Fixed-term contracts are useful for dealing with peaks and troughs in a business but can often also be used to “test” suitability of an employee.

Where an FTC is for a short period of time and the person you’ve hired isn’t up to scratch you can simply let them go when the FTC expires.

It is a good idea to have a reason why the contract has ended though – to justify the reasoning and avoid any claims of discrimination.

If the employee works out well and you want to keep them on when their current FTC expires, what are your options?

You could offer a permanent contract or extend the FTC.

If you want to look at an extension, always put this in writing for clarity, setting out the length of extension, reasoning and when the FTC will now expire.

If you are using fixed term contracts you may be trying to avoid further employment rights.

If this is the case, don’t extend the current FTC or series of FTCs past the two-year point, as the individual will accrue unfair dismissal rights.

They will also automatically become a permanent employee if they work on a single FTC or series of FTCs continuously for a four-year period.

It is possible to break periods of continuous employment and prevent unfair dismissal rights by leaving enough time between contracts that breaks the cycle, but there are downsides with this.

It looks like an avoidance tactic, employees may not be prepared to be without work during the “break” period and it doesn’t look great for your employer branding…