Open-ended contracts explained: four myths HR gets wrong

Open-ended contracts are the most common type of employment contract in the UK, yet they’re surrounded by myths. Some make employers nervous about hiring. Others lead to mistakes that end up in front of an employment tribunal.

Our short video runs through four of the most common myths in under a minute. Below, we go a bit deeper on each. For the basics, see our guide: What is an open-ended contract and how does it work?

Myth 1: Permanent and open-ended are different contracts

Fact: legally, they’re the same. “Permanent”, “open-ended” and “indefinite” all describe one thing: an employment contract with no fixed end date. Whichever word appears on the paperwork, the employee has the same rights and the employer has the same obligations.

The confusion usually comes from comparing them with fixed-term contracts, which end on a set date or when a specific task is finished, like covering maternity leave. For a wider comparison, see our guide to the different types of employment contracts.

The takeaway: pick one term and use it consistently in your contracts, offer letters and HR system, so nobody thinks two different arrangements exist.

Myth 2: An open-ended contract can never end

Fact: it can end, by resignation or a fair dismissal. No end date doesn’t mean a job for life. An employee can resign by giving the notice set out in their contract. An employer can dismiss, as long as there’s a fair reason and a fair process.

GOV.UK lists the fair reasons for dismissal as:

• Capability or conduct
• Redundancy
• Something that legally prevents the employee doing the job (for example, a driver losing their licence)
• Some other substantial reason

Once an employee has the qualifying service, they’re protected from unfair dismissal. As of October 2026, that period is two years. Under the Employment Rights Act 2025 it drops to six months from 1 January 2027 (see how to prepare for the 2027 unfair dismissal changes). Some protections, such as discrimination and whistleblowing, apply from day one.

The takeaway: treat every dismissal as something you may need to explain later. Keep clear records of performance conversations, warnings and meetings.

Myth 3: A probation end date makes it fixed-term

Fact: no. That date just marks a performance review. A new starter on probation is already on an open-ended contract. Probation is a review point inside that contract, not a separate temporary contract that expires. It usually lasts three to six months, though there’s no legal standard length.

When the probation date arrives, one of three things normally happens:

1. The employee passes and carries on as before.
2. Probation is extended, with clear targets and a new review date.
3. The employer ends employment, usually on capability grounds, with the right notice and a fair process.

If nobody does anything, the contract simply carries on. It doesn’t end on its own. Acas guidance on probation also points out that day-one rights, like the minimum wage, paid holiday and protection from discrimination, apply throughout.

The takeaway: set expectations in week one, hold regular check-ins, record them, and diarise the review date so it doesn’t quietly pass.

Myth 4: Gig work has made permanent contracts rare

Fact: 88% of workers with a written contract are permanent. That’s from Contract trends in the UK labour market, research commissioned by HMRC and published in 2022, which found around 9% were on fixed-term contracts. Gig and freelance work get a lot of attention, but open-ended contracts remain the norm.

For employers, that matters. If your competitors offer permanent roles and you don’t, you may find it harder to attract and keep good people.

The takeaway: use fixed-term or flexible arrangements where they genuinely fit, not as a default way to avoid commitment.

Two more things worth getting right

Put it in writing from day one

A contract exists as soon as someone accepts a job and starts work, signed or not. But the written statement of employment particulars must be given on or before the first day, covering things like pay, hours, holiday, job title, start date, probation and notice. If it’s missing, an employment tribunal can award compensation when it upholds another claim, such as unfair dismissal.

Watch rolling fixed-term contracts

Under regulation 8 of the Fixed-term Employees Regulations 2002, an employee kept on successive fixed-term contracts for four years or more becomes permanent, unless the employer can objectively justify it or a collective agreement says otherwise.

Know your contract, and you’ll know where you stand

Most contract problems come from paperwork that’s missing, out of date or impossible to find when you need it. Sense HR keeps contracts, written statements, probation reviews and key dates in one place, so nothing slips. Start your free trial or book a demo to see how it works.

FAQs

Sources

• GOV.UK: Dismissing staff, fair dismissals
• Acas: Probation periods
• Acas: When an employee must get their written terms
• Legislation.gov.uk: Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, regulation 8
• GOV.UK: Contract trends in the UK labour market (HMRC research, 2022)

Last reviewed: October 2026. This article is general information, not legal advice.