Temporary and fixed-term contracts provide organizations with a higher level of flexibility when it comes to fulfilling staffing requirements. However, it’s important to understand the benefits of and differences between each before starting the recruitment process.
What is a Temporary Contract?
Unlike a fixed-term contract, which is for a set period of time (e.g. 12 months), a temporary contract doesn’t have a specific end date. organizations can – but don’t have to – recruit temporary candidates through a recruitment agency specializing in temporary work.
Temp workers are defined as non-permanent members of staff, as are casual workers, short-term employees, and short-term self-employed workers.
People engage in temporary work for a number of reasons. They might be studying and need work during their summer vacation or be in the process of changing careers and want to ‘test the waters’ in a new workplace setting.
Temps are usually paid an hourly rate versus a salary, and receive their pay in arrears every week. Agency temps typically submit digital timesheets to their recruiter at the end of each week to confirm how many hours they have worked.
Temporary contracts might be more appropriate for roles that need to be filled in the short term or for an unknown period of time. For instance, a company might hire temps to meet a seasonal increase in demand or to cover members of staff who are on sick leave.
Organizations usually turn to temps for help with specific tasks, such as to tackle a mounting administrative workload or to help out in the warehouse around annual seasonal events like Black Friday and Cyber Monday.
Benefits of Temporary Contracts
- Flexibility – Temporary contracts can be for an undetermined amount of time and can be terminated at short notice by the employer.
- Quick – Hiring through a temporary recruitment agency can be a lot faster than hiring in-house; the agency should have a pool of candidates ready to go.
- Impact – Because temps are hired to meet a specific short-term need, they can make a tangible impact within an organization and offer fresh perspectives.
- Skills – Experienced temps are skilled in using different systems and processes and should be able to hit the ground running.
- Cost-effective – Temps don’t require the same level of expenditure as permanent employees, although it’s important to factor in the agency’s fees.
Important Facts about Temp Employment
- Training – Some level of training will need to be provided, especially when it comes to key business systems and processes; in the interests of safety and efficiency, temps involved in manual work must understand how to use equipment properly.
- Collaboration – It can be harder for those on temporary contracts to build a rapport with permanent employees because of the short-term nature of the work; as such, roles that require collaboration might not be as suitable for temp work.
- Insecurity – Temp workers can leave at short notice, so organizations should consider opting for agencies with the bandwidth to find last-minute replacements.
- Employment Rights – According to the Agency Workers Regulations 2010, temps are entitled to the same working conditions and pay as employees.
What is a Fixed-Term Contract?
Is a fixed-term contract temporary? In some ways, yes; in others, no.
Fixed-term contracts are similar to permanent ones, the main difference being that they come with a fixed end date. As such, an employee on a fixed-term contract can have similar employee benefits to an employee on a permanent one, but without long-term job security.
To be a fixed-term member of staff, the employee needs to have a contract with the organization they work for, not an agency. There also needs to be an end date to the contract, which will usually fall after an event or when a specific task has been completed.
Unlike a temporary contract, which doesn’t need to have a fixed end date, a fixed-term contract does – in this way, it suits roles that need to be fulfilled for a set period of time.
Fixed-term contracts expire on the end date specified; however, they can be renewed by the employer. An employer might want to extend a fixed-term contract or move the employee onto a permanent contract if their skills are required for the long-term, they’ve done a good job, and the employer wants to retain their talent.
Fixed-term contracts are often used to cover employees on maternity leave. They can also come in useful for project work, where an organization requires specific skills for a set amount of time. Like temporary contracts, fixed-term contracts can also be used to facilitate seasonal work.
Benefits of Fixed-Term Contracts
- Security – Fixed-term contracts provide both the employer and employee with more certainty; the employee knows they will have a job for a set period of time, and the employer knows they will benefit from the skills of the employee for the duration of their contract (unless, of course, they resign).
- Budget certainty – Fixed-term arrangements can be useful for forecasting workforce budgets and resources.
- Less commitment – If an organization wants to test out how a role ‘plays out’ within a company without committing yet, an FTC could be an ideal solution.
- Access to talent – There are lots of candidates out there who are actively looking for temporary or fixed-term work, especially those who value flexibility.
- Agility – It can be easier to test new approaches or concepts with employees on fixed-term contracts. This makes them appealing to companies going through change or growth. Again, a permanent position can be offered at the end of the term.
Important Facts about Fixed-term Employment
- Early dismissal – It’s important to know that an FTC employee whose contract is terminated before the end date might be entitled to compensation totaling the amount they would have received if they had worked to the end of the fixed term. Therefore, it could be worth considering including an “early termination clause” in the contract.
- Working beyond the fixed term – If an employee on a fixed term contract works beyond the fixed term date without a new contract, they could be considered a permanent employee. The same goes for if the employee is offered consecutive fixed-term contracts over and over again.
- Unfair dismissal – Fixed-term employees share the same statutory rights as those on permanent contracts. For example, the employer cannot terminate the employment unfairly or wrongfully. Employees on a fixed-term contract should also be informed of any permanent roles within the company.
Temporary Contract vs Fixed Term Contract
There are a number of similarities between fixed-term and temporary contracts, which is why some people refer to an FTC as a temporary fixed-term contract. When set against permanent contracts, both options provide organizations with more flexibility.
When it comes to contract vs fixed term, let’s recap some of the main points:
- Temps tend to be quick to hire, and contracts can be ended at short notice.
- Fixed-term contracts offer more security and have a set end date.
- Working with an employment agency can speed up the recruitment process.
- Both types of contracts should be used with a specific purpose and task in mind.
- It’s important to describe in the contract the reason for the position being temporary or fixed term and not permanent, as vague contracts are easier to challenge.
- Some temporary and fixed-term candidates will be looking for permanent positions and may resign if and when they find one.
Where to find Temp Workers?
Organizations can hire workers on temporary contracts either in-house or through an employment agency. If hiring in-house, existing employees can be a good place to start. They might be able to recommend people they know or help attract applicants through professional social networking platforms such as LinkedIn.
Job boards are another option, one that can help companies reach the right people. There are temp jobs boards out there for every sector, including – but not limited to – finance, sales, hospitality, education, property, and healthcare.
Temporary employment agencies are designed to source temporary workers for organizations. Agency temps are employed by the agency, resulting in less paperwork for the hiring company. Agencies tend to have access to a wide network of potential candidates, so it can be an appealing option for organizations that need talent fast.
The Bottom Line
Temporary and contract arrangements can work well for organizations that need to meet short-term operational needs. But while they’re effective in the short term, they should not be used as a long-term hiring strategy.
Employees who have been on successive fixed-term contracts for four or more years are seen as permanent employees unless the employer can justify the use of sequential FTCs. This doesn’t apply, however, to an employee on a four-year FTC unless the four-year employment contract is renewed upon completion.
If an employer offers their fixed-term employee a contract with less favorable terms at the end of their current FTC, the employee can reject it and try to negotiate a better deal. If the organization refuses to budge, the employee can either agree to the new contract or accept it as having come to an end and look for work elsewhere.
Ultimately, it’s up to employers to figure out whether they’re justified in continuing to keep an employee on an FTC instead of hiring them as permanent members of the team.
About the Author
Auria Heanley is the co-founder of Oriel Partners, a boutique PA and administrative recruitment consultancy based in Central London. She is extremely passionate about providing the highest quality of service to both clients and candidates. Oriel Partners’ clients range from global multinationals to small boutique firms.