Effective from 6 December 2023, Australia will see the introduction of stringent regulations on fixed-term employment contracts. This part of the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022.
The changes will contemplate limitations on length of the term, renewal/extensions, and consecutive contract limitations, applicable to employment contracts initiated after 6 December 2023.
If employers do not comply, this may result in civil penalties, with the risk of invalid contracts being deemed “ongoing employment”. This exposes employers to legal ramifications for potentially not providing rights to that employee that would otherwise be afforded as a permanent employee of ongoing employment.
Employers must also furnish a ‘Fixed Term Contract Information Statement’ to employees. This is in addition to the already mandatory to be provide, Fair Work Information Statement.
Compliance with these changes and seeking legal counsel is crucial to mitigate risks.
New Restrictions
For fixed-term contracts entered into after 6 December 2023, there will be three additional limitations to be aware of: Those are:
1. Two-year period
Such contracts must not extend beyond a two-year period. This considers extensions and renewals. This means irrespective of the initial contract’s duration, when factoring in all extensions and renewals, the cumulative employment duration must not surpass two years.
2. Contract Renewal
Similar to the above, any contract renewal must not extend the employment period to exceed two years.
3. Consecutive Contract Limitations
The regulations also impose restrictions on successive fixed-term contracts.
A new fixed-term contract must not be entered into if:
i. The contract is similar to the duties required under a previous fixed term contract;
ii. The is no substantial break between the two contracts;
iii. Total period of the previous and new fixed term contract is more than 2 years;
iv. The new contract can be renewed or extended; or
v. The previous contract was extended.
Exceptions for employers
There are some exceptions to compliance with the above new regulations, which includes, but is not limited to:
a) Specialised skills are required for that role;
b) Tailored training arrangements;
c) Essential work for the relevant business peak periods;
d) Emergency situations or temporary replacements;
e) High-income threshold employees;
f) Government funded contracts;
g) Award provisions allow for it.
Why you must comply
It is crucial for employers to be cognisant of their obligations post 6 December 2023.
These amendments take effect after a one-year adjustment period to aid employers in this transition.
Violations of the fixed-term contract constraints may result in civil penalties for employers. This is a result of classifying the employee as a non-permanent employee when they otherwise would be considered a permanent employee by virtue of their ongoing employment (over 2 years).
For further information on the new amendment, visit fair work commission.
Need advice?
For tailored advice on your fixed-term contracts, call our Employment Law professionals today.
Disclaimer:
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
