Fixed-term contracts

Question: What happens when an employee on a fixed-term contract works past the expiry of the fixed term?

Answer: A fixed-term contract allows an employer to hire an employee for a specific period of time, at the end of which the employee’s term of employment comes to an end. Under a fixed-term contract the employee is given “notice” of the date the employment will end at the start of the relationship. Thus, where a fixed term agreement is in place, no additional notice of termination to the employee is required as the employee simply stops working when the contract expires.

However, if through inadvertence or some other reason an employee continues to work after the expiry of the term, notice of termination may be required.

Generally, an employee who works past the specified term of a fixed term agreement acquires the same rights as as indefinite-term employee. This would mean that under the common law the employee would be entitled to reasonable notice upon termination for the entire period of continuous employment.

However, whether or not the employee is entitled to statutory notice in accordance with employment standards legislation will depend on the provisions of the act in the particular jurisdiction, and the amount of time the employee has continued working past the expiry of the term.

For example in Ontario the act provides that employers are only exempt from paying fixed-term employees statutory termination pay where the fixed-term contract is for a duration of 12 months or less.

Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.

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