Temporary Vs. Fixed-Term Contract: What Is The Difference?

As a recruiter, I often speak with clients who know they need short-term support but aren’t quite sure whether a temporary or fixed-term contract is the right route to take. And I completely understand why. On the surface, the two can sound interchangeable. But from a hiring, cost and commitment perspective, the difference between them is more significant than most people realise.

Whether you’re covering a team member’s unexpected sick leave or need someone in place for the next nine months of a project, understanding the nuances between these contract types can save you time, money and stress.

In this article, I’ll explain how each option works, what they mean legally and practically and which is likely to suit your needs best.

Let’s start with what each contract type actually means.

What Is a Fixed-Term Contract?

A fixed-term contract is exactly what it sounds like: a contract with a clearly defined start and end date, or one that finishes when a specific event occurs (like the completion of a project or the return of a permanent employee from maternity leave). It gives both the employer and the candidate clarity from the outset about how long the arrangement will last.

From my experience, fixed-term contracts work particularly well when you’re hiring for a known period of time. 

For example: 

• Maternity cover

• A six-month admin project

• Support during a predictable busy season

In these situations, it makes sense to bring someone into your business who’s directly employed, committed for the full duration and integrated into your team from day one.

Most fixed-term hires are employed directly by the company, rather than through a recruitment agency payroll. 

That means they’re typically entitled to the same benefits and protections as permanent staff, including:

• Statutory sick pay

• Holiday entitlement

• Access to company perks

• Pension schemes

• Protection from unfair dismissal

However, some company-specific perks, such as a company car or enhanced pension contributions, may be withheld if there is no business need.

It’s also worth knowing that under UK law, if a fixed-term employee stays with you for four years or more, they may automatically gain permanent employee status unless there’s a legitimate business reason not to.

Another key difference is the level of commitment. Because fixed-term contracts usually come with a notice period (often around one week, but this varies), they provide a little more security and structure for both sides. It’s a real advantage if you need someone to stay the course.

One tip I often give my clients, particularly for contracts longer than six months, is to consider offering a completion bonus. It doesn’t need to be a huge amount, but a financial incentive for seeing the contract through to the end can make a meaningful difference. Candidates appreciate it, and from what I’ve seen, it reduces the risk of someone jumping ship halfway through.

Ultimately, fixed-term contracts are best when you want someone to fully embed into the business, commit to the timeline and take ownership of their responsibilities from the outset.

What Is a Temporary Contract?

A temporary contract is typically used when the duration of the role is uncertain or very short-term. For example:

• You need someone to start immediately

• You need someone to cover an unexpected absence

Unlike a fixed-term contract, it doesn’t always have a clear end date. In many cases, it’s offered on a rolling basis, often week-by-week, and can be extended or ended at short notice.

In most temporary placements, the candidate is employed by the recruitment agency, not by your company directly. That means they’re paid weekly in arrears through the agency’s payroll, usually based on a timesheet approved by the client at the end of each week. From an admin perspective, it’s incredibly straightforward for the hiring business. I’ve spoken more about hiring temps through a temp agency here.

The biggest advantage of temporary contracts is flexibility. You can bring someone on board quickly, with minimal paperwork and scale the hours or duration up or down depending on your needs. There’s no long-term commitment required and, if the assignment ends earlier than expected, you can usually wrap it up with minimal notice, sometimes even same-day.

That flexibility works both ways, though. Temporary workers can also choose to leave with little or no notice, which can understandably cause disruption. That’s why at Oriel Partners, we work with a trusted network of temps who’ve proven themselves across multiple assignments. It gives us a better sense of who’s reliable and who’s likely to commit.

Temporary contracts are especially useful when the role is reactive. For example:

• Providing reception cover at short notice

• Supporting a team during a last-minute event

• Helping with a backlog of admin that’s cropped up unexpectedly.

It’s worth noting that temporary workers, particularly those placed through a temping agency, are protected under the Agency Workers Regulations. After 12 weeks in the same role, they gain the right to equal treatment, meaning their pay, holiday entitlement, and working hours must match those of a permanent employee doing the same job.

In short, if you need someone fast, for an undefined period, and want to keep things low-commitment, a temp can be a brilliant solution. Just be mindful that you’re trading a bit of certainty for that speed and flexibility, and that’s a decision I help my clients weigh up all the time.

Learn more about what temp work actually involves in my article here.

Which Contract Type Should You Choose?

One of the most common questions I get from clients is: “So which one should I go for — temporary or fixed-term?” And the answer is: it depends entirely on your situation. But there are some key patterns I’ve seen over the years that can help guide your decision.

Here’s how I usually break it down:

If You Need Immediate Cover, Go Temporary

If someone’s called in sick, you’ve got an urgent event happening, or your receptionist is off for a few days, you need a temp. Temporary contracts allow you to move quickly and adjust on the fly. I’ve placed temps within hours when needed, and that kind of speed can be a lifesaver.

For example, when one of our clients needed last-minute reception cover during a week of VIP meetings, we had someone in place by 9am the next morning. That just wouldn’t be possible with a fixed-term contract. 

