An employment contract — by which an employment relationship is established — may be concluded between the employer and the employee for an indefinite or fixed term.
According to the Labour Act, an employment contract in which the time for which it is concluded is not determined is considered an indefinite-term contract. By such a provision, the legislator has placed the indefinite-term contract as the rule — to which exceptions exist.
Rights of fixed-term employees
An employee who works for a fixed term has all rights from the employment relationship. The only difference is that in their case they are limited to the duration of the contract — which ceases to apply upon expiry of the time for which it was concluded.
When it can be concluded for a fixed term
An employment contract may be concluded for a fixed term — for temporary and specific needs of the employer. Reasons:
- Expiry of a certain period
- Completion of a certain job
- Occurrence of a certain event
Two ways of determining duration
- Absolutely determined — a calendar date, a certain number of days, months or years
- Relatively determined — termination conditional on the occurrence of facts (e.g. completion of a job) — the date need not be determined in advance, but is determinable
Maximum 36 months
The Labour Act provides for a limitation on the employer — regardless of the reasons for which a fixed-term contract has been concluded.
An employer may not conclude one or more contracts with the same employee whose total duration — uninterrupted or with interruptions — exceeds 36 months.
Note: The Act does not limit the number of successive contracts within the 36-month period.
Interruption longer than 70 days
In case of an interruption longer than 70 days — the duration of the contract after the interruption is added to the time the employee has spent in employment with the employer before the interruption. The counting of the 36-month period thus continues.
After 36 months — the rule of indefinite contract
After the expiry of 36 months, if the employee’s employment relationship ends — all future contracts (concluded at any period in the future) must be for an indefinite term.
Exception: if the contract is concluded for one of the reasons from Article 37 of the Act:
- Replacement of an absent employee
- Seasonal work
- Work on a project
- Contract with a director
- Contract with an athlete
- Agency contract for assignment to a user employer
What is NOT counted in the 36 months
- Traineeship (since the purpose of traineeship is professional training)
- The period of contract extension due to pregnancy, maternity and parental leave
What IS counted in the 36 months
- The time of engagement through a temporary agency work provider — to protect against abuse by the employer
Transitional rules (before the entry into force of the Act)
The Labour Act in its transitional and final provisions provides that the 36-month period will also include the time of engagement before the entry into force of the Act — but applies to future contracts and assignment agreements.
Specific examples:
- If, on the day of entry into force of the Act, an employee had a contract longer than 36 months, no automatic transformation will occur into an indefinite-term contract (since the provision only applies to new contracts)
- If engaged for 24 months — may still be engaged 12 months for a fixed term
- If engaged 24 months with the employer — cannot be further engaged through an agency, but directly through an employment contract
- If employed for 12 months — the rest up to 36 months may be both through an agency and directly
Source: Labour Act of Montenegro
