Limitations apply to fixed-term employment contracts from 6 December 2023, with the commencement of the final tranche of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022.
Fixed-term employment contracts
A fixed-term contract of employment is one that terminates at the end of an identifiable period, such as on a set date or at the end of a season.
Under fixed-term contracts, full-time or part-time employees have comparable conditions and entitlements to permanent employees, including leave entitlements, but no right to redundancy or unfair dismissal claims on termination at the end of their contract period.
Limitations on fixed-term employment contracts
The legislative amendments introduce limitations which apply to fixed-term contracts entered after 6 December 2023. The limitations do not apply to contracts entered earlier, however earlier contracts are taken into account when determining consecutive contract periods.
Fixed-term contracts now cannot be used for the same role for more than two years, or by extending or renewing a fixed-term contract for a role that would otherwise be an ongoing full-time or part-time position even if the total period is less than two years. Only one extension option is allowable.
Exceptions to limitations on fixed-term employment contracts
A new s 333F of the Fair Work Act sets out various exceptions which, if applicable, mean the new limitations do not apply and a fixed term contract can be for more than two years or have multiple extensions. These essentially require there be a good operational reason for the fixed-term contract continuing, or the employee to have annual earnings under the contract above the high-income threshold.
Neither the limitations nor the exceptions apply to casual employees.
See the Fair Work Australia Fixed Term Contract Information Statement for further details.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 passed Federal parliament in December 2022, making many changes to the Fair Work Act 2009.
These amendments have all now commenced and include:
- expansion of the objects of the Fair Work Act;
- equal pay provisions to address gender inequality;
- prohibition of pay secrecy – designed to augment the equal pay provisions;
- prohibition of sexual harassment in the workplace, including Stop Sexual Harassment Orders via the Fair Work Commission;
- additional grounds for anti-discrimination in the workplace;
- expanded availability of flexible work arrangements;
- a new small claims process for unpaid entitlement recovery; and
- fixed-term contracts are generally no longer permitted.
The By Lawyers Employment Law publication has been updated for all the relevant amendments.