Is it possible to conclude a fixed-term employment contract with reference not to the calendar date, but to the fact of completion of the contract of the employer with its counterparty?

In a changing economy, entities providing highly specialized services as well as outstaffing companies want to be able to dismiss an employee if the line of business or agreement ends and there is no work to be done.

One of the options is to conclude a fixed-term employment agreement. This legal design will be convenient for the employer, because it gives the opportunity not to pay employee for the working hours, if he/she actually does not work and does not create “added value” for the employer.

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Position of labor legislation in relation to fixed-term agreements

According to the labour law of Ukraine, all employment agreements can be divided into fixed-term and indefinite ones. We will talk about fixed-term agreements, because this type of agreements is the best choice to address the situation covered above.

Today, there are two types of fixed-term employment agreements:

• linked to a specific end date of such an agreement;
• linked to a specific workload.

Depending on the nature of the relationship between the counterparty and the employer, the latter may specify the period of the fixed-term employment agreement with its employees.

What can happen if the period is not clearly specified in the agreement?

In case of failure to clearly specify the period of the employment agreement, such agreement may be considered invalid in terms of determining the period of the agreement.

Thus, according to the legal position of the Supreme Court of Ukraine dated February 18, 2019 in case No. 641/9895/15-ц the conclusion of an employment agreement for a certain period in the absence of conditions specified in the second part of Article 23 of the Labor Code of Ukraine is the basis for its invalidation in terms of determining the period of the agreement. That is, such agreements will be deemed concluded for an indefinite term from the date of their conclusion (open-end agreements).

The indication of a clear period in the employment agreement is mandatory. However, depending on the specifics of cooperation with the counterparty, the employer can specify such a period in various ways.

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What to do when it is impossible to clearly define the period of cooperation with an employee?

There are several options that can be used to conclude an employment agreement:

1. The period can be determined by circumstances or event. Such an event may be the duration of the agreement concluded between and by the employer and its counterparties.

An example confirming the possibility to specify the duration of the agreement before the event, which will inevitably come, is the decisions of the Supreme Court of Ukraine. For example, in cases No. 235/2741/19 or No. 714/1129/18, which recognize the following events:

• The return to work of a female employee from maternity and childcare leave;
• Removal of a person from work in connection with a call for active fixed-term military or alternative service, election as a people’s deputy or election to an elective office (or performance of a certain volume of work).

2. The period of the employment agreement may be determined by the scope of work performed by the employee. This is confirmed by the decision of the High Specialized Court of Ukraine on consideration of civil and criminal cases dated December 24, 2015 in case No 6-34018sk15 - such a circumstance is recognized as the period of work of the boiler house during the heating period.

3. The period of the employment agreement may be determined by indicating several such circumstances and termination of the agreement, provided that one of them occurs.

What should the agreement specify for its safe conclusion?

If you want to conclude a fixed-term agreement with an employee with reference to the termination of the employer’s agreement with its counterparty, you need to:

• Acquaint the employee with the terms and conditions of the agreement regarding the duration and termination of such an agreement;
• Specify in the employment agreement a mechanism for notifying the employee of the termination of the agreement;
• When concluding an employment agreement for the period of the duration of the employer’s agreement with its counterparty, this period shall be specified both in the employment agreement and in the order on the employee’s employment.

If you have any questions about entering into employment agreements with your employees, don’t hesitate to call us! We will advise you on how to act in any situation and how to optimize the employment relationship in your company.