Changes to Fixed Term Contracts

Effective 6^th December, new rules apply when engaging employees on a fixed term contract.

The new rules include any employee from today engaged on a fixed term contract must receive a Fixed Term Contract Information Statement.

The new rules also include limitations on how fixed term contracts can be used.

These include

• A fixed term contract can’t be for longer than 2 years. This includes any extensions or renewals
• A fixed term contract can’t have an option to:
  • extend or renew the contract so the period of employment lasts for longer than 2 years, or
  • extend or renew the contract more than once.
• An employee can’t be offered a new fixed term contract if the first 3 points below all apply, and one or more of the scenarios in the 4th point applies.

1. Their previous contract was also for a fixed term.
2. Their previous contract and the new contract are for mainly the same work.
3. There is substantial continuity in the employment relationship between the previous and new contracts, and
4. Either:

• the previous contract contained an option to extend that was used
• the total period of employment for both the previous and new fixed term contract is more than 2 years
• the new fixed term contract contains an option to renew or extend, or
• there was an initial contract in place (before the previous contract):
• that was for a fixed term,
• that was for the same or similar work, and
• where there was substantial continuity in the employment relationship.

There are exceptions to this rule, which include

• Specialised skills for a specific task
• Training arrangements
• Essential work
• Emergency or temporary circumstances
• High Income Employees
• Positions subject to government funding  (which is unlikely to be renewed)
• Governance positions
• Award provisions.

Further details on the exception can be found at https://www.fairwork.gov.au/starting-employment/types-of-employees/fixed-term-contract-employees

If fixed term contracts don’t meet the limitations or aren’t deemed to be an exception, the contract’s end date will no longer apply.