Key Takeaways
The new changes only apply to new fixed-term contracts (i.e., fixed-term contracts entered into after 6 December 2023).
- Many businesses and fixed-term contracts will be captured by the limitations.
- For employers who have the General Exemptions and Conditional Exemptions, they must be careful that the circumstances of limited exemptions are clearly met.
- A Fixed Term Contract Information Statement will need to be provided to new Fixed Term employees as a matter of course (along with a Fair Work Information Statement).
- Breaches to the new provisions will attract significant civil penalties.
- Employers will need to ensure appropriate training is provided to employees with hiring authority or who are otherwise involved in employment contract preparation to ensure compliance with the changes.
What’s Ahead
From 6 December 2023, the Fixed-Term Contract limitations kick in, which limit employers to a maximum of 2 contracts (that relate to the same or similar role) within up to 2 years of Fixed Term employment (Fixed-Term Limits).
There are specific exemptions to the Fixed-Term Limits set out below (General Exemptions). The Federal Government has also granted a conditional reprieve to a range of industries/circumstances relating to the Fixed-Term Limits.
After hearing from a range of industries that are unhappy and concerned about the Fixed-Term Limits disrupting their industries and business models, Minister Burke has introduced the Fair Work Amendment (Fixed Term Contracts) Regulations 2023. This provides c.7 months of conditional exemptions for specific industries, from the Fixed Term limitations, for contracts entered into between 6 December 2023 and 1 July 2024 (Conditional Exemptions).
The General Exemptions are that the following will not be subject to the Fixed-Term Limits:
- apprentices and trainee workers;
- employees paid above the high-income threshold ($167,500);
- employees undertaking specific or discrete tasks involving specialist skills;
- employee temporarily replacing another employee on long leave (e.g., maternity leave);
- undertaking essential work during a peak demand period; and
- where an applicable modern award permits such an engagement.
Does My Industry Qualify For This?
The Conditional Exemptions will end on 30 June 2024 and are limited to the following industries and circumstances (summary):
- Organised Sport Exemptions: For contracts between specifically identified sporting bodies and athletes, performance support professionals, coaches and match officials in organised sports.
- Higher Education Exemptions: For contracts falling within the exemption for employees covered by the Higher Education Industry—Academic Staff—Award 2020 or the Higher Education Industry—General Staff—Award 2020;
- Performance Industry Exemptions: For contracts falling within the exemption for employees covered by the Live Performance Award 2020; or
- Funded Philanthropic Exemptions: Funding has been provided to an employer by a philanthropic entity; or testamentary give/contribution to a philanthropic entity for charitable purposes, the philanthropic entity must not be associated entity of the employer.
It is important that any contracts meet the technical requirements of the legislation and regulation as the above is a summary.
What Else Should I Be Aware Of?
Additionally, after 6 December 2023, in circumstances where employers engage employees on a fixed term basis, an employer must issue a new fixed term employee with
- a Fixed Term Contract Information Statement, which should be available from the FWO Website on 6 December 2023: Fixed Term Contract Information Statement; and
- a Fair Work Information Statement, found here: Fair Work Information Statement.
The changes seek to prevent any attempts to circumvent the new laws by:
- terminating and then rehiring an employee on a fixed term contract in an effort to disrupt the continuity of employment;
- altering the job description of the employee on a fixed-term contract so as to create the appearance of an entirely new role;
- engaging another employee to perform the same, or substantially similar work, as the employee had performed; and
- attempting to stretch out the re-engagement window so at to disrupt the continuity of employment.
Penalties For Breaches
In the event an employer is found to have breached these new provisions, they open themselves to the potential for significant civil penalties as follows:
- up to $93,900 for a body corporate, or up to $939,000 for a serious contravention; and/or
- up to $18,780 for individuals, or up to $187,800 for a serious contravention, including individuals who were knowingly involved in the contravention (e.g., managers).
The changes to fixed-term contracts under the Fair Work Act represent a significant change in the way that many Australian businesses operate. As these changes continue to influence employment practices, employers should take a proactive approach in understanding and implementing these changes to ensure compliance and avoid the potentially costly outcomes that may flow from breaching the Fair Work Act.
Cowell Clarke’s Employment and Workplace Relations Team is on the front foot and can provide you with advice and assistance, including with respect to fixed term contracts, and to assist you in ensuring your workplace remains compliant with the changing regulations.
