New rules for Fixed Term contracts from 6 December 2023

Employment Law: 16 November 2023

Author: Stephen Curtain - Our People

As part of the Closing the Loopholes legislation contracts will not be allowed to be for a fixed term of longer than 2 years. This includes contracts which can by agreement be extended beyond 2 years. Nor can fixed term contracts be extended more than once, even if the total period is for less than 2 years.

Furthermore, an employer cannot employ someone on a new fixed term contract if:

• the contract is for mainly the same work as a previous fixed term contract; and
• there is no substantial break in the employment relationship between the two contracts; and
• any of the following applies:
  • the total period of employment is more than 2 years; or
  • the new fixed term contract can be extended; or
  • the previous fixed term contract was extended; or
  • there was an initial fixed term contract before the previous contract that:
    • was mainly for the same work; and
    • there was continuity in the employment relationship between the two contracts.

Exceptions

There are exceptions and these are:

• high income employees – currently those earning more than $167,500 p.a.
• where the relevant award allows it
• contracts for specialized skills – e.g. Sporting coaches
• training under Federal or State laws – e.g apprenticeships
• essential work – e.g. doing essential work such as fruit picking during harvesting
• emergency situations – e.g. replacing an essential services worker
• governance positions for limited times based on the body’s rules – e.g. board position
• government funded contracts for more than 2 years and funding not likely to be renewed

Employers will be required to provide employees employed on fixed term contracts with a Fixed Term Contract Information Statement which is yet to be finalized.

Please contact our employment law team if you’d like to consult a lawyer before employing anyone on a fixed term contract or renewing or replacing such a contract. Stephen Curtain, Special Counsel (scurtain@aitken.com.au) has many years of experienced and would be pleased to assist.

Please note: The information in this article is provided for general information purposes only and does not constitute legal advice. It is not intended to be comprehensive or to apply to any specific circumstances. You should seek independent legal advice before acting on any information contained in this article.