Employment Contract with Fixed Term: Understanding its Advantages and Disadvantages
An employment contract with a fixed term is a type of employment agreement that stipulates a specific start and end date for the employment relationship. This type of contract is commonly used by employers as a means of hiring temporary workers for a specific project or to cover for a permanent employee`s absence. However, it can also be used by employees who prefer a short-term commitment or desire to gain experience with different employers.
Advantages of a Fixed-Term Employment Contract
Employers and employees alike can benefit from using a fixed-term employment contract. Here are some of the advantages:
1. Cost-Effective
One of the significant benefits of employing someone on a fixed-term contract is that it`s more cost-effective than a permanent contract. These employees do not receive benefits such as sick leave, vacation pay, or medical insurance. This means employers will only incur costs for the duration of the project, and not for the entire year.
2. Flexibility
A fixed-term contract offers flexibility to both employers and employees. Employers can bring in employees to handle a particular project or cover a short-term need, without having to commit to a permanent employee. On the other hand, employees can gain experience across different companies and industries and have time to pursue other interests when their contract ends.
3. Specialized Skills
Employers can bring in specialized skills through fixed-term contracts. Contract employees can fill short-term skill gaps or bring in additional expertise that the company currently lacks.
Disadvantages of a Fixed-Term Employment Contract
Despite its advantages, a fixed-term employment contract also has its downsides. Below are some of the disadvantages:
1. Insecurity
A fixed-term employment contract is less secure than a permanent contract. When it ends, the employee would need to look for another job. Employers can also choose not to renew the contract, leaving the employee without a source of income.
2. No Guaranteed Work
Contract employees have no guaranteed work, and they might not be able to secure another commitment as soon as their current contract ends.
3. Lack of Benefits
As previously mentioned, fixed-term employees do not receive benefits such as sick leave, medical insurance, or vacation pay. This can pose a problem for those who rely on these benefits for their livelihoods.
Conclusion
A fixed-term employment contract is an option for both employees and employers looking for short-term commitments. However, it`s important to weigh the advantages and disadvantages before choosing this type of contract. Employers must ensure they`re not exploiting employees by hiring them on fixed-term contracts to avoid paying benefits and ensure they comply with employment laws. Meanwhile, employees must consider the stability of their income stream and the lack of benefits when negotiating a fixed-term employment contract.
