Fixed Terms – Can They Be Broken?
Employers and employees are free to contract on the terms and conditions of employment. That contract, often referred to as an employment agreement, if appropriately and properly drafted, can bind the parties in the event of what occurs on the termination of employment.
Most employment agreements have open-ended terms. That is, they are contracts of indefinite hire, subject to an early termination provision set out in the employment agreement. However, some employment agreements specify that the employee’s employment is for a "fixed term," which means it automatically comes to an end at the end of that term, unless the parties agree otherwise.
The legal issue which often arises with a fixed-term contract is that unless the language is specific on early termination, the courts may find that the liability of the employer could be not only statutory or even common law notice, but payment to the end date of the fixed-term, absent the obligation to mitigate. For this reason, employers have been reticent to enter into fixed-term employment contracts.
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