As we reported in our update when the Secure Jobs, Better Pay Act passed late last year; from 6 December 2023, new obligations and limitations will apply to the use of fixed-term employment contracts.
It’s a good time for employers to remind themselves of what this means for fixed term employees:
1 – Limited
A fixed term employment contract cannot be longer than 2 years, including extensions and renewals.
2 – Renewal limitations
A fixed term contract may only be renewed once and its total duration must remain within the 2 year cap.
3 – Consecutive contract limitations
An employer may not use new fixed term contracts to continue the employment of a person if the nature of their work is largely unchanged; there hasn’t been a substantial break in the employment relationship, and:
- the total period of employment for the previous contract and the new fixed term contract is more than 2 years; or
- the new fixed term contract can be renewed or extended; or
- the previous fixed term contract was extended; or
- consecutive fixed term employment contracts have already been used.
4 – Information must be provided to fixed term employees
Employers also need to provide the following information to employees who are engaged on a fixed term basis:
- Fixed Term Contract Information Statement (FTCIS) which will be available to download from the Fair Work Ombudsman’s website from 6 December 2023; and
- Fair Work Information Statement, which provides information about minimum workplace rights and entitlements.
- It will be sufficient to email links for these documents to new employees. This effort should be undertaken before employment commences – ideally when they sign the new contract.
5 – Limited exceptions to the new rules
There are some limited circumstances where the new restrictions on the duration and renewal of fixed term contracts will not apply:
- Where the employee has specialised skills;
- Where the employment contract involves the training of an employee under state or territory law (i.e.: apprenticeships);
- Essential work during a period of peak demand;
- Employment necessitated by emergency circumstances or temporary absences;
- Where the employee’s pay exceeds the high income threshold for a full-time employee (for employees working part-time or for less than a year, the threshold should be considered on a pro-rata basis);
- Where the employment is wholly or partly funded by the government for more than 2 years and that funding is not likely to be renewed;
- Governance positions created for a limited time, such as those based on the rules of a corporation or association; and
- Where award provisions cover the employment and allow for different fixed term contract options.
6 – Fair Work Commission jurisdiction
The Fair Work Commission will have the ability to conciliate or, if both parties agree, arbitrate disputes in relation to fixed-term contracts.
Employers who fail to comply with these new obligations may be required to pay penalties.
7 – Recommendations
- Review how you are engaging your fixed-term employees;
- Update your standard form contracts and internal policies to reflect the new requirements;
- Identify any relevant exceptions that apply to your organisation or particular employees;
- Ensure new employees on fixed-term contracts are supplied with the FTCIS and Fair Work Information Sheet; and
- Document your reasons for engaging an employee on a fixed-term basis.
If you would like more information about this article, please contact:
M: 0416 794 061
Published: 1 December 2023