What is a fixed term contract? Read about rules and rights here

Fixed term contract

A fixed term employment agreement is an employment contract in which it is clearly stated when the employee must leave the position. It can, for example, be in connection with a completed work task or when a specific event occurs.

In this article, we will make you aware of what fixed term contract entails and how many times it is possible to extend a fixed term contract

Let's start by looking more closely at what defines a fixed term contract

What is a fixed term contract?

A Fixed term contract means that the employment contract has a fixed date when the employee must leave the company. The employment can be described as fixed term if one of the following three elements is agreed in the contract:

• The employment ends on a specific date
• The employment ends when the employee has finished a specific work task
• The employment ends when a certain event occurs, for example if an employee on long term sick leave is able to return to the workplace

It is important in relation to a task specific and event based employment that the contract clearly clarifies when the work task is completed, or which specific event must take place before the employee has their last day of work.

According to the Act on fixed term contract §2 subsection 2, the following wage earners are not covered by the legislation: 

• Employees who are made available to a user company by means of a temp agency
• Pupils covered by the Act on basic vocational education, basic social and health education, agricultural education and vocational education
• Wage earners, where the employment relationship has been drawn up in connection with special public or publicly supported programmes

In addition, the legislation points out that a fixed term contract may not be treated differently compared to the company's other employees.

The purpose of the law is to strengthen the quality of fixed term contract. The law must also ensure that the employee who is employed in a fixed term position is treated on the same terms as the workplace's other employees.

It is also worth mentioning that it is permitted to reduce salary and benefits proportionately in relation to the employee's employment period. Thus, it is possible to give the employee a 3/12 bonus if the temporary employee has been employed for 3 months of the year.

The employer can also decide that specific terms of employment only come into force when the employee has achieved a certain length of service. An example of this could be that it requires 9 months of seniority before the employee is entitled to holiday days off or pay during maternity leave. However, these rules must also apply to the remaining employees in the company.

You now have a good understanding of what a fixed term contract entails. In the next section, we will take a closer look at how many times a fixed term contract can be extended.

How many times can a fixed term contract t be extended?

An employee who is employed in a teaching and research enterprise at state owned and self owned institutions, which is primarily financed by grants from the state, can extend the fixed term contract twice. However, this also requires the state to determine or agree on salary and employment conditions.

In addition, it should be noted that the provision does not apply to employees who work with teaching at independent primary schools, post secondary schools, housekeeping and manual work schools and private upper secondary schools.

In other contexts, §5 clarifies that the fixed term contract can be extended without the rules of the Civil Service Act coming into force, if the extension is due to objective reasons. The objective reasons include:

• Unforeseeable lapses, e.g. illness, pregnancy, maternity or leave
• The work task requires more time

If an extension is not due to objective circumstances, the employee has the right to consider themselves a permanent employee and can therefore demand that the termination be done with a notice of termination, which also applies to the company's permanent employees.

In addition, employers must be aware that it is required by law to give employees who have a fixed term contract notice about vacancies, e.g. via the workplace's communication system. The fixed term contract does not have the right to be offered the position, but instead acquires an opportunity to apply for the position just like other employees at the workplace.

If the employer does not comply with the rules defined in the legislation regarding fixed-term employment, the employee can claim compensation. An example of this is a case where a university had illegally extended employment more than twice. The outcome of the judgment thus meant that the four employees were entitled to compensation of DKK 75,000 each.

Another relevant subject in connection to this is the Danish Salaried Employees Act. See what that means if you are an employer: