Starting from from 6 December 2023, new regulations for fixed term contracts in employment will be implemented. Key points of these regulations are:
What is a Fixed Term Contract?
A fixed-term contract ends after a specified period, such as a set date, time frame, or season.
Fixed Term Contract Information Statement (FTCIS)
Employers must provide an FTCIS to every employee engaged under a new fixed-term contract. This document, which must be given upon entering the contract or shortly thereafter, informs the employee about the rules and conditions of fixed-term employment.
Limitations on Contract Duration and Renewals:
- A fixed-term contract cannot exceed two years, including any extensions or renewals.
- Contracts cannot include options that allow extending or renewing the contract more than once or beyond a two-year total employment period.
Consecutive Contract Limitations:
An employee cannot be offered a new fixed-term contract if:
- Their previous contract was also fixed-term for largely the same work.
- There is substantial continuity between the old and new contracts.
- Additionally, if any of these scenarios apply:
- The previous contract’s extension option was used.
- The total employment period across both contracts exceeds two years.
- The new contract contains an option to renew or extend.
- There was a prior fixed-term contract for similar work with substantial continuity.
Employers are prohibited from actions intended to circumvent these rules, such as terminating employment to avoid contract limitations, employing someone else for similar work, or significantly changing an employee’s job role. Such actions might constitute adverse action.
Fixed Term Contracts Before 6 December 2023
These new limitations do not apply to fixed-term contracts entered into before this date. However, any contracts from before this date must be considered when applying the consecutive contracts limitation to new contracts made on or after 6 December 2023.
These new rules aim to regulate the use of fixed-term contracts and protect employees from potential exploitation or unfair employment practices.
The new regulations for fixed-term contracts have several exceptions where the limitations do not apply. These exceptions are:
- Specialised Skills for a Specific Task: This applies when an employee is engaged for a specific task that requires their specialized skills.
- Training Arrangements: This exception covers employees engaged under formal training arrangements under State or Territory law, such as apprenticeships or traineeships that combine work with study for a qualification.
- Essential Work: This refers to engaging employees for essential work during peak demand periods.
- Emergency or Temporary Circumstances: This exception applies to employees working in emergency situations or replacing someone temporarily absent.
- High-Income Employees: Employees whose guaranteed salary is above the high-income threshold for the year the contract is entered into are exempt.
- Positions Subject to Government Funding: This includes positions funded wholly or partially by government funding, provided the funding is for more than two years and is unlikely to be renewed afterwards. This does not apply to employees working for a government agency or department on a fixed-term contract.
- Governance Positions: This applies to contracts for governance positions that are limited in time based on the rules of the corporation or association.
- Award Provisions: If an employee is covered by an award that allows circumstances limited by the new rules, such as multiple contract renewals as agreed between the employee and employer, then this exception applies.
These exceptions acknowledge the diverse employment situations where fixed-term contracts might be necessary and provide flexibility in applying the new rules.
For more information about changes to Fixed term employment Contracts please visit the Fair Work Website.