Fixed term employment contracts can be beneficial for employers who only need employees for a limited time or for a limited scope. These contracts help create some certainty and set out an end point to the employment relationship, often exempting these employees from notice provisions under the British Columbia Employment Standard Act.
But there is more to a fixed term contract that employers should know:
In British Columbia, fixed term contracts only exempt employees from entitlement to notice provisions (or termination pay) if the contracts are less than 12 months and the employment contract is not renewed. However, this exemption may not exist for employees that fall under federal jurisdiction. These employees include those that work in air transportation, banks, first Nation band councils, federal Crown Corporations, radio or television broadcasting, telecommunications and railways. For these employees, there is no legislation that exempts an employee from termination pay at the end of a fixed term contract, so it may be up to a court to decide if the employee receives termination pay.
If an employee works past the end of a fixed term contract, the employee will be considered to be a regular employee – entitling them to working notice or severance pay if the employer later terminates the employment.
If a fixed term contract, or any employment contract, is properly drafted, employers may be able to limit an employee’s termination pay to what is mandatory in the relevant legislation. This allows the employer and employee to have certainty about what to do when the employment ends.
We help employers prepare employment contracts – whether fixed or indefinite. Having a little legal help at the start of employment can save a lot of headache at the end.