How to Extend a Fixed-Term Contract
Extend a fixed-term contract by agreeing a new end date in writing before the current term expires. For employment contracts, be aware that four or more years on successive fixed-term contracts gives the employee permanent employee rights.
Last updated: February 2025
Step-by-Step Guide
Review the existing contract for extension provisions
Check whether the contract includes an option to extend or a renewal clause, and what notice is required.
- •Act before the expiry date to avoid accidental termination or implied renewal.
Agree the new terms
Confirm the extended end date and whether any other terms change, such as pay or scope.
- •If terms change significantly, consider drafting a new contract instead.
Draft and sign the extension letter or amendment
Write a brief document confirming the extension period, the new end date, and that all other terms remain unchanged.
- •Reference the original contract by date and parties.
Consider the four-year rule for employees
Under the Fixed-term Employees Regulations 2002, employees on successive fixed-term contracts for four or more years become permanent employees unless the employer can justify continued fixed-term use.
- •Track cumulative fixed-term service carefully.
Legal Requirements
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 provide that an employee on successive fixed-term contracts for four or more years becomes a permanent employee automatically, unless the use of a fixed term can be objectively justified. Fixed-term employees must not be treated less favourably than permanent employees.
Common Mistakes
Template / Example
When to Get a Solicitor
If the employee is approaching the four-year cumulative limit, if you need to justify continued fixed-term use, or if the extension involves significant changes to terms.
FAQ
What happens if a fixed-term contract expires and the employee keeps working?
The employee is likely to be considered a permanent employee on an implied contract with the same terms. They would then have full permanent employee rights including unfair dismissal protection.
Can I keep renewing a fixed-term contract indefinitely?
In practice, no. After four years of successive fixed-term contracts, the employee automatically becomes permanent unless you can objectively justify the fixed-term arrangement.
Let AccountsOS handle this for you
Our AI generates UK-compliant contracts and guides you through every step. From £10/month.
Get Started FreeThis is guidance, not legal advice. Consult a solicitor for complex matters.
View all how-to guides