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Suppose a person is doing an incredible job at work (e.g. being very productive and coming up with innovative ideas). Let's assume that this person is a contractor for this company. Are there cases where the company can terminate contractors because they expected them to work at a slower place? For example, it was expected that the contractor was to complete the project in 6 months but instead he completed it in 3 months. Is this a valid reason to terminate a contractor (maybe due to budget constraints, no more project available, etc.)?

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    Most contracts have termination clauses in them where either party can terminate at any time with a given notice period. If the work is done, then that could well be a reason to terminate early. Read your contract, that's the best way to see what you agreed to with regards to early termination.
    – Jane S
    Commented Sep 3, 2019 at 5:56
  • @JaneS The contract was for 6 months but was terminated in 3 months. I am assuming that this was because all the work was done combined with lack of projects, billing issues, etc. Also why would companies hire contractors instead of full time employees? Commented Sep 3, 2019 at 6:00
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    Contractors are only as good as your last job. You get paid more to cover the transient nature of the work, but you have to be good at what you do. I have been a contractor for most of the past 20 years (including my current role), and as a contractor you need to realise that you aren't a part of the organisation, merely a hired gun, so to speak :)
    – Jane S
    Commented Sep 3, 2019 at 6:15
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    Some companies hire contractors on a full-time basis... Been employed like that, month to month... One manager sacked all contractors in his department then found he had to re-employ them 3 months later as the systems went down... They all got a pay rise, the company saved overall by terminating the manager.. :)
    – Solar Mike
    Commented Sep 3, 2019 at 6:20
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    I'm confused. If the contract was for a specific project (regardless of the time frame), why would the employer retain the contractor after they had finished it?
    – dwizum
    Commented Sep 3, 2019 at 13:20

2 Answers 2

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Most contracts have termination clauses in them where either party can terminate at any time with a given notice period. If the work is done, then that could well be a reason to terminate early. Read your contract, that's the best way to see what you agreed to with regards to early termination.

From a comment by the OP:

The contract was for 6 months but was terminated in 3 months. I am assuming that this was because all the work was done combined with lack of projects, billing issues, etc. Also why would companies hire contractors instead of full time employees?

Usually, companies hire contractors when there is a specific unit of work that needs to be done and they don't need or want to keep those resources around afterward. Sometimes the project takes longer than expected, sometimes shorter. That's just how it works as a contractor, you're quite literally a temporary resource.

Don't think of early termination of a contract as necessarily something you've done wrong. Ask if you can use them as a reference (given you finished everything well before planned) and move on :)

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    It can also be cheaper to use contractors rather than hire employees even in the long term as they're not entitled to receive all the benefits a company has to provide to employees (health insurance, maternity leave, paid vacation, etc.), case in point: Uber and Lyft. Commented Sep 3, 2019 at 6:19
  • @AffableAmbler there are other employers who employ contractors who pay to include holidays, medical etc as they value the skills of the contractors and, sometimes, it is the only way to get those skills...
    – Solar Mike
    Commented Sep 3, 2019 at 6:21
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If you have a six month contract, then the company and you both planned that you will do a task taking six months. If it is done in three months, then the contract can be cancelled. If after three months you both believe the task will take nine months, the contract can be extended. One side can cancel the contract against the wishes of the other side, but both sides must agree to extend the contract. On the other hand, if you did task A in 3 instead of 6 months, the company may be quite willing to give you another contract for some task B.

In the UK, to avoid expensive tax complications, it is very very much recommended that the contract is for performing a specific task, and that the contract length is just everyone's best estimate how long that task will take.

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