There are two main points to remember in connection with fixed-term employment contracts. First, certain conditions must be met, or the fixed-term employment will transfer into employment for an indefinite period. Second, the possibility to terminate the employment before the expiry date must be specifically agreed. Otherwise, the employment will last until the agreed expiry date, and thus cannot be terminated prematurely in case of, for example, redundancy.
A fixed-term employment contract is valid in case of:
- a temporary substitute employment (maximum of two years);
- a seasonal employment; or
- an employee reaching the age of 67.
Further, it is also possible to use fixed-term contracts if:
- the employment will last no more than two years; and
- the employee has not been employed on fixed-term contracts (without such specific reasons as mentioned above), for an aggregate period of more than two years during the past five years.
If these conditions are not met, the fixed-term employment will transfer into employment for an indefinite period.
A fixed-term employment contract will end on the agreed expiry date (unless it has been transferred into employment for an indefinite period). However, situations may occur when the employer needs to terminate the employment prematurely. Premature termination is possible only if this has been specifically agreed and objective grounds are at hand (ie, redundancy or personal reasons). Premature termination is also possible where the employee has grossly neglected his or her obligations to the employer. In such a situation, the employment can be terminated without a notice period.
In connection with the termination of fixed-term employment contracts, there are also some procedural rules to observe. If the employee has been employed for an aggregate period of more than 12 months during the past three years, the employer is obliged to notify him or her of its decision. The notification must be given at least one month before the employment expires. If the employee is a member of a trade union (the employer must ask the employee about any union membership), the trade union must also be notified.
Other rules may also apply to fixed-term employment contracts if the employer is bound by a collective bargaining agreement.
Some key points to remember are as follows:
- To avoid fixed-term employment transferring into employment for an indefinite period, regular reviews are necessary to ensure that time limits and other conditions are met.
- Premature termination of employment is possible only if so agreed.
- A potential notification obligation must be observed.
- Other rules may apply under the applicable collective bargaining agreement, if any.
For further information please contact Fredrika Skoog or Jennie Lööw at Hamilton by telephone (+46 8 505 501 00), fax (+46 8 505 501 01) or email ([email protected] or [email protected]).