The Regime of Fixed-Term Employment Contracts
An employment contract is concluded orally or in writing, for a fixed or indefinite term. Where the duration of the employment relationship exceeds 1 month, written form is mandatory. Conclusion for a fixed term is, as a rule, permissible only on a closed list of grounds — the legislator's response to the abusive use of term contracts. In other words: the rule is an open-ended contract, and the exception is a fixed term.
An employer choosing a fixed term must justify that choice by a ground provided by law. Otherwise the contract is deemed concluded for an indefinite term — an automatic consequence that does not depend on the parties' agreement. This makes the existence of a statutory ground the central question of every dispute over term contracts.
Grounds for Conclusion for a Fixed Term
Except where the term of the contract is 1 year or more, an employment contract may be concluded for a fixed term only where: work of a specific volume is to be performed; seasonal work is to be performed; the volume of work temporarily increases; an employee temporarily absent from work due to suspension of the employment relationship is replaced; the contract provides for the wage subsidy defined by the Law on the Promotion of Employment; or another objective circumstance justifies fixed-term conclusion.
Where the term of the contract exceeds 30 months, or where the employment relationship continues as a result of two or more consecutive fixed-term contracts and its duration exceeds 30 months, the contract is deemed concluded for an indefinite term. Consecutive contracts are deemed to exist where the existing contract was continued immediately upon expiry, or the next contract was concluded within 60 days of the expiry of the first.
The Start-Up Exception
The restrictions do not apply to an entrepreneur where 48 months have not passed since its state registration — a start-up enterprise — and it satisfies additional conditions set by the Government, provided that the duration of the fixed-term contract may not be less than 3 months. The exception does not extend to an entrepreneur created as a result of reorganisation, transfer of assets, or a sham transaction — the law here targets abusive schemes.
Where an employment relationship started within the 48-month period and continues after its expiry, it becomes an open-ended contract. The employer is also obliged to inform an employee hired for a fixed term about existing vacancies, so that he has, like other employees, an equal opportunity to occupy positions within the framework of open-ended contracts.
Content and Termination
The essential terms of an employment contract are: information about the parties; the date of commencement and the duration of the relationship; working and rest time; the place of work; the position and type of work; remuneration and the manner of payment; the rules for overtime pay; leave; the procedure for termination; and, where relevant, the provisions of collective agreements. At the employee's request the employer is obliged to issue a certificate of employment.
Among the grounds for termination, central for fixed-term contracts are the expiry of the term and the completion of the work provided. Others include: economic, technological or organisational changes necessitating a reduction of the workforce; agreement of the parties; the employee's voluntary departure in writing; inadequacy of qualification or skills; gross or repeated breach of duties; prolonged incapacity — where it exceeds 40 consecutive calendar days or 60 calendar days in aggregate within 6 months; death; liquidation; and other objective circumstances.
Disputes and Defence Routes
Disputes on fixed-term contracts arise regularly: upon expiry the employer ends the relationship, while the employee believes an open-ended contract should have been deemed to exist. Decisive here is the analysis of the moment of conclusion: whether a permissible ground existed, whether the 30-month and consecutiveness rules were observed, and whether the start-up exception was applied correctly.
Practical advice for the employee: record the term of the contract, the start date and the chronology of repeat conclusions; request the employment certificate; monitor notification of vacancies. For the employer: justify every fixed-term conclusion in writing on a ground from the closed list — otherwise you risk automatic conversion to an open-ended contract.
Frequently Asked Questions
When is a fixed-term contract permissible?
Only where a statutory ground exists — specific-volume or seasonal work, temporarily increased volume, replacement, subsidy, objective circumstance — or where the term exceeds 1 year.
When does the contract become open-ended?
Where the term exceeds 30 months, or consecutive conclusion pushes the relationship beyond 30 months, or no ground existed at all.
What is consecutive conclusion?
Immediate continuation upon expiry of the existing contract, or conclusion of a new one within 60 days of expiry.
Who may use the exception?
A start-up — an entrepreneur within 48 months of registration meeting additional conditions; minimum term 3 months. Entities created by reorganisation or sham transactions — no.
How We Help on Legal.ge
The Legal.ge team defends both employees and employers in fixed-term contract disputes: we assess the qualification, reconstruct the chronology and represent interests in court. Contact us at an early stage of the dispute.