Fixed-Term Contract: What Does the Law Say About Its Applications?

A fixed-term contract (FTC) is a legal solution that allows companies to meet temporary or exceptional needs. Regulated by labor law, this type of contract differs from an indefinite-term contract (ITC) due to its temporary nature.

Whether for a replacement, an increase in activity, or a seasonal job, the use of an FTC follows strict rules.

Understanding its specificities, conditions of use, duration, and obligations is essential for both the employer and the employee. Discover everything you need to know about FTCs, their advantages, and the pitfalls to avoid.

Summary

• What is a Fixed-Term Contract (FTC)?
• Types of FTCs
• Duration and renewal of an FTC
• Employee rights under an FTC
• Sanctions and risks of reclassification as an ITC
• Early termination of an FTC
• FAQ

Definition and Objectives of the FTC

A fixed-term contract (FTC) is a specific employment contract with a limited duration, designed to meet the temporary needs of a company. Unlike an indefinite-term contract (ITC), it cannot be used to permanently fill a position related to the company’s normal and ongoing activity, in accordance with Article L.1242-1 of the Labor Code.

An FTC can only be concluded under specific and legally regulated circumstances, including:

• Replacing an absent employee: This applies when an employee is on sick leave, parental leave, maternity leave, or in a temporary suspension of their contract. It can also be used for cascading replacements, where an FTC employee fills a position so that an ITC employee can replace another absent colleague.

• Temporary increase in activity: This applies when a company experiences an exceptional increase in workload, such as a major order, a peak season, or fluctuating sales cycles.

• Seasonal or customary jobs: In industries such as tourism, agriculture, or audiovisual production, where ITCs are not commonly used, FTCs help meet specific workforce demands.

These legal provisions are governed by Article L.1242-2 of the Labor Code, which imposes strict conditions. Any violation of FTC regulations may result in automatic reclassification as an ITC, often to the employer’s disadvantage.

This means the company could be required to provide the employee with the same benefits and job security as an ITC, including long-term employment protection.

Types of FTCs

Fixed-term contracts (FTCs) come in various forms, each tailored to specific situations and temporary workforce needs. Below are the main types of FTCs and their characteristics:

Replacement FTC

This type of contract compensates for the temporary absence of an employee in cases such as:

• Illness, maternity or parental leave, work-related accidents
• Temporary suspension of a work contract for another reason
• Cascading replacements, where an FTC employee is hired to fill a position vacated by an ITC employee who takes over another absent worker’s role

Since April 2023, certain industries can use multi-replacement FTCs, introduced by Article L.1242-3-1 of the Labor Code. This experimental measure, valid until April 13, 2025, allows a single FTC to cover multiple employee absences, simplifying HR management.

FTC for Temporary Increase in Activity

This contract is designed to handle a temporary and exceptional rise in business activity, such as:

• A large order requiring additional workforce
• Cyclical production variations due to market demand

However, this type of FTC cannot be used to address a permanent or structural increase in activity. According to Article L.1242-2 of the Labor Code, it must remain a short-term solution, or else the contract risks reclassification as an ITC.

Customary FTC

This FTC applies to industries where ITCs are uncommon, such as:

• Audiovisual production, live entertainment, film production
• Tourism, hospitality, or professional sports

Its legal framework is established by Decree No. 99-433 of May 28, 1999, listing the applicable industries. This contract suits temporary, repetitive jobs but remains subject to strict duration requirements.

Seasonal FTC

This contract applies to jobs with predictable, cyclical work patterns tied to seasonal or lifestyle trends, such as:

• Agricultural harvesting or grape-picking
• Seasonal tourism activities in summer or winter

According to labor law, these jobs must be recurrent and occur at fixed periods each year.

Objective-Based FTC

Created by the June 25, 2008 law, this contract is reserved for executives and engineers hired for a specific mission with an uncertain duration.

It ends once the objective is achieved, provided a pre-agreed notice period is met.
This contract is commonly used in technical or industrial sectors requiring specialized skills for complex projects.

Each type of FTC is regulated by strict laws, and failure to comply may result in serious penalties, including automatic reclassification as an ITC.

Duration and Renewal of an FTC

The duration of a fixed-term contract (FTC) is strictly regulated by labor law and depends on the contract type and purpose. Here are the key rules:

Maximum Duration of an FTC

An FTC is generally limited to a maximum of 18 months, including renewals, as per Article L.1242-8 of the Labor Code. However, exceptions allow for extended durations in specific cases:

• 9 months: If the contract is signed while awaiting the arrival of a new ITC employee or for urgent safety-related work.
• 24 months: For international assignments, the permanent departure of an employee, or an exceptional export order requiring special resources.
• 36 months: For objective-based FTCs, exclusively for executives and engineers.

Exceeding these limits results in automatic reclassification as an ITC.

Renewal of an FTC

An FTC can be renewed twice unless otherwise stated in a collective agreement or sector-specific regulations. The renewal must meet these conditions:

• It must be stipulated in an initial renewal clause or confirmed through an addendum signed by both parties.
• The total duration, including renewals, must not exceed the legal or contractual limit.

Failure to comply, such as unauthorized renewal or exceeding the maximum duration, leads to automatic reclassification as an ITC, in line with Article L.1245-1 of the Labor Code.

Consequences of Non-Compliance

If the FTC duration or renewal rules are violated:

• The employee can request reclassification as an ITC through the labor court.
• The employer may be ordered to pay damages and an indemnity equal to at least one month’s salary, as per Article L.1245-2 of the Labor Code.

Compliance with these obligations is crucial to avoid legal disputes and ensure contractual security.

Salary and Employee Rights Under an FTC

Employees on an FTC have the same rights as ITC employees. The principle of equal treatment applies to salary, benefits, and paid leave (Article L.1242-15).

End-of-Contract Compensation

• Job insecurity allowance: 10% of the total gross salary, unless the employee refuses an ITC or the FTC transitions into an ITC (Article L.1243-8).
• Compensatory leave allowance, calculated under Article L.3141-26.

Sanctions and Risks of Reclassification

Failure to comply with FTC regulations can result in severe penalties, with reclassification as an ITC being the most common.

Reasons for FTC Reclassification as an ITC

Reclassification occurs when an FTC fails to meet legal requirements, including:

• Unclear or missing justification: Article L.1242-12 mandates that the contract must clearly state its purpose. If not, it is automatically reclassified as an ITC.
• Lack of a written contract: The FTC must be in writing and signed by both parties. Failure to do so results in automatic reclassification as an ITC, as per Article L.1242-13.
• Exceeding duration limits or improper renewal.