new limitations on fixed-term contracts from today 6 december
From today, 6 December 2023. 🗓️ significant changes limiting the use of fixed-term contracts take effect.
The changes to the Fair Work Act 2009 (Cth) prohibit the use of a fixed-term contract that does one or more of the following:
🗓️ sets a fixed-term that is longer than 2 years; or
📑 results in a combined term that is longer than 2 years, including by renewal; or
⏳ allows for renewal more than once.
The new limitations apply to both fixed-term contracts and maximum-term contracts.
If you aren’t sure of the difference between fixed-term and maximum-term contracts, shoot me an email for a complimentary summary.
Are there exceptions?
The good news is that there are limitations. 😮💨
The new laws provide for 9 circumstances in which the above limitations do not apply:
⚙️ the employee is engaged under the contract to perform only a distinct and identifiable task involving specialised skills; or
🦾 the employee is engaged under the contract in relation to a training arrangement; or
📈 the employee is engaged under the contract to undertake essential work during a peak demand period; or
🆘 the employee is engaged under the contract to undertake work during emergency circumstances or during a temporary absence of another employee; or
🧮 in the year the contract is entered into the amount of the employee’s earnings under the contract is above the high-income threshold (HIT) for that year; or
🧑💼 the contract relates to a position for the performance of work that:
is funded in whole or in part by government funding or funding of a kind prescribed by the regulations for the purposes of this subparagraph; and
the funding is payable for a period of more than 2 years; and
there are no reasonable prospects that the funding will be renewed after the end of that period; or
💼 the contract relates to a governance position that has a time limit under the governing rules of a corporation
or association of persons; or
🏆 a modern award that covers the employee includes terms that permit any of the circumstances limited by the limitations to occur; or
🤝 the contract is of a kind prescribed by the regulations (this includes, for example, some organised support, high performance sport, higher education and live performance employees, and non-government funded philanthropic entities).
Are there any work-arounds?
The new laws also prohibit anti-avoidance behaviour (that means no artificial contracting ‘work arounds’) 👩🏻🎨. These include:
❌ terminating an employee’s employment for a period;
❌ delaying re-engaging an employee for a period;
❌ engaging another person to perform the same, or substantially similar work for the person as the employee had performed;
❌ changing the nature of work or task the employee is required to perform for the person; or
❌ otherwise altering the employment relationship.
What does this mean for your business?
From today, you should assess whether any new employee may fall under the new limitations. For any new employees, they will need to be issued with both the Fair Work Information Sheet and the new Fixed Term Contract Information Statement, which is available to download from the Fair Work Ombudsman’s website here.
For existing employees, the new laws may impact the ability you have to enter into subsequent fixed term agreements with the same employee moving forward.
Consequences of getting it wrong
Non-compliance with the new laws may attract civil penalties against you. Additionally, employees can bring a claim in the Fair Work Commission.
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