What is a fixed-term contract?
A fixed-term contract is an employment contract that ends on a set date, when a specific task is finished or when a defined event happens, such as an absent employee returning. Fixed-term employees are employees, not contractors, and in most countries they have the same pay and working conditions as comparable permanent staff. Many countries limit how long fixed-term contracts can last or how often they can be renewed.
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- Covering parental leave or long-term sickness.
- Seasonal peaks or a temporary increase in work.
- Projects with a defined end date.
- Roles funded for a limited period.
- Testing a new market before committing to permanent headcount.
Some countries, such as France and Mexico, only allow fixed-term contracts for reasons listed in the law. Others, such as Germany and the UK, allow them more freely but limit repeated use.
Fixed-term contract rules by country
| Country | Maximum length | Notes |
|---|---|---|
| United States | No statutory limit | Employment is at will unless the contract says otherwise. |
| United Kingdom | 4 years of successive contracts | After 4 years’ continuous employment on successive fixed-term contracts, the employee becomes permanent unless continuing on a fixed term is objectively justified. |
| Germany | 2 years without an objective reason | Up to 3 extensions within the 2 years. Up to 4 years in the first 4 years of a new company, and up to 5 years for employees aged 52 or over in some cases. Must be in writing. |
| France | 18 months including renewals | Renewable twice. Allowed only for specific reasons listed in the law, such as replacing an absent employee or a temporary increase in activity. 9 or 24 months in some cases. |
| India | No statutory maximum | Fixed-term employees must get the same hours, wages and benefits as permanent staff doing the same work, and qualify for gratuity after 1 year. |
| Brazil | 2 years | Can be extended only once. A contract extended more than once becomes indefinite. |
| Mexico | Only where the work requires it | For example, temporary work or replacing an absent worker. Otherwise the employment is indefinite. |
| Japan | 3 years per contract | 5 years for highly skilled experts and workers aged 60 or over. After renewals totalling more than 5 years, the employee can request an indefinite contract. |
| South Korea | 2 years | An employee kept on beyond 2 years is treated as having an indefinite contract, with some exceptions. |
Figures checked in November 2026 against official sources listed at the end of this page. Hungary, South Africa and other countries have their own limits, covered in our country glossary terms.
Rights of fixed-term employees
In the EU, the UK and many other countries, fixed-term employees must not be treated less favourably than comparable permanent employees just because their contract is temporary. That covers pay, leave, benefits and access to training. They build up length of service in the same way, which matters for notice, severance and benefits that depend on tenure. Some countries add specific payments at the end of the contract, such as France’s end-of-contract allowance.
What happens when a fixed-term contract ends?
The contract ends on its agreed date without notice in many countries, but not everywhere. Some laws treat the expiry of a fixed-term contract as a dismissal, which can trigger notice, consultation or severance pay. If the employee keeps working after the end date without a new contract, many countries treat the employment as permanent from then on. Renewing a contract beyond the legal limits has the same effect.
Fixed-term contract vs permanent contract
A permanent (indefinite) contract has no end date and ends only by resignation, dismissal or retirement, with notice. A fixed-term contract gives the employer flexibility but can cost more, because some countries charge higher contributions or end-of-contract payments, and converting a contract by mistake can turn a temporary hire into a permanent one with full protection.
How TopSource handles fixed-term employment
When TopSource employs your team through our Employer of Record service, we check whether a fixed-term contract is allowed for your reason in that country, set the term and renewals within the legal limits, and track end dates so that each contract is renewed, converted or ended on time.
Frequently asked questions
What does fixed-term contract mean?
It is an employment contract with an end date, or one that ends when a task is completed. The employee is a regular employee for the duration of the contract.
How long can a fixed-term contract last?
It depends on the country: 2 years without a reason in Germany and South Korea, 18 months in France, 2 years in Brazil and 3 years per contract in Japan. The UK and the United States set no maximum for a single contract.
Can a fixed-term contract be terminated early?
Only if the contract or local law allows it. In several countries an employer that ends a fixed-term contract early without a valid reason must pay the salary for the rest of the term.
Do fixed-term employees get the same benefits as permanent staff?
In most countries, yes. The law prohibits less favourable treatment of fixed-term employees compared with permanent employees doing similar work.
Does a fixed-term contract become permanent?
It can. Renewing beyond the legal limits, or letting the employee keep working after the end date, turns it into a permanent contract in many countries, including the UK after 4 years and South Korea after 2 years.
Related terms
Sources
- UK: Fixed-term Employees Regulations 2002, regulation 8
- Germany: Part-Time and Fixed-Term Employment Act, section 14
- Service-Public.fr: Renouvellement d’un CDD
- Brazil: Consolidação das Leis do Trabalho, articles 445 and 451
- Mexico: Ley Federal del Trabajo
- Japan: Labor Standards Act, Article 14
- Korea: Act on the Protection, etc. of Fixed-term and Part-time Employees
- India: Ministry of Labour and Employment (Labour Codes)