Fixed Term Contracts: Everything You Need to Know | Dynamic Search

Fixed Term Contracts: Everything You Need to Know

This article is for employees looking for information about fixed term contracts. For employers looking for information about fixed term contracts for their business, see our article here.

When looking for a new role, it can be worth considering a fixed term contract over permanent employment. A fixed term contract can offer you experience in a new industry, and show future employers that you’re eager to learn new skills, explore new opportunities, and adaptable.

But before you make the big change to a fixed term contract, it’s important to make sure you have all the answers to all your questions. Which is why we’re addressing some of the most common questions about fixed term contracts.

What is a Fixed Term Contract?

A fixed term contract (or FTC as you may see it abbreviated on some job adverts and job descriptions), is a contract of employment that is used instead of permanent employment, to solve a businesses short term employment needs. 

Fixed term contracts are usually specified for a period of time, like 1 year or 6 months. In the IT industry, it’s not uncommon for businesses to hire an IT Professional on a fixed term contract for the duration of a specific project.

Fixed term contracts can be a great way to gain experience in new industries or roles, while you develop or diversify your skills.

Fixed term contracts often pay a higher salary than the equivalent position for a permanent. This is due to the risk involved by a contractor who may have gaps in employment between contracts, and because of the temporary but often urgent nature of the work for the employer.

How Long is a Fixed Term Contract?

The length of a fixed term contract is entirely dependent on the needs of the business. They can be as short as 3 months, to 1 year, to a few years long.

Some businesses use fixed term contracts to fill gaps in their workforce, with a common reason being maternity cover. 

However some businesses also use fixed term contracts as a sort of trial period, to make sure that any new hires are right for the businesses: Before offering them a permanent position.

One of the big variables to the length of a fixed-term contract is the industry you work in. Some industries or jobs have shorter averaged fixed term contracts. 

For example, we hire for contract IT Professionals across Networks, Infrastructure, Cyber and Cloud. Any businesses that offer a fixed term contract shorter than 3 months will likely have difficulty finding anyone willing to take on that short a contract, without a much higher than average salary being offered.

Meanwhile businesses that offer multi-year contracts can also find difficulty, as contractors may not want to remain in one role for such a long period. Otherwise they would simply apply for a more secure, permanent position.

Can You Leave a Fixed Term Contract Early?

Yes, if you need to for whatever reason, you can leave a fixed term contract early. A fixed term contract behaves much like any other employment contract, in that you always have the option to break your contract and leave early: Within reason…

Your contract will likely stipulate a notice period that you need to give to the employer. You can always leave immediately without giving any notice. Although we would advise against breaking the terms of your contract and leaving early unless it is an unavoidable emergency.

Leaving your contract early without giving any notice does leave you open to being sued by your former employer. And while this is unlikely, as no business wants to be known for suing former employees, it’s still not something we advise doing.

How Long is a Fixed Term Contract’s Notice Period?

The minimum length of a notice period for a fixed term contract in the UK is 1 week. The actual length of your notice period may be longer, depending on what was agreed upon when you signed your contract.

For longer contracts, it’s common to see a longer notice period, to better protect both you and the employer. These can be as long as three months, especially if your fixed term contract is a year or longer.

What Happens When a Fixed Term Contract Ends?

When your fixed term contract comes to its natural conclusion at the end of the specified contractual agreement, you will need to look for a new fixed term contract or permanent position.

This is unless, the business offers to extend your contract. At that point you can then negotiate a new contract with the business.

If the business doesn’t offer to extend your fixed term contract, you can always broach the subject yourself and ask if your contract can be renewed. 

That is of course, if you wish to stay in your current role longer. It’s common for the contractors that we work with to choose not to stay in one position for too long, to continue to gain different experience and skills, and add variety to their career and work.

Pros and Cons of Fixed Term ContractsWhat are the Benefits/ Advantages of a Fixed Term Contract?

When deciding between a fixed term contract or permanent employment, there are a few stand out benefits of fixed term contracts that are worth consideration.

  • It gives you a variety of skills and experience.

Working multiple fixed term contracts can offer a much greater variety in experience, and new skills that you might not gain in a single permanent employment. The variety of roles may look attractive on your CV to employers, and show that you’re great at joining a new business and hitting the ground running.

  • You can earn more.

Fixed-term contracts can pay more than a permanent position, to compensate for the lessened job security. Meaning by working as a contractor permanently, you can earn more than someone with equivalent experience and skillset, who is in a permanent role.

  • It offers more flexible working.

Contract positions can often (but not always) be more flexible than a permanent position. Some businesses will give you more flexible working options, and flexible working hours.

  • It offers a more flexible working lifestyle.

When you have a permanent position, you often have a limited amount of holiday days to use per year. 

But when you work fixed term contracts, you can take a break between your next contract for as long as you like, and as long as you can afford. Allowing you to live a more flexible lifestyle, working as long as you like or need to.

  • It stops you from being tied to a permanent job and location.

When a hiring manager looks at a candidate’s CV, one thing they pay attention to is how long someone has stayed in a permanent role. After all, no hiring manager wants to hire an employee with a jumpy CV who may leave their company soon. 

Meaning a permanent job is a long-term commitment to both a job and a certain location. 

But working a series of fixed term contracts allows you to travel to other locations and work in new places and different companies.

What are the Disadvantages of a Fixed Term Contract?

A fixed term contract isn’t all sunshine and rainbows however. There are some disadvantages to a fixed term contract over traditional permanent employment that it’s important to consider before you make any decisions.

  • Job security.

The most obvious, and perhaps the biggest disadvantage to fixed term contract employment, is the lack of job security.

Your employment will have a fixed end date. And it can be difficult to find a new contract that starts immediately as your old one ends. 

Additionally, you may not be as protected as a permanent employee if your contract is terminated early. And you may not have a notice period as long as a permanent employee.

  • Company and job benefits.

As a contract employee you may not have the opportunity to enjoy the same company benefits as a permanent employee. Although this can depend on the length of your contract, and the terms of the contract you sign.

These company and job benefits can include benefits such as health and dental insurance, paid holiday leave, company holidays or financial incentives and bonuses.

  • Career progression opportunities.

As a contractor you won’t have access to the same opportunities for career progression as a permanent employee. 

Permanent employees will often have a career progression plan, with steps for them to take to reach their next stage in their career. Because businesses recognise that if they don’t offer these progression opportunities, employees will look elsewhere for them and leave. 

But a contractor will leave a business anyway, so there’s no incentive to help a contract worker progress in their career: Which means it’s all up to you.

  • Learning and development.

Similarly, you will have far less opportunities for learning and developing your skills provided by your employer: Because companies only offer these opportunities when they will see a reward from their efforts. And if you aren’t staying around for the long-term, then it’s not a financially responsible decision for the business to offer you development opportunities.

  • Lessened company culture or belonging.

As a contractor, you’ll likely not have the opportunities to enjoy the company culture as much as a permanent employee who is fully ingrained in the company culture. And considering how significant company culture can be in how much you enjoy your work, this can be a big factor in deciding whether fixed term contracts is a career for you.

While this can be just not developing the long-term work relationships as you would in a permanent role, it can also stretch to not being involved in company events and socials.

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