F is for...

I’m now onto the Fs at a time when the abbreviation FFS took on a whole new meaning with the Flexible Furlough Scheme.

The obvious one to discuss is furlough, a term which appeared out of nowhere, and has completely taken over the business world for the last 5 months. I don’t however want to talk about furlough today as I think people are a bit fed up with it. Instead I want to focus on some of the key features of Fixed Term Contracts.

A Fixed Term Contract (FTC) is one of those, ‘it says what it does on the tin’ contracts as FTCs are used to cover a specific period of time.

Unlike standard employment contracts, FTCs have an end point – this could be a specific date or when a project/event has been completed. At that point, the employment relationship ends (unless a new agreement is negotiated).

Contrary to popular belief, FTCs should not be used if the budgets are looking a bit iffy as the reason for ending a FTC needs to be clearly defined.

FTCs would be suitable in the following examples:

• Seasonal work – staff are employed to deal with a peak in demand.

• Project work – where more resource is required to complete a project or when employees with specialist skill sets are required for a certain amount of time. 

• Maternity cover - this is one of the more common uses of FTCs. 

• When external funding is available to do the role and employment would cease if the funding was withdrawn (this is different to iffy budgets).

Those on FTCs shouldn’t be treated any less favourably than permanent employees and should receive the same pay and benefits package and terms and conditions.

As with other employees, you now need to make sure that ALL employees are issued with their contract before they start or on their first day.

If you employ someone on a FTC for over two years, they are entitled to the same redundancy and unfair dismissal rights as permanent employees.

You don’t need to give notice to end a FTC at the agreed end point; the contract terminates automatically.

However, if you want to end it early, you need to give notice and have some clear wording in the contract about early termination otherwise there can be financial penalties.

If the FTC gets extended and employment continues for at least four years, a fixed term employee will automatically become a permanent employee.

Remember above I said if they have over two years’ service, then they will have rights around unfair dismissal? As the non-renewal of a FTC is considered a dismissal, you will need to demonstrate that there is a ‘fair’ reason for not renewing the contract (e.g., if they were planning to stop doing the work the contract was for).

If they have got over one years’ service, then they are also entitled to confirmation in writing with the reasons for not renewing the contract.

So should you use FTCs?

Yes because they can allow you to control resources more flexibly depending on the workload.

However they aren’t quite as flexible as people think; they need some careful contract wording to avoid being faced with financial penalties and aren’t as attractive a job offer to some candidates.  

From a personal experience, they have worked very well over the years. I have taken on some fabulous people on FTCs (mainly to backfill on projects) and many of which became permanent employees and are still employed.

Let me know if you would like any advice on taking on FT employees or getting the contract right for your business or if you did actually want a conversation about furlough (or flexible working).

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