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Contract Advice: Extending a Permanent Employee Currently on a Maternity Cover FTC

Oredola

Hi all,

I am seeking some advice on the best contractual approach for the following situation.

Background: A permanent employee successfully applied for an internal maternity cover role. We issued a Fixed-Term Contract (FTC) variation linked to their permanent contract. The variation explicitly stated that all other terms remained the same and they would return to their original permanent role once the maternity cover ended.

Current Situation: The maternity cover ends on August 31, and the employee has indicated they intend to resign at that point. However, to support them and ensure organisational continuity, we want to offer them a 3-month project role at the same pay grade as the maternity cover. This would provide them with valuable experience for their job hunt while covering our business needs.

My Questions:

  1. What type of contract issue/variation is best here? Should we issue a further contract addendum/extension to avoid breaking continuity of service?

  2. How do we handle the resignation intent? Should we accept a formal resignation from their permanent contract, or would doing so create complex implications regarding notice periods and employment continuity?

What would be the standard, statutory-compliant approach in this scenario?

Thanks in advance for your insights!

Dola

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  • Just to add - As an alternative option:
    what are the statutory requirements and best practice to transition an employee to a contractor?

    Thanks

  • in reply to Oredola

    Hi Oredola

    I’d view what you’ve done as a secondment arrangement that’s due to end on 31 August.

    So, employee might give you say three months notice of resignation as from 31 August and you confirm that they’ll work such notice doing whatever at whatever salary rate. Then in three months or whatever time their employment terminates having been at their own request.

    Self employed to be legitimate would get complicated and probably is best avoided 

  • in reply to David

    Hi David, 

    Thanks for your quick reply. 

    Just to clarify, do you meant we should accept their resignation and transfer to a self-employed arrangement at the end of the notice/for the Project Manager role?
    Thanks, 

    Dola

  • in reply to Oredola

    Hi Oredola

    Are you and they looking at transitioning to self employed as from end of November?

    That might be ok if eg they set up as a limited company contractor but with appropriate professional advice. That's becoming commercial law as much as employment law, so not 100% sure

  • in reply to David

    No We hadn't thought of that.

    The two options we are exploring is: 
    - Not break employment and transition them to a new role on a short term 4months FTC
    - Break employment and transition them to a short term 4months FTC

    What are the HMRC impact of moving someone from an employment contract to a self employed arrangement (I thought we weren't allowed to do this as they still be classed as being employed except there is gap between the contract end and start of the new arrangement)?

Reply
  • in reply to David

    No We hadn't thought of that.

    The two options we are exploring is: 
    - Not break employment and transition them to a new role on a short term 4months FTC
    - Break employment and transition them to a short term 4months FTC

    What are the HMRC impact of moving someone from an employment contract to a self employed arrangement (I thought we weren't allowed to do this as they still be classed as being employed except there is gap between the contract end and start of the new arrangement)?

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