As of 6 December 2023, employers must now provide any employee engaged under a new fixed term contract, a copy of a Fixed Term Contract Information Statement. This needs to be provided to an employee as soon as they enter (or as soon as possible after they enter) the fixed term contract.
These information statements provide fixed term employees with information about fixed term employment, and rules about when fixed term contracts can be made.
New limits on having fixed term employment
In addition to the Fixed Term Contract Information Statement, there are new limitations on when employers can offer fixed term employment. These are significant changes and include:
- Time: A fixed term contract can’t be for longer than 2 years, including any extensions or renewals.
- Renewal: A fixed term contract cannot extend/renew the contract so the period of employment lasts for longer than 2 years, or extend/renew more than once.
- Consecutive contract: An employee cannot be offered a new fixed term contract if the first three points below apply, and at least one of the scenarios in the final point:
- The previous contract was also for a fixed term.
- The previous contract and the new contract are for mainly the same work.
- There is solid stability in the employment relationship between the previous and new contracts, and
- Either: the previous contract contained an option to extend that was used; the total period of employment for both the previous and new fixed term contract is more than 2 years; the new fixed term contract contains an option to renew or extend, or there was an initial contract in place (before the previous contract) that was for a fixed term, for the same or similar work, and where there was substantial continuity in the employment relationship.
Can employers try avoid these changes?
Employers should not try and avoid these new rules. These are called anti-avoidance protections which include: ending employment or not re-employing the employee for an amount of time; not re-engaging the employee and employing someone else to do the same or substantially similar work instead, or changing the type of work or tasks that an employee does or changing the employment relationship.
If an employer does any of these things, they may be breaching the Fair Work legislation and opening themselves up to a claim for adverse action.
Exceptions to the limitations
The new rules don’t apply to:
- Specialised skills for a specific task: Work only on a specific task that requires the employee’s specialised skills.
- Training arrangements: Engaging an employee under a formal training arrangement made under State or Territory law. This is an arrangement that combines work with study for a qualification like an apprenticeship or traineeship.
- Essential work: Performing essential work during a peak demand period.
- Emergency or temporary circumstances: Working in emergency circumstances, or to replace someone who is temporarily away.
- Positions subject to government funding: Where the employee’s position is funded by government funding (completely or in part), the funding is for more than 2 years, and the funding is unlikely to be renewed afterwards. This isn’t the same as working for a government agency or department on a fixed term contract.
Disputes about fixed term contracts
If an employee and employer disagree on the limitations or exceptions to the rules and whether or not they apply, a discussion to try to resolve the disagreement should be the first point of action. In having this discussion, it’s important to:
- Have the discussion during a meeting (either virtual or in person);
- Be transparent about the purpose of the meeting; and
- Follow up the meeting with a summary of what was discussed and your position.
If a dispute about fixed term contracts cannot be resolved between parties, either the employee or the employer can lodge a complaint with the Fair Work Commission.
Employees can also take civil action in the small claims court.
If you would like to discuss the changes and have your fixed term contracts reviewed, contact one of our experienced employment lawyers on (03) 9481 2000 or info@tauruslawyers.com.au.