Fact about employment contracts: termination of a fixed-term employment

Topics

• Employment contract
• Labour law
• Unemployment

If the employment contract includes a probation, either party to the employment relationship may terminate the fixed-term contract with immediate effect. After the probation, the general rule is that a fixed-term employment relationship ends after the term is up, unless a termination clause is specifically included in the contract and the contract is a hybrid agreement.

What to keep in mind

The employer and employee may jointly agree on ending a fixed-term employment relationship before the term is up. It is important to note that this so-called termination agreement is likely to have an impact on the employee’s unemployment security.

What if? 

If the employer terminates a fixed-term employment relationship before the term is up, they are liable to pay the compensation stated in the law. If an employee terminates a fixed-term employment relationship before the term is up and without the employer’s consent, the employee may need to compensate the employer for damages caused.

Unless if

An employee may terminate a fixed-term employment contract if the employer neglects its obligations (such as payment of wages or occupational safety) seriously enough that the employee cannot reasonably be expected to continue the employment relationship. 

An employer may terminate a fixed-term employment contract only for very weighty reasons. Such a reason can be that the employee is materially violating or neglecting his or her obligations, for example.

Exception to the rule

A fixed-term employment contract that is agreed for a term longer than five years can be terminated after five years in the same way as an employment contract that is valid until further notice.

Pay attention to the following when agreeing to a fixed-term employment contract:

• The reasons as to why the contract is only for a fixed term must always be stated in the employment contract or in a separate document on the terms of employment. Such a reason can be that the employee is a substitute or the work is seasonal, for example. 
• A probation at the start of the employment relationship is not applied automatically but must be agreed in the employment contract.  
• You can try to agree on including terms of termination of the fixed-term employment relationship in the employment contract, in which case the contract changes to a so-called hybrid agreement.

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