Terminating a Fixed Term Contract Letter

Terminating a Fixed Term Contract Letter: Everything You Need to Know

A fixed term contract is a type of employment agreement that specifies the start and end date of an employee`s tenure. While these types of contracts are common in industries that rely on seasonal or project-based work, there may come a time when an employer or employee needs to terminate the contract before the agreed-upon end date.

When it comes to terminating a fixed term contract, there are certain legal and ethical considerations that employers and employees should be aware of. In this article, we`ll explore the various scenarios when a fixed term contract may need to be terminated and the steps that should be taken to do so.

Reasons for Terminating a Fixed Term Contract

There are several reasons why an employer or employee may need to terminate a fixed term contract before the agreed-upon end date. These can include:

1. Breach of contract: If one party fails to meet the obligations outlined in the employment agreement, the other party may have the right to terminate the contract early.

2. Mutual agreement: Both parties may agree to end the contract early for various reasons, such as if the employee is no longer able to perform their duties or if the employer has a change in business needs.

3. Employer redundancy: If an employer no longer requires the services of an employee due to business restructuring or financial difficulties, they may need to terminate the contract early.

4. Employee resignation: An employee may choose to resign from their position before the end of their contract, citing personal reasons or better job opportunities elsewhere.

Steps to Terminate a Fixed Term Contract

If an employer or employee needs to terminate a fixed term contract early, there are certain steps that should be followed to ensure a smooth transition. These include:

1. Review the employment agreement: The first step is to review the terms of the employment agreement and ensure that terminating the contract early is allowed and what the notice period and other requirements are.

2. Communicate with the other party: The employer or employee should communicate clearly with the other party about their intentions to terminate the contract early and their reasons for doing so.

3. Provide written notice: If the employment agreement requires written notice of termination, the party initiating the termination should provide a formal letter outlining their intentions and the reasons for ending the contract early.

4. Finalize outstanding work: The parties should work together to finalize any outstanding work or projects before the end of the contract term.

5. Handle financial obligations: Employers should ensure that they have met any financial obligations, such as paying out the employee`s remaining salary and benefits, in accordance with the employment agreement and the law.


Terminating a fixed term contract can be a complex and sensitive issue, requiring a thorough understanding of the legal and ethical considerations involved. Employers and employees should always review their employment agreements carefully and communicate openly and transparently to ensure a smooth transition in the event of early termination. By following these steps, both parties can minimize any potential conflicts and ensure a positive outcome for all involved.