New rules (or ‘limitations’) regarding the use of fixed term contracts are in place as of 6 December 2023.
Fixed term contracts are where the employee is employed for a specific period.
What’s new for employers?
There are 3 rules (or ‘limitations’) which all must be followed:
- Cannot be longer than 2 years, including extensions and renewals
- Cannot have an option to extend or renew the contract such that the employment period (in total) is longer than 2 years; or
- Cannot have an option to extend or renew the contract more than once.
Consecutive contract limitations
- Cannot employ someone on a new fixed term contract if:
i. the contract is for mainly the same work as a previous fixed term contract; and
ii. there is not a substantial break in the employment relationship between the previous and new contracts; and
iii. any of the following apply:
- the total period of the employment for the previous and new fixed term contracts is longer than 2 years; or
- the new fixed term contract can be extended or renewed; or
- the previous fixed term contract was extended; or
- there was an initial fixed term contract (before the previous contract) that was for mainly the same work; and there was a continuing employment relationship from the period of time between the initial contract and the previous contract.
The new limitations above do not apply in the following situations:
- the employee is engaged under the contract to perform only a distinct task using specialised skills;
- the amount of the employee’s earnings under the contract is above the high-income threshold for the year that the contract is entered into;
- the employee is engaged to undertake essential work during a peak demand period;
- the employee is engaged to undertake work during emergency circumstances or during the temporary absence of another employee;
- the employee’s position is funded partly or wholly by the government for more than two years and there are no reasonable prospects that the funding will be renewed after that time;
- or other areas prescribed by the Fair Work Amendment (Fixed Term Contracts) Regulations 2023, including organised sport, high performance sport and international event organising bodies, live performance, higher education, and non-government funded philanthropic entities.
Fixed Term Contract Information Statement (FTCIS)
Employers must give employees a Fixed Term Contract Information Statement (FTCIS) before, or as soon as possible after, they enter into a new fixed term contract.
Employers must give employees a Fair Work Information Statement in addition to the FTCIS.
If you would like to discuss these or other workplace issues, please contact Andrew Bland or call 02 9412 3077.