If you do not follow the legal requirements, you may end up with a permanent staff member and not the fixed term arrangement you wanted.

As a general rule, a fixed term agreement that comes to an end through the passage of time is not classified as a dismissal. Under the Employment Relations Act 2000, before there can be a fixed term agreement, employers must:

1. Have a genuine reason for ending the employment in that way; and
2. Advise the employee of when or how his or her employment will end and reasons for his or her employment ending in that way.

A recent decision of the Court of Appeal confirms that an employer must comply with both requirements if the agreement is to be considered a fixed term agreement.

The Court decided that employers must have a genuine reason for specifying that the employment will end in that way, and advise the employee of when and how the employment will end, and why it will end in that way.

In that case there was a genuine reason for ending the agreement and the employee had been advised that the agreement was for a fixed term. However when the agreement was renewed, the employer failed to advise the employee again of the reasons for the nature of the agreement and, therefore, he became a permanent employee.