Today, employment contracts are generally divided into fixed-term and open-ended (indefinite) contracts. An open-ended employment contract has no predetermined end date or termination date and is considered the standard form of employment. However, labor law allows fixed-term employment contracts under certain conditions and for specific situations. So what is a fixed-term contract? How many times can a fixed-term employment contract be renewed?
Renewal of Employment Contracts
A fixed-term employment contract is a written agreement concluded for work that will be completed within a defined period or under specific, objective circumstances that distinguish it from open-ended employment. The default and generally accepted form is the open-ended contract; fixed-term contracts are exceptional. For a fixed-term contract to be legally valid, there must be an objective reason, a defined task or job, and the contract must be in writing.
When a fixed-term employment contract is renewed, certain conditions must be met. Upon the expiration date specified in the contract, the agreement may be renewed at the request of either the employee or the employer. How many times can a fixed-term employment contract be extended? Generally, it can be extended only once. The terms that existed in the first contract remain in effect; if those terms are not preserved during renewal, the contract may be treated as an open-ended employment contract. However, if there is a substantial objective reason, the employment contract may be renewed more than once. According to Article 11 of the Labor Law, without a substantial reason, consecutive or chained fixed-term contracts cannot be concluded repeatedly. If such chaining occurs without justification, the contract will be considered an open-ended employment contract from the beginning.
Fixed-term contracts are commonly used for seasonal work, short-term promotional campaigns run by businesses, events such as festivals, fairs and exhibitions, situations where a sudden surge in demand cannot be met by existing staff, or to temporarily fill the position of a staff member who is absent. In these and similar circumstances, employers typically opt for fixed-term employment agreements.
The main difference between fixed-term and open-ended contracts is that fixed-term contracts generally do not grant the employee the right to reinstatement. In fixed-term contracts, the employer provides job security only for the duration of the agreed term; when the contract expires and is terminated at its end date, job security protection ends accordingly. However, if it is determined that a contract was concluded with the intent to avoid granting reinstatement rights to the employee, the contract may be reclassified as an open-ended employment contract, which restores the employee’s right to reinstatement.