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May 27, 2019

Can we end a fixed-term contract early?

Our employee is on a 12-month fixed-term contract that ends in 8 months.

The employee is not satisfactory. There is a clause in the contract that specifies a 6-month probation. What is the business’s legal position regarding ending the contract earlier than this?

It will depend on the terms of the contract. A true fixed-term contract does not give the employer or the employee a right to terminate employment early (except in limited circumstances). However, some contracts allow either party to terminate employment early on notice for any reason, and will generally specify a period of notice that is required to be given – this is called a maximum-term contract.

If the contract is truly a fixed-term agreement, you will still be liable to pay the balance of the contract even if you end the contract early. If it is a maximum-term contract, you will be able to terminate employment early and will only have to pay the notice specified in the contract.

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