Time to have a rethink about the use of Fixed Term Employment Contracts

Starting from 6 December 2023, employers must evaluate their utilisation of fixed-term employment agreements as a result of modifications made to the Fair Work Act through the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act of 2022.

Employers will be prohibited from entering into fixed term employment contracts that meet the following criteria:

  1. Last for two or more years, including any extensions.
  2. Have the potential for multiple extensions.
  3. Are new contracts that:

    (a) Cover the same or substantially similar role as previous contracts.

    (b) Display significant continuity in the employment relationship between the end of the previous contract and the new contract.

    (c) Either have a combined duration of two or more years, allow for renewals or extensions, or involve a previous contract that was extended.

Certain exceptions will apply, and the prohibition will not be applicable to fixed-term contracts that:

  1. Are part of a training arrangement.
  2. Are covered by an award that permits the use of fixed-term contracts.

Moreover, employers will be obligated to furnish a Fixed Term Contract Information Statement to employees when entering into a new fixed-term contract. The statement will be accessible on the Fair Work website prior to the implementation of these changes.

The Fair Work Commission will possess the authority to handle disputes related to the new requirements.

There are interesting times ahead for employers that are using fixed term employment contracts for long term employees

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