01 Dec What is the difference between a Fixed-Term Contract & an Indefinite Term contract?
If you have just received an Employment Contract, you will be wondering what kind of employment relationship you are agreeing to. Further to outlining the responsibilities and benefits of your new job, your Employment Contract will also affirm the expected duration of the employment relationship.
The two types of Employment Contracts are fixed-term and indefinite term contracts which both affect the employment relationship in different ways. Receiving one of these contracts can largely impact what termination will look like for the employee, and what damages they could receive if they were to take legal action against their employer.
Fixed Term Contracts
A fixed term contract outlines an employment relationship that has an exact duration of how long the employment is expected to last. In this case, the employee will know when the employment period is over.
This type of contract impacts the termination process because the employer is no longer required to provide reasonable notice before termination. The employee already knows their termination date, as it was stated in their original Employment Contract, and therefore does not require notice. This kind of employment is commonly called working on a “contract” basis.
It is possible that an employee may be given many fixed-term contracts over several years, and this is often recognized as an indefinite period by the court. The employer would then need to provide reasonable notice. One of the reasons reasonable notice would then be required is that the employee could be anticipating a future contract once their current contract has ended. The employer is legally required to make sure the employee has enough time to acknowledge their termination and find a new job.
Indefinite Term Contracts
An indefinite term contract outlines an employment relationship that does not anticipate any termination date. This means that the employee works for this employer for an unlimited period of time.
If the employee receives this type of contract, the employer must provide reasonable notice upon termination. Providing the employee with termination notice is a legal obligation for the employer in this case because the employee expects their employment to continue. If the employer does not supply reasonable notice, the employee may file a wrongful dismissal claim and sue for damages.
If you have recently received an Employment Contract and wish to have it reviewed by an Employment Lawyer, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.