There have been many cases when the use of fixed-term employment contract options has been useful. With that said, there are also many instances when certain amendments have been requested.
The recent updates to these types of contracts are definitely worth keeping in mind. Even when a person is hired for a specific period of time, there are some aspects of this that need to be as clear as possible.
What is a fixed-term employment contract?
This is a written and signed agreement between the employer and the employee that specifies employment terms for a specific period of time. This can be good, but at the same time, there are certain issues that are worth considering.
Termination and the possibility of claiming unfair dismissal.
When an employee reaches the end of the fixed-term contract and the employer terminates that employee, there are no grounds for the employee to claim unfair dismissal.
In contrast, if an employee is dismissed prior to the contract expiration date for any reason other than misconduct, there are two issues that can arise from this decision. The first one is that the employer could be required to pay out the employee until the date of the contract expiry date.
It is essential for any contract to specify that a premature termination of said contract is possible under certain circumstances. This is a good way to avoid the loopholes of an employment contract that could force an employer to pay the employee for the duration of the contract.
The statutory qualifying period
There are other things to consider in this type of situation such as the commonly known statutory period. For example, in a company where there are fewer than 15 employees, there is a qualifying period of 12 months, while a company with 15 or more employees has a 6-month qualifying period.
Anytime an employee is dismissed after the qualifying period but is still under the employment contract period, this could be grounds for the employee to claim unfair dismissal. This is a common situation when the contract is not clear enough and it leaves too many aspects of the agreement unchecked.
If the dismissal is caused by misconduct or breach of contract of any kind, this would not be a valid claim. It is also important to note that all employment contract regulations should be updated once a contract expires.
A new employment contract needs to be made and the terms could be entirely different, but it is important for all obligations to be stated for both the employer and the employee. This is essential in order to ensure that there will be no issues in terms of technicalities that could help either party make any unfair claims.
Clear contracts are essential in business
It is important for employers to always be clear about the terms by which the contract ends. If the services of the employee are no longer required after the contract expires, this is also something to state immediately after the contract reaches its expiration date.
If the employer wishes to extend the fixed term, this is also something that needs to be notified. In either case, a new employment agreement needs to be drafted for both parties to sign once all the terms are agreeable for everyone involved.
Final thoughts on employment contract terms
It is always essential for all employers and employees to be able to agree on the kind of terms for their working relationship. This is going to give both parties peace of mind regarding what they are signing and how they can expect the end of the working contract to play out.
At HR Expertise, our team provides HR Consulting in Melbourne and across Australia to help navigate you through employment contracts, call us today if you need assistance, we would love to work with you.