It’s become very common in the workplace to hire new staff on a fixed term contract (FTC), as opposed to making them permanent employees. However, the Labour Relations Act (LRA) is quite specific in Section 198B in terms of when you can have a FTC, so make sure you’re up to speed on what the law and the experts have to say.
The only acceptable reasons for entering into a fixed term contract, where the employee is under the threshold, is when the employee:
- is replacing another employee who is temporarily absent from work
- is employed on account of a temporary increase in the volume of work which is not expected to endure beyond 12 months
- is a student or recent graduate who is employed for the purpose of being trained or gaining work experience in order to enter a job or profession
- is employed to work exclusively on a specific project that has a limited or defined duration
- is a non-citizen who has been granted a work permit for a defined period
- is employed to perform seasonal work
- is employed for the purpose of an official public works scheme or similar public job creation scheme
- is employed in a position which is funded by an external source for a limited period; or
- has reached the normal or agreed retirement age applicable in the employer’s business.
If none of these are applicable to your situation, the best option is to have a permanent contract in place with a probation that is managed correctly, and to terminate the service before probation ends if the new employee is not suitable.
If you have any questions relating to fixed term contracts, reach out to us on [email protected].