Changes to fixed-Term contracts Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022.
These provisions come into effect from 6 December 2023, unless an earlier date is set by the Government.
Fair Work Act 2009 (Cth) (FW Act) made by the Federal Government’s Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 brings in a provision for the (in)ability of employers to over utilise fixed-term employment contracts.
From 6 December 2023, employers can no longer employ an employee on a fixed term contract that:
- is for 2 or more years (including extensions)
- may be extended more than once, or
- is a new contract:
- that is for the same or a substantially similar role as previous contracts
- with substantial continuity of the employment relationship between the end of the previous contract and the new contract, and either:
- the total period of the contracts is 2 or more years,
- the new contract can be renewed or extended, or
- a previous contract was extended.
Employers must not take certain actions to avoid the new restrictions from applying. For example, they can’t:
- delay re-engaging an employee for a period
- re-engage the employee and engage someone else instead to do the same or substantially similar role.
Some exceptions will apply, including if the fixed term contract is:
- for a training arrangement, or
- the employee is covered by an award that allows fixed term contracts in the above circumstances.
From 6 December 2023, employers will have to give employees they’re engaging on new fixed term contracts a Fixed Term Contract Information Statement. This statement will be available on this website before then.
Fixed-term employment or Fixed-task employment
A fixed-term employee is employed on a contract that specifies the end date of the contract. The end date is mutually agreed prior to work commencing. At the end of the contract the contract comes to an end and the employee is terminated. As such there is no need for either party to terminate the contract; it is automatic, so there is no need for a resignation or a dismissal. These contracts can be useful when you are covering a parental leave situation.
A fixed-task employee is typically hired for the duration of a project or range of tasks and once this project is completed the contract automatically expires and the employment is terminated.
Generally fixed-term employees and fixed-task employees are excluded from:
- unfair dismissal provisions under s386 of the FW Act
- minimum notice of termination
- redundancy pay
- employers having to notify and consult with unions before implementing redundancies in the workplace
A word of caution – there is a difference between a fixed-term contract versus a contract for a specified period of time. The difference is where a fixed-term contract contains a notice of termination clause; it is prevented from being a contract for a specified period of time, although it will still be regarded as a fixed-term contract.
Business owners need to be aware of inserting a notice provision; the advantage of such a clause is that it allows either party to terminate the contract prior to the termination date specified without the other party being able to bring a breach of contract claim in the common law courts. The disadvantage is that that such a clause will generally prevent the contract from falling within the federal unfair dismissal exclusion.
Workers may be able to perform a number of concurrent fixed-term contracts or fixed-task contracts, however, care needs to be taken to ensure that case law does not determine these contracts warrant treatment as a permanent employee.
Be wary of terminating a fixed-term contract prior to the termination date as this is likely to amount to a breach of contract and there may be a damages claim. The compensation likely to be awarded is on the basis should the contract have continued to the agreed termination date.
Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.