5 December, 2022

Legislative amendments – Fixed-term contracts

Blog | Industry News

Comprehensive Fair Work Act 2009 (Cth) changes have been passed by Parliament in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022. For a general summary of all changes and links to more detailed notes on each topic, please see our summary ,EMA Note.

This EMA Note focuses on the legislative changes related to fixed-term contracts as passed by Parliament.

The Bill includes significant changes to the way employers will be allowed to offer and use temporary or fixed-term contracts. National System Employers should review their practices now and prepare for a significantly restricted ability to offer fixed-term employment whenever work is ongoing.

What will change and when?

This note is not a comprehensive explanation of the changes and should not be relied on as advice. In summary:

• Employees must be given a Fixed Term Employment Information Statement setting out their rights;
• new contracts for a finite period – whether or not they include early termination clauses – will have a maximum life of two years;
• fixed term contracts must not contain any “renewal options” with a potential to run more than two years from the commencement date;
• subsequent fixed term contracts – including renewal of any existing contracts – will be unlawful if the preceding contract has run for two years or more;
• the combined total of any renewal and preceding contract must not exceed two years;
• if the duties performed under a fixed term contract are to continue after its expiry, the incumbent must be offered the role;
• there are some limited exemptions – for example (without limitation) if the position is expressly tied to fixed period government funding and the contract coincides with that period of funding, and for employees over the high-income threshold;
• the Fair Work Commission will be able to deal with disputes in relation to fixed-term contracts; and
• there are anti-avoidance provisions making it a specific offence to take actions designed to work around the provisions.

The changes will commence on a date to be proclaimed, but no later than 12 months after royal assent.

What should employers do now?

These rule changes will significantly disrupt business models that use rolling periodic contracts for the same position. Employers should review their human resource planning and consider using ongoing contracts for ongoing work. Breaches of these provisions will be subject to penalties (fines).

It is very likely that the terms of existing fixed term contract templates will need to change to comply with new laws. These can be reviewed now to avoid being caught out. We can help on assessing your risk, reviewing your recruitment business model, or redrafting your template contracts. We will be reviewing and updating our template policies that are available for purchase (and for download for subscribers of My ERLibrary) to ensure our template policies are compliant with the new amendments.

Require further information/assistance?

This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your Consultant.

EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.