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Fixed-term employment agreements are a useful tool when, as an employer, you do not require a permanent employee but need an employee for a stated period of time, or until the conclusion of a specific project, or for a specified event.

The Employment Relations Act 2000 imposes specific requirements that must be complied with for a fixed-term employment agreement to be valid. You must have ‘genuine reasons’ based on reasonable grounds for making the employment fixed-term.

You must advise your employee as to the reasons for the fixed-term provision, and record when or how their employment will end in a written employment agreement. If you don’t adequately record the reasons for a fixed-term, and when or how the employment will end, the fixed-term may not be valid, and you may be expected to treat your employee as a permanent staff member. This could open you up to a claim of unjustified dismissal.

Examples of ‘genuine reasons’ may be to cover another employee who is on an extended period of leave or your need for additional resources for a specific project. Employing someone who is on a work visa, or other type of immigration visa, is not a genuine reason for fixed-term employment because the expiry of a work visa is merely a circumstance of your employee. Your employee should be hired as a permanent employee with provisions included in their individual employment agreement about holding and retaining a valid work visa.

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Employment & HR Employment agreements