As of 6 December 2023 conditions around fixed term employees changed. What is a fixed term employee? A fixed term employee is an employee that is given a definite end date from when they start their employment.
Employers previously had the freedom to renew these contracts as desired, however that is now not the case and the Fair Work Commission has placed a limit on how fixed-term contracts can be used and for how long.
Employers can now only hire an Employee for a fixed term not exceeding 2 years, this includes any renewals or extensions of the contract. Employers also cannot offer employees more than two consecutive contracts for the same or similar works.
There are some exceptions to these new rules which include:
- If the fixed term contract relates to a training program which includes apprenticeships or traineeships;
- If the fixed term contract falls under a prescribed government funding exception or a modern award permits them;
- If the fixed term contract concerns the undertaking of essential work during a peak demand period or for work during emergency circumstances or during a temporary absence of another employee;
- If the fixed term contract if for the performance of a distinct identifiable task which uses specialised skills; or
- If the employee is earning more than the higher income threshold (which as of July 1 2023 is $167,500).
The new changes aren’t as scary as they first sound, they won’t affect anyone using fixed-term contracts correctly, instead it will only effect employers who are employing people under fixed-term contracts when they should be using a full-time or casual contract.
If there is a dispute regarding a fixed term contract the Fair Work Commission may intervene.
Additionally, if the terms of your fixed term contract are not valid, your employee may be considered a permanent employee and not a fixed term employee.
Reach out to the Employment Law Team at Marsdens to review any fixed term contracts your business is using or for advice regarding your businesses’ contracts.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
