Termination of a Fixed Term Contract of Employment: Understanding the Guidelines
As an employee or an employer, you may wonder about the steps to take when a fixed term contract comes to an end. Terminating a fixed term contract of employment requires careful consideration to avoid legal implications. In this article, we will outline the guidelines to be observed when ending a fixed term contract.
Firstly, it is important to understand what a fixed term contract entails. A fixed term contract is an employment agreement that has a predetermined end date, which is agreed upon by both the employer and the employee. These contracts are common in industries where employment is based on specific projects that have start and end dates.
There are several ways in which a fixed term contract can come to an end. The most common ones include:
1. Expiration of the Contract
The simplest way a fixed term contract ends is by reaching the agreed-upon end date. When the contract expires, the employment relationship between the employer and the employee ceases automatically. It is important to note that the employee is entitled to receive their salary, benefits, and any accrued time off up to the last day of their employment.
2. Mutual Agreement
The employer and employee can agree to terminate the fixed term contract before the end date. In this case, the parties should agree on the terms of the termination, including the compensation payable to the employee.
3. Termination for Cause
An employer may terminate a fixed term contract before the expiration date due to the employee`s misconduct or poor performance. The employer must provide the employee with notice and an opportunity to correct their behavior or performance before terminating the contract. In this case, the employee is entitled to receive any salary, benefits, or accrued time off up to the last day of their employment.
4. Frustration of the Contract
A fixed term contract may be terminated due to unforeseen circumstances beyond the control of either party, making it impossible to fulfill the agreement`s terms. For instance, the nature of the employment may become illegal or dangerous, which makes it impossible to continue operating. In such cases, neither party is liable for any damages resulting from the termination.
Employers should follow specific guidelines when terminating a fixed term contract to avoid any legal implications. The guidelines include:
1. Giving Notice
Employers must provide notice to the employee before terminating the fixed term contract. The notice period should be specified in the contract. If no notice period is mentioned in the agreement, the employer must provide reasonable notice that considers the length of service of the employee.
2. Entitlement to Severance Pay
Employees who have worked for an employer for at least three months and whose fixed term contract is terminated without cause are entitled to receive severance pay. The amount of severance pay will depend on the length of the employee`s service and the nature of the employment.
Employers must communicate the termination of a fixed term contract in writing to the employee. The letter should state the reasons for the termination, the last day of employment, and any compensation payable.
In conclusion, terminating a fixed term contract of employment requires careful consideration to avoid legal implications. Employers should follow the guidelines above, including providing notice, entitlement to severance pay, and clear communication. By following these guidelines, employers can ensure that the termination of a fixed term contract is conducted in a fair and legal manner.