Employment arrangements: definite vs indefinite contracts

Employment contracts are broadly divided into two categories: definite and indefinite contracts. These two types are principally distinguished by a single factor: the proposed duration of the employment relationship.

Indefinite employment contracts

An indefinite employment contract has no fixed term or date on which the employment ends. During the probationary period, an indefinite contract may be terminated at will by either the employer or the employee without giving any reasons.

If an employee has been working for the same employer continuously for more than one month during the probationary period, the party terminating the contract must give the other party a week’s notice of the termination of employment.

Indefinite Contracts: Notice of termination

Once the probationary period comes to an end, an indefinite employment contract may be terminated by giving notice as set out below, by the employee without assigning any reason and by the employer only on grounds of redundancy.

Notice of the termination of employment proposed either by the employer or by the employee under an indefinite contract of service, shall be of the following respective duration:

Term of Service with the same Employer	Notice Period
more than one month but not more than six months	one week
more than six months but not more than two years	two weeks
more than two years but not more than four years	four weeks
more than four years but not more than seven years	eight weeks
more than seven years	eight weeks plus an additional one week for every subsequent year of service or part thereof exceeding seven years, up to a maximum of twelve weeks

An indefinite contract of employment with an employee who is engaged in a technical, administrative, executive or managerial post, may prescribe a longer notice period as may be agreed between the employer and the employee.

Indefinite Contracts: Notice of termination from employer

On receiving notice of termination from employer, an employee under a contract of service for an indefinite time has the option to do two things: either to continue to work until the period of notice expires or, at any time during the period of notice, to request the employer to pay a sum equivalent to half the wages that would be payable to employee in respect of the unexpired period of notice.

Indefinite Contracts: Notice of termination from employee

On receiving notice of termination from the employee, the employer has the option either to allow employee to continue to perform work until the period of notice expires or, at any time during the currency of the period of notice, to pay the employee a sum equal to the full wages that would have been payable in respect of the unexpired period of notice.

Indefinite Contracts: Failure to give notice

If an employee under an indefinite contract to give notice as aforesaid, would be liable to pay the employer a sum equal to half the wages that would be payable in respect of the period of notice. If the employer fails to give the said notice, the employer would be liable to pay to such employee a sum equal to the full wages that would be payable in respect of the period of notice.

Indefinite Contracts: Sufficient cause for dismissal or abandonment of employment

An employer may dismiss an employee, and an employee may also abandon employment with his employer, without giving notice and without liability to make any of the abovementioned payments, if there is good and sufficient cause for such dismissal or abandonment of service. The “good and sufficient cause” is determined by the Industrial Tribunal.

Definite Employment Contracts

A definite or fixed term employment contract is a contract of service entered into between an employer and an employee, which comes to an end when a specific date is reached, or when a specific task is completed, or through the occurrence of a specific event.

The conditions of employment in a fixed term contract must be as favourable as those which would have been applicable to an indefinite contract at the same place of work, unless different treatment is justified on objective grounds.

Definite Contract: Retainment of fixed-term employee

If you are a fixed term employee whose contract has expired and are being retained by your employer without being given a new contract of service for a fixed term within the first twelve working days following the expiry of the previous contract, you shall be deemed to be retained on an indefinite period contract.

If you are retained in employment in the same category after the date of termination of a definite contract, or are re-employed in the same category by the employer for a fixed or indefinite term within one year from the date of termination of the previous definite contract, the conditions of employment may not be less favourable than those which would have been applicable had the contract of service been for an indefinite time.

As a general rule, an employer may not retain an employee on a fixed term contract beyond a period of four years. In fact, once four years of continuous employment elapse, a definite contract shall be transformed into an indefinite contract of employment if the employee has been continuously employed under such a contract for a fixed term, or under that contract taken in conjunction with a previous contract or contracts of service for a fixed term.

Exceptionally, an employer may only retain an employee on a fixed term contract beyond four years when such retention is justified by objective reasons based the circumstances of a given activity, usually resulting from the specific nature, or from inherent characteristics, of the tasks to be performed in the fixed term contract.

Termination before expiration of definite contract

If the employer terminates definite contract of employment before the date of expiration specified by the contract, the employer must pay to the employee a sum equal to half the wages that would have been acquired by the employee during the remainder of the time agreed upon in the contract.

Employees who abandon their employment before the time definitely specified in the contract of service must pay the employer a sum equal to half the full wages they would have been entitled to had they continued their services.

Definite Contracts: Sufficient cause for dismissal or abandonment of employment

Nevertheless, an employee may be dismissed, and an employee may also abandon his employment, without liability to make any of the said payments, if there is good and sufficient cause for such dismissal or abandonment of service.