Term Contract Employment

What are the benefits you must offer and how you can treat term contract employees fairly.

What Is Term Contract Employment

Term contract employment refers to the hiring of individuals on fixed-term contracts. These contracts terminate upon expiry of a specific term or period (such as a date), unless it is renewed.

Why It Matters

If your term contract employee is covered by the Employment Act (EA), and has worked for at least 3 months, you must provide statutory leave benefits such as annual leave and medical leave. Refer to Annual Leave Eligibility and Entitlement for more information.

You should also provide other benefits fairly as satisfied employees are more dedicated and productive.

What You Must Do to Be Fair and Compliant

If your employees are covered by the Employment Act , you must provide the following.

Leave Benefits

You must provide leave benefits if your employee has provided continuous service for 3 months or more. Continuous service refers to term contracts lasting 14 days or more, which are renewed within 1 month from the end of the previous contract. The calculation of continuous service includes changes in terms and roles (e.g. role change from term contract to permanent employment).

For example, Employee A finishes his first term contract of 25 days. His second contract begins 10 days later and lasts 24 days. He then takes a break of 20 days and starts a third contract of 2 months.

Criteria for leave benefits Scenario for Employee A Was criteria met?
Total length of service exceeds 3 months He delivered more than 3 months of service (25 days + 24 days + 2 months). Yes
Each term contract lasts 14 days or more Each of his contracts lasted 14 days or more (25 days, 24 days and 2 months respectively). Yes
Length of break between contracts is less than 1 month Each break between his contracts was less than 1 month (10 days and 20 days respectively). Yes

As employee A served more than 3 months of continuous service, he is entitled to the following benefits under the Employment Act and the Child Development Co-Savings Act:

  • Annual leave
  • Sick leave
  • Paternity leave
  • Adoption leave
  • Child-care leave and extended child-care leave

If you are unable to provide annual for any reason (e.g. nature of job), you should compensate employees accordingly by paying for leave entitlements in cash instead.

Notice Period

In cases of early termination or non-renewal, you should provide a notice period that is proportional to the total length of service. If your employee has delivered continuous service in earlier term contracts, include the duration of those contracts when calculating the total length of service.

Total length of service Notice period shall not be less than
Less than 26 weeks 1 day
At least 26 weeks but less than 2 years 1 week
At least 2 years but less than 5 years 2 weeks
At least 5 years 4 weeks

Tripartite Guidelines

Refer to the Tripartite Guidelines on Fair Employment Practices to ensure that you abide by the guidelines on all the relevant practices.

How to Be Progressive

You can go beyond the practices presented here by providing training to your term contract employees. This would help them to perform their job more effectively. Examples of training include on-the-job training, online courses and workshops. If you offer training and meet all of the guidelines above, you can adopt the Tripartite Standard on Employment of Term-Contract Employees to distinguish your organisation.

You can also browse our resource collection to get tips, tools and ideas and learn from case studies and interviews with progressive employers.