{"id":1317,"date":"2025-04-16T09:13:08","date_gmt":"2025-04-16T09:13:08","guid":{"rendered":"https:\/\/sense.hr\/blog\/fixed-term-contracts-when-and-how-to-use-them\/"},"modified":"2025-04-16T09:13:08","modified_gmt":"2025-04-16T09:13:08","slug":"fixed-term-contracts-when-and-how-to-use-them","status":"publish","type":"post","link":"https:\/\/sense.hr\/blog\/fixed-term-contracts-when-and-how-to-use-them\/","title":{"rendered":"Fixed-term contracts: when and how to use them"},"content":{"rendered":"

\n A fixed-term contract is a flexible employment agreement that lasts for a specified period or until a particular task or project is completed. Unlike a permanent contract, which has no defined end date, a fixed-term contract has a predetermined termination point agreed upon in advance.\n<\/p>\n

<\/a>Not to be confused with other types of flexible contracts<\/h2>\n

\n While the difference between fixed-term and permanent contracts is clear, the distinction between fixed-term contracts and other flexible contracts is not as black and white. As a result, fixed-term contracts can sometimes be used in situations where other flexible working arrangements are more suitable and vice versa. Knowing the subtle differences between common types of flexible contract, as shown below, can help employers optimise their usage.\n<\/p>\n

<\/a>How fixed term contracts differ from casual contracts<\/h2>\n

\n Fixed-term contracts differ from casual contracts. A fixed-term contract specifies the number of weekly or monthly hours an employee must work, whereas casual contracts do not guarantee any hours. Casual employees are also not obligated to accept work when offered. If your project requires a minimum or fixed level of working hours, a fixed-term contract may be more suitable than a casual one\n<\/p>\n

<\/a>Fixed term contracts of employment vs self-employment agreements<\/h3>\n

\n Fixed-term contracts should not be confused with self-employed service agreements. Employees on fixed-term contracts have statutory employment rights, and income tax must be deducted at source (inside IR35). By contrast, self-employed individuals operating under a contract for services are not considered employees and must manage their own tax obligations, (outside IR35).\n<\/p>\n

\n However, the distinction between employment and self-employment has been subject to scrutiny, particularly regarding disguised employment within fixed-term or temporary roles. HMRC has raised concerns that some self-employed individuals (operating outside IR35) were performing similar work to fixed-term employees (inside IR35) while benefiting from different tax treatment.\n<\/p>\n

\n To address this, employers must determine a worker\u2019s employment status using HMRC\u2019s Employment Status Checker<\/a> and apply the appropriate tax treatment. If a worker is deemed to be in an employment relationship (inside IR35), they will likely be considered an employee under employment law, and a fixed-term employment contract should be used. Given the complexities, seeking HR or legal advice is advisable if you are unsure.\n<\/p>\n

<\/a>When to use fixed-term contracts of employment<\/h2>\n

\n Fixed-term contracts are suitable for roles where the end date is predictable. Common applications include seasonal work, maternity cover, events, or project-based roles. Below are some industries and positions where fixed-term contracts are frequently used:\n<\/p>\n