of employment,
- The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034) which implemented the provisions of the Fixed-term Work Directive (1999/70/EC) into UK law, and
- The Fixed-term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008 (SI 2008/2776).
Request a call back at +44 (0) 77 83 908571 and speak with our HR advisors about employee relations challenges, employee contracts, extensions, change of terms and conditions, and HR case management.