I explore the reasons to hire a temp in more depth in this article.

If You Know the Timeline, Choose Fixed-Term

When you’re covering maternity leave, running a six-month project or just need structured support over a defined period, a fixed-term contract is almost always the better choice. You’ll save on costs, build more commitment from the candidate, and often see better continuity in the role.

Fixed-term hires tend to stay more engaged when they know the expectations from the start, especially if you add a completion bonus. That small incentive can make a big difference in retention.

If You’re Unsure How Long You’ll Need Help, Start Temporary Then Switch

Sometimes the best approach is to begin with a temp and convert to a fixed-term contract later, once the scope becomes clearer. I’ve supported several clients through that route, it allows you to test the waters before committing.

Just keep in mind that switching doesn’t work in every situation. If you keep someone on a rolling temporary contract for too long, it can lead to issues with morale or compliance, especially if they’re effectively doing a fixed-term job.

If You Want to Keep the Role Open for Permanent Hires, Be Strategic

Many candidates in the market for perm roles will take on short-term work to bridge gaps, but they might leave quickly if a permanent job comes up. If you’re hiring into a long-term need, make sure the contract reflects that. Otherwise, you risk losing good talent halfway through.

My Rule of Thumb?

• Less than a month? Temp is probably best.

• One to six months? A fixed-term contract will offer better value and continuity.

• Uncertain or reactive need? Temp to start, then review.

Every business is different, but understanding your goals and how the role fits into the bigger picture makes it much easier to choose the right approach. If in doubt, I always advise clients to think about what would cause more disruption if it changed suddenly: the person or the timeline. That usually leads you to the right answer.

Here’s a quick side-by-side comparison I often share with clients when helping them decide between a temp and a fixed-term contract:

Common Misconceptions I Hear as a Recruiter

Over the years, I’ve lost count of how many times I’ve had to untangle contract confusion, and honestly, I don’t blame anyone. Employment terms can be full of overlap, especially when you’re hiring under pressure. Here are a few of the most common myths I hear, and the truth behind them:

“Temporary and fixed-term mean the same thing.”

Not quite. While both are short-term hiring options, a fixed-term contract has a defined end date or task-based conclusion, and typically comes with a formal employment contract. A temporary contract, on the other hand, is often open-ended or rolling, with less clarity around the timeline, and usually managed by a recruitment agency.

While all fixed-term contracts are technically temporary, not all temporary contracts are fixed-term.

“Temps aren’t entitled to benefits.”

This one crops up surprisingly often. From day one, agency temps are covered by basic employment protections. And once they’ve been in the same role for 12 weeks, the Agency Workers Regulations kick in, giving them equal treatment in terms of pay, holiday entitlement and working hours.

“Fixed-term contracts can’t be ended early.”

Actually, they can, but it depends on the contract terms. Most fixed-term contracts include a notice period clause (often around a week), which allows either party to exit early. That said, ending a fixed-term contract early without a proper process can lead to legal risk, so I always advise clients to check the wording carefully.

“Temps are more likely to walk out.”

This isn’t always true. Yes, temps can leave with short notice, but when you work with a reputable agency that knows its candidate base well (like we do at Oriel Partners), you’re much less likely to be caught out.

We build relationships with our temps. Many of them have worked with us for years, so we know who’s dependable and who’s not. That insight makes all the difference. Here are some of the reasons candidates tell us they like temping.

“A temp is always more expensive.”

It’s true that the hourly rate for a temp usually includes additional costs to factor in holiday pay, National Insurance, pension contributions and agency margin. But that doesn’t always mean temps are more expensive overall.

If you only need someone for a few days or sporadically, a temp could still be more cost-effective than onboarding a fixed-term employee for longer than necessary.

Frequently Asked Questions

What happens after 4 years on a fixed-term contract?

If someone stays on successive fixed-term contracts for four years or more, UK law says they may automatically become a permanent employee unless the employer can objectively justify keeping them on a fixed-term basis. It’s something I flag with clients who use contract workers long term, as it can have legal and financial implications if overlooked.

Can a temporary role become permanent?

It can, and sometimes it does. I’ve placed temps who’ve made such a strong impression that they’ve been offered a permanent position soon after. But it’s less common than with fixed-term contracts, where there’s usually a clearer pathway to longer-term employment. I’ve explored this topic in more detail in my article on temporary to permanent employment.

Which is better: a fixed-term or a temporary contract?

There’s no one-size-fits-all answer. If you need someone for a defined period and want them to fully integrate into the business, I’d recommend a fixed-term contract. If your need is short-term, urgent or unpredictable, a temp contract is likely to be a better fit. I always advise clients to base their decision on the timeline, cost and how much flexibility they need.

Need Help Choosing Between a Temp or Fixed-Term Hire?

Whether you’re looking to hire a temp urgently or need structured support for the months ahead, we’d be happy to help. At Oriel Partners, we work with a trusted network of skilled, professional candidates, from last-minute reception cover to longer-term contract PAs.

Please get in touch, and one of our consultants will guide you through your best options and find the right person for the role.

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You may also like to read my article on how to use temp agencies to your business’s advantage.