New limits on fixed term contracts

As of 6 December 2023, amendments to the Fair Work Act 2009 (Cth) (the Act) will apply to the use of fixed term employment contracts. The purpose of these changes is to provide greater job security for employees.

What is changing?

Fixed term contracts can now only be used for the same role for either a maximum of two years or two consecutive contracts, whichever is shorter. If the employer breaches these rules, then the clause providing for the expiry of the contract is invalid. This means that the employee would be considered a permanent employee.

Are there any exceptions?

The Act does provide for exceptions in situations where ongoing fixed term contracts are genuinely necessary and appropriate. Some examples are itemised 

• Performance of a discrete task for a fixed period;
• Apprenticeships;
• Employees performing essential work in a peak demand period (eg. harvest time);
• Temporary replacement of another employee on long leave (eg parental leave); or
• Where the employee earns above the high-income threshold.

These changes apply only to contracts entered after the commencement of the legislation on 6 December 2023. However, previous fixed term contracts for a particular role prior to the commencement will count towards the number of times a fixed term contract was used for the same role.

There are additional exceptions available for organised sport, live performance, higher education, etc, however these are subject to specific rules and only apply to fixed term contracts made between 6 December 2023 and 1 July 2024. After 1 July 2024, the same rules apply to these types of work as apply to all contracts under the Act.

Other requirements

Where an employer and employee are entering into a fixed term contract, the employer must provide the Fixed Term Contract Information Statement. 

There is a civil penalty for not providing this Statement to employees.

Did you know that any fixed term contract exceeding 2 years entered after 6 December 2023 will be invalid?

From 6 Dec 2023 employers must give employees engaged on fixed term contracts a Fixed Term Contract Information Statement which will be available on the Fair Work Ombudsman website.

Disclaimer: This summary is a guide only and is not legal advice. For more information, call ECA Legal on (08) 6241 6129 or email ecalegalwa@ecawa.org.au