The 6th of December 2023 saw a rollout of a changes to fixed term employment contracts. These changes will affect both employers and employees. The changes implement limitations on the use of a fixed term contract as per the amendments outlined in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth).
Fixed term contracts are a type of employment contract that provides a specified period for which an individual is employed. When an individual is employed under a fixed term contract, their employment comes to an end on a certain date. The nature of these fixed term contracts means that issues surrounding notice periods, redundancy pay and unfair dismissal do not arise. Fixed term contracts have been criticised for the job instability they create. In a bid to protect employees, there are now limitations imposed on their use.
What are the new limitations?
The limitations that have been introduced limit the length of the term of fixed term contracts, the renewal of those contracts and imposing limitations on the use of consecutive fixed term contracts.
Time Limitations
Fixed term employment contracts now have a time limitation of 2 years.
Renewal Limitations
There are limitations on employer’s ability to continuously renew. This means employers are unable to renew the contract if the total length of an individual’s employment under a fixed term contract exceeds 2 years. An employer is also subject to limits on the number of times they can renew a fixed-term contract. An employer will only be able to renew the contract once. This is irrespective of whether the total time of employment is less than 2 years.
Consecutive Contract Limitations
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) also prohibits the use of consecutive fixed term contracts. This means once a fixed term contract has ended, employers are unable to use a new fixed term contract if the contract is for mainly the same type of work as the previous contract or there is no significant break in employment between them.
Exceptions
There are some circumstances in which an exception to the limitations on fixed term contracts will be provided. In these circumstances, the new limitations will not be applicable. A few of those exceptions include:
- performing a specific task;
- emergency circumstances or temporary absences (such as parental leave);
- essential work during a peak demand period of that role;
- individuals earning more than $167,500 for full-time employment; and
- modern awards that permit the use of fixed-term contracts as well as the terms of the contract.
There are some industries which will not yet be affected by the changes, and have until 1 July 2024 before the amendments become applicable which include organised sport, the organising bodies for international sporting events, live performance, higher education and employees funded by charities.
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