Fixed-Term Period Employment Agreement

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What is

Fixed-Term Period Employment Agreement


An employment agreement lays down the terms of engagement of the employee, including without limitation, job description, reporting relations, the salary, and other obligations the employee may have to the employer and vice versa. 

A fixed-term employment agreement is an agreement entered by employers with employees for a fixed period of time that may be subject to renewal. Through a fixed-term employment agreement, the employee receives an incentive to perform better for the renewal of the agreement and at the same time provides the security of being a salaried employee. 


1.  What’s the difference between a fixed-term employment agreement and a work-for-hire agreement

A fixed-term employment agreement establishes an employee-employer relationship between the parties, whereas in a work-for-hire agreement an independent contractor relationship is established between the parties. 

2.  Is there any legal limit on the number of times a fixed-term employment agreement may be renewed?

There is no specific law dealing with the renewal of a fixed-term employment agreement, usually, the terms of the renewal are negotiated by the parties.

3.  Are there any legislations in India governing employment agreements?

In India there is no specific legislation governing employment agreements, however employment agreements are subject to the Indian Contract Act of 1872. Further, if the employee satisfies the definition of the workman (depends on salary and nature of work), the employment agreement may be subject to labor legislation.

4. Can an employee be prevented from working with or engaging in a competing business post-termination?

An employee may be prevented from working with or engaging in a competing business only for the term of his employment, this period may include the remainder of the employment term where the employment is prematurely terminated by the employee. No employee may be prevented from engaging or working even if it is with a competing business post the termination of the employment agreement as, under section 27 of the Indian contract act 1872, no person may enter into a contract in restraint of trade. 

5.  Is the employment agreement still valid if the employee has lied about his academic qualification or expertise or made false claims?

Under sections 17 and section 18 of the Indian contract act 1872, any contract entered into by parties where one party has committed fraud or misrepresented material facts, the other party may at its option render the agreement void, similarly and the employment agreement may be voided by the employer. 

6.  Can an employer force an employee to perform his obligation towards his work under an employment agreement?

Under section 14 of the Specific Relief Act of 1963, a contract, the performance of which involves the performance of a continuous duty that the court cannot supervise cannot be enforced, hence an employee may not be forced to perform his obligations under an employment agreement, however, the employer may file a suit for recovery of any money paid for the same.