A fixed-term contract sets a specific end date for the employment relationship. In theory, it gives employers flexibility. In practice, most countries heavily regulate when you can use them, how many times you can renew, and what happens when they expire.
France limits fixed-term contracts (CDD) to 18 months including renewals, and you need a valid reason — like covering maternity leave or handling a temporary spike in work. Germany allows them for up to two years without justification, but after the third renewal or the two-year mark, the contract automatically converts to permanent. Brazil caps them at two years. Spain’s 2022 reform made fixed-term contracts nearly impossible to use for ongoing work. The pattern: legislators worldwide are tightening rules because employers were using rolling fixed-term contracts to avoid providing permanent employment protections.
Renewal limits vary more than most employers realize. The Netherlands allows three consecutive fixed-term contracts over a maximum of three years before automatic permanent conversion kicks in. Italy permits up to four renewals within 24 months, but only the first contract can be without a specific reason — renewals require justification. South Korea limits fixed-term contracts to two years total. Japan’s rules are more flexible, but a 2013 amendment gives employees working more than five years the right to request permanent status.
The consequences of exceeding these limits are rarely just a formality. In most EU countries, an automatically converted contract grants full permanent-employee protections: notice periods, severance entitlements, and unfair dismissal claims. That conversion happens by operation of law — you don’t get to agree or disagree. The ILO’s Termination of Employment Convention (C158) establishes the international framework that most countries draw from when regulating fixed-term work and conversion thresholds.
Why It Matters for EOR
When hiring through an EOR, fixed-term contracts are common for the first engagement because both sides want flexibility. But your EOR should warn you well before a contract hits the legal conversion threshold. If they don’t, you may find that your “temporary” hire became a permanent employee with full dismissal protections — and you never agreed to that.
Ask your EOR three questions upfront: what’s the maximum duration for fixed-term contracts in this country, how many renewals are allowed, and what happens automatically at the conversion point? Good providers like Deel and Oyster build these alerts into their platform. Others require you to track it yourself — which defeats part of the purpose of using an EOR.
If you’re hiring for roles that are clearly ongoing, skip the fixed-term contract entirely and start with permanent employment through the EOR. It avoids the contractor vs. employee classification questions that rolling fixed-term contracts can create, and it gives your employee more stability — which matters for retention in competitive markets.
For practical use of this concept, see EOR vs PEO explained and remote jobs by country.
Further Reading
- Hiring in Spain: fixed-term contract restrictions after the 2022 reform — Spain’s labor reform made fixed-term contracts nearly impossible for ongoing work, a cautionary example for employers.
- Hiring in the Netherlands: automatic conversion rules and dismissal protections — Dutch law converts fixed-term contracts to permanent after specific renewal thresholds, with strict dismissal protections.
- Contractor vs. employee: how contract type affects classification risk — Rolling fixed-term contracts can blur the line between temporary and permanent employment, creating classification exposure.
- EOR comparisons
- Read Deel review
- EOR vs PEO explained
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