Fixed-term contracts

There need to be sound reasons for defining jobs as short-term rather than permanent

We get a lot of queries about fixed-term contracts – how long they can last, how many times they can be rolled over and, in short, what the law allows.

It’s little wonder as the use of fixed-term contracts is creeping steadily upwards. In the last four years, at least 40 percent of new appointments in the public service have been for a fixed term – that is, temporary positions with a defined end date.

These employment arrangements can be for good reasons. They may be for a short-term project or to fill in for someone who is on parental leave. But over-use of fixed-term contracts without good reason is adding to the growth of insecure work. This is not good for anyone and makes life hard for employees who can’t plan ahead with any certainty.

The PSA has dealt with many cases of unlawful fixed-term contracts. It’s a practice that appears to be widespread across the public sector so it’s worth knowing what the law says. 


What the law says

The Employment Relations Act allows for the use of fixed-term contracts in certain circumstances, but not as a replacement for permanent work. 

The employer must have genuine reasons based on reasonable grounds for the fixed term and must explain these to the employee when the contract is entered into. There has to be an agreement between the employer and the employee that the job will end on a specified date or when a project has been completed.

The employment agreement must be in writing and state when the employment ends and the reasons for ending it. Without this written agreement, the employee can assume they are employed on a permanent basis and therefore have protections against dismissal.

A fixed-term contract can’t be used simply as a way to vet someone before deciding whether to employ them on a permanent basis. Nor can it be used to limit employment rights such as holidays and other forms of leave. There have to be genuine reasons with reasonable grounds for ending the employment of a fixed-term worker.

If you are employed on a fixed-term contract, you have the same right to join the union as anyone else.



The PSA has successfully represented employees with unlawful fixed terms. Where it can be shown that the fixed term is unlawful, it is our expectation that the person’s employment will become permanent. Each case turns on its own facts and the specifics behind the arrangements entered between the employer and employee.

Where there has not been a written agreement that the employment has a defined end date, the PSA has been able to establish that the job is a permanent one.  

There have been examples where an employee’s fixed term has expired or the project has been completed but the employee continues to be employed and wrongly defined as being a fixed-term employee.  

In other cases, members have had their fixed-term constantly rolled over, sometimes over many years, with the project never reaching a conclusion. This is generally because the job should be defined as permanent and this is what the PSA has had success in arguing. 

Sometimes, no clear reason has been given for the fixed term or the employer is attempting to use it to establish suitability for ongoing employment. Again, this falls outside the lawful definition of a fixed-term contract.

It’s always worth checking your collective agreement as this may include further restrictions on the use of fixed-term contracts that may strengthen the case for permanent employment status.


This article is from the March 2014 issue of the PSA Journal. You can read back issues of the Journal by clicking here.