The law does not allow a fixed term" contract to be used as a sham.
You can have a fixed term contract if it is absolutely necessary for the job such as a specified student job over a fixed period, or if the work is for a particular task.
But you just cannot say . . . "This contract is month to month" and then think that the contract can be ended after one month for no good reason.
Also, the contract MUST be in writing and MUST contain the reasons for it being a fixed contract.
Fixed term agreements must be drafted carefully to ensure that they are enforceable, and crystal clear how and when they will terminate.
The Employment Relations Act 2000 imposes important requirements on employers who want to take on staff for a fixed term.
Before an employer and an employee can agree on a fixed term, the employer:
must have genuine reasons, based on reasonable grounds, for seeking fixed term employment; and
must tell the employee when or how their employment will end, and the reasons why their employment will end in that way.
Section 66 of the Employment Relations Act 2000 deals with the issue.
Section 66 – Employment Relations Act 2000
Fixed term employment
(1) An employee and an employer may agree that the employment of the employee will end —
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