Fixed Term Contracts-New Rules Now Apply
The new rules on fixed-term contracts are now in place, on and from 6 December 2023.
These new rules govern when fixed term contracts can be made, limit the length of time of fixed term contracts, with renewal and consecutive contract limitations.
A fixed term contract cannot be for longer that two (2) years, inclusive of any extensions or renewals.
A fixed term contract cannot have an option to:
extend or renew the contract so the period of employment lasts for longer than two (2) years; or
extend or renew the contract more than once.
There are also limitations on consecutive contracts.
There are a number of exceptions to these limitations in certain circumstances, which means that they do not apply to all fixed term contracts. There are also a number of additional exceptions that apply to some fixed term contracts made on or after 6 December 2023 and before 1 July 2024.
Where a fixed term contract does not meet the limitations, the contract's end date will no longer apply. This means that the contract will not end automatically on the end date. Other terms and conditions of employment under the contract will still apply, including entitlements from any relevant legislation, Modern Award, enterprise agreement or employment contract.
The Fair Work Commission can now deal with disputes relating to fixed term contracts where an employer and employee are in dispute about a fixed terms contract, and are unable to resolve the issue. The Fair Work Commission may be able to deal with the dispute by mediation, conciliation or consent arbitration.
The Fair Work Ombudsman now has guidance material available with regards to the new rules and limitations, see:
Snapshot-Limitations on using fixed term contracts.
The Fair Work Ombudsman has now also released the new Fixed Term Contract Information Statement which all employers must now issue to employees engaged on a new fixed-term contract. This must be provided in addition to the Fair Work Information Statement which must be provided to all new employees. When issuing these Statements, employers should always check the Fair Work Ombudsman's website to ensure you are using the latest version of the Statements.
Should you require assistance in understanding these new rules and what your business needs to do as a result, please contact IR Legal Solutions to discuss.