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.