Frequently asked questions about fixed-term employment contracts

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In what situations can employers and employees make a fixed-term employment contract?

According to the Employment Contracts Act, an employment contract is valid indefinitely (toistaiseksi voimassaoleva in Finnish) unless it has, for a justified reason, been made for a specific fixed term (määräaikainen in Finnish). If an employment contract is made for a fixed term on the employer’s initiative without a justified reason, the contract is considered valid indefinitely.

An employment contract can, by default, be made for a fixed term if at the time of making the contract it is deemed that the work set out in the contract will no longer be available after the contract ends. The Employment Contracts Act does not set any limits for the number of back-to-back fixed-term contracts made by employers and employees. However, it is important to note that if the employer and the employee enter into a series of back-to-back fixed-term contracts, a justified reason must be provided for each fixed term.

Justified reasons for a fixed term can include the nature of the work, a substitution, an internship or some other comparable reason or a reason related to the company’s operations or the work to be performed. The use of a fixed-term contract may also be justified if the employer offers the employee a task with a time limit. Such tasks include working as a substitute, seasonal or temporary work or a one-off task or project. In addition, a fixed-term contract may be justified if the task requires specific expertise and is not performed by the regular employees.

A fixed-term contract can also be made at the employee’s request. In this case, the fixed-term contract does not require a particular reason.

When does a fixed-term employment contract end?

A fixed-term employment contract ends without notice at the end of the fixed term or when the agreed work is completed. Fixed-term contracts often include a specific date on which the contract will be terminated.

However, not all fixed-term contracts include a specific date of termination. This may be the case, for example, when an employee has been hired on a fixed-term contract for a specific task or until the completion of a particular job. If the date of termination of the employment contract is known only to the employer, the employer must notify the employee of the date as soon as the employer becomes aware of it.

Can a fixed-term employment contract be terminated?

As a rule, a fixed-term contract cannot be terminated during the employment relationship. However, there are two exceptions to this rule.

Firstly, the parties to the employment contract may agree in the contract that the contract may be terminated. This is a so-called hybrid employment contract: the contract is a combination of a fixed-term and an indefinitely valid contract. The parties may decide that the contract will be valid no longer than until the end of the fixed term, but either party may terminate the contract to end before this time. If the employer terminates the contract, they must comply with the grounds for termination and the provisions concerning the termination procedure set out in the Employment Contracts Act.

The other exception to the rule concerns fixed-term employment contracts that have lasted for more than five years. If a fixed-term contract has been valid for more than five years, it may be terminated in the same way as an indefinitely valid employment contract. It is worth noting that there is no maximum term for a fixed-term employment contract, but after five years, the contract may be terminated.

Do I accrue annual holiday during fixed-term employment?

You accrue annual holiday as a fixed-term employee just as you would if you had an indefinitely valid employment relationship. Employees may take annual holidays during their employment according to the Annual Holidays Act. At the end of the employment relationship, any annual holiday that remains unused is paid to the employee as holiday compensation.

If the employer and the employee sign a new employment contract at the end of a fixed-term contract, this new contract should also state whether the days of annual holiday that were accrued during the previous fixed-term contract will be transferred to be used under the new contract or if the accrued days of annual holiday are paid as holiday compensation at the end of the previous fixed-term contract.