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Employment

Fixed Term Contracts – Own Goal or Winner?

Friday, July 12, 2019

Unusually for the Premier League Rafa Benitez, Newcastle United’s beloved manager, found himself coming towards the end of his three-year contract but without a firm offer that would entice him to stay. The majority of football managers are lucky to survive for full two seasons let alone three, but the Spaniard has an excellent track record.

Rafa joined the Magpies following the departure of Steve McLaren whose disastrous tenure saw the club facing almost certain relegation to the Championship with only 10 games to go. Although he steadied the ship it was too late, and the club was indeed relegated and spent the following season in the Championship. An excellent season in the lower league saw Rafa bring the club back to the top tier and see two years of relative comfort sitting mid-table, achieved despite limited investment from owner Mike Ashley.

Clearly, Benitez is a strong and very capable manager with an ability to maintain Premiership status on a budget far below many other clubs their fans would wish to be competing with.

With so much at stake it would seem logical to extend the Benetiz contract, but it appears the appetite to offer an improved deal and essentially invest in new players is not sufficient and the club is now actively searching for a new coach.

In many ways, football operates in a bubble and rarely reflects the commercial world but here we have an example of the application of a commonly used contractual arrangement however in this occasion it has worked against the club’s owners.

When it comes to deciding on the contractual basis for your employers many will opt for a traditional employment contract but when business is more fluid and need for a resource either seasonal or time-limited in other ways there are two main options.

  1. Fixed Term Contract – such as Benitez
  2. Temporary Contract – more often used for lower-paid seasonal workers.

Fixed Term Contract

Typically, a business will use fixed-term contracts when they have a very specific resourcing requirement over a defined period. This may be to provide maternity cover, someone on long term sickness absence or to manage a project.

The fixed-term contract will be set up between the employer organisation and the contractor/ fixed-term employee and is used by organisations when they have a specific end date for the work required. The contract will include the length of tenure required to fulfil the terms. There may be an option to serve notice to quit before the end of the contract but if no such option exists the contract will automatically expire on the end date stipulated.

By contrast, a temporary contract provides a resource for short term periods of staffing requirements. Temps can leave on short notice and they are often paid by an agency rather than directly by the employer. The employer will contract with the agency for the supply of such temporary workers.

Employer Benefits

  • Often a wider range of available talent for fixed-term gigs enabling access to a larger more varied pool of talent.
  • The flexibility of meeting business demand without committing to a standard full-time employment contract.
  • Planned or unscheduled departures of staff who will return can be covered without concerning the incumbent role holder.
  • Can be quicker than the normal recruitment process
  • Helps manage budgets with the certainty of contract terms
  • Option to switch to permanent employment as and when the need arises.

Employee Benefits

  • Many fixed-term contract applicants don’t appreciate that they have the same rights as a permanent employee entitled to; the same pay, working con redundancy or dismissal and to be informed of permanent roles within the company.
  • Occasionally, if the work is highly specialised or skills in short supply the employee may be paid on a higher equivalent rate to a full-time employee to accommodate the short term tenure.
  • Very often, if it suits the employee and employer the contract can be extended or the arrangement made permanent. Something that won’t be happening in either case with Rafa Benitez.
  • If you are concerned about the appropriate use of Fixed Term Contracts or any contractual arrangement please feel free to drop us a line.

Call Robert Gibson or Sally Lomas Fletcher on 0191 2328451 or e-mail sallyfletcher@samuelphillips.co.uk

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