Fixed-term employment contracts: a smart option to enhance the flexibility of your workforce

Fixed-term contracts have characteristics that make them favorable to many employers and employees alike. On the one hand, they provide companies with the ability to strategically plan their human resources without being tied to long-term contracts that may not align with the speed of economic and technological changes. On the other hand, they give employees the opportunity to gain diverse experiences and develop their skills in different work environments, while maintaining the flexibility to choose opportunities that align with their professional and personal aspirations.

However, fixed-term contracts come with their own challenges, requiring both companies and employees to have a clear understanding of their terms and conditions to ensure the rights of both parties are upheld and to avoid any confusion that may arise from misunderstandings or lack of clarity in the agreements made.

Everything you need to know about fixed-term employment contracts:

Fixed-term contracts are employment contracts used to meet specific and temporary needs of companies, differing from permanent contracts in that they have a specified duration or end upon completion of a specific task. Here are some important details about these contracts:

1. Temporary Contract:

   • Has a specified duration or is linked to the completion of a specific task.
   • Its duration cannot exceed 90 days and can be renewed by agreement between the parties.

2. Seasonal Contract:

   • Is linked to a specific season and starts and ends with that season, such as contracts during the Hajj season.

3. Casual Contract:

   • Used for work that does not enter into the usual business activity and must not exceed 90 days.

4. Part-Time Contract:

   • Regulates work for a non-full-time worker for hours less than half of the usual daily working hours.

5. Training and Qualification Contract:

   • Commits the employer to qualifying or training a person for a specific profession, and must be in writing and specify the type of profession, the duration of the training, and the reward.

6. Contract for Specific Task:

   • Regulates the performance of a specific task or work and ends upon completion of the agreed-upon work.

These contracts are useful for companies that need flexibility in hiring for specific projects or to cover seasonal work. However, companies and employees must understand the terms of these contracts well to ensure the rights of both parties are protected and to avoid any legal issues that may arise.

The Difference Between Fixed-Term and Indefinite Employment Contracts:

Fixed-Term Employment Contract:

• A fixed-term employment contract is an agreement between an employer and an employee that explicitly specifies the contract's duration. This type of contract can be temporary (such as contracts for a specific season) or for a specific project. The end date of the contract is predetermined, and there are usually specific conditions for early termination of the contract.

Benefits of Fixed-Term Employment Contracts:

• Work Flexibility: Employers can hire workers for a specific period without committing to permanent employment.
• Lower Cost: Fixed-term contracts can be less costly than permanent contracts.
• Avoidance of Long-Term Commitments: Employees can experience different fields without committing to a long-term job.

Challenges of Fixed-Term Employment Contracts:

• Professional Instability: Employees may feel professionally unstable due to not committing to a permanent job.
• Lack of Additional Benefits: Employees may not receive additional benefits like health insurance or paid leave.

Indefinite Employment Contract:

• An indefinite employment contract is a type of contract in the Saudi system. It is characterized by not specifying a fixed duration, giving the worker greater job stability. The indefinite contract is always valid, and the employer or employee may not terminate it without just cause. The contract can be terminated by the worker or the employer at any time, but subject to some legal restrictions. This type of contract is the most common, providing flexibility for both parties and does not require regular renewal as with fixed-term contracts.

Challenges of Indefinite Employment Contracts:

• Instability: The worker or employer can terminate the contract at any time, meaning job stability may be threatened.
• Social Rights: Workers under indefinite contracts may lack some social rights available to fixed-term workers, such as paid vacations and health insurance.
• Psychological Stress: Uncertainty about the job's continuity can lead to psychological stress for the worker.

Benefits of Indefinite Employment Contracts:

• Flexibility: The indefinite contract gives both the worker and the employer flexibility to adjust the contract's terms and terminate it.
• Economic Cost: Employers can save additional costs such as health insurance and paid leave.
• Automatic Renewal: The indefinite contract is always valid, meaning it does not require periodic renewal.

In conclusion, the indefinite employment contract is a common option that combines flexibility and challenges. Workers and employers should consider their personal and professional circumstances before deciding on this type of contract.