Navigating Changes to Fixed-Term Employment Contract

Recent reforms affecting fixed term contracts introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (‘Secure Jobs, Better Pay Act’) came into effect on 6 December 2023. The Secure Jobs, Better Pay Act was introduced to limit the use of fixed term contracts and encourage employers and employees to move into permanent employment. Employers engaging individuals on fixed term employment contracts now face new considerations and requirements. In this article, we’ll delve into the key points of these changes and explore how they might impact both employers and employees.

What are the Changes?

The Secure Jobs, Better Pay Act created time limitations on fixed term employment contracts. A fixed term employment must not be for a period of more than two (2) years, including any extensions or renewals. It should also be noted that any contract can only be extended or renewed once. The Secure Jobs, Better Pay Act also now requires employers to give employees employed on a fixed term contract a Fixed Term Contract Information Statement.

Further, fixed term employment contracts cannot be offered to an employee if the ‘consecutive contract’ criteria are met, namely the previous contract was a fixed term contract for predominantly the same work, there is a substantial continuity of employment, and one of the following applies:

1. The previous contract was extended;
2. the total period for both the previous contract and new contract is more than two years;
3. the new contract contains an option to extend or renew; or
4. there was a previous contract in place that was for a fixed term for the same or similar work, and there was a substantial continuity of employment.

Who Do the Changes Apply to?

The amendments in the Secure Jobs, Better Pay Act only apply to new fixed term employment contracts. However, previous fix-term employment contracts may be affected where any previous contract and new contract together constitute consecutive contracts under the Act.

Exceptions to the Changes

There are a number of exceptions to the new limitations, including:

1. casual workers;
2. where the contract only relates to a specific task requiring a specialised skill;
3. training arrangements, such as traineeships or apprenticeships;
4. essential work during peak demand;
5. emergency or temporary circumstances, such as filling a temporary absence of an employee;
6. high income employees (the high income threshold is currently $167,500.00);
7. positions subject to government funding;
8. governance positions; and
9. employees covered by an award.

Further exceptions apply to fixed term employment contracts made before 1 July 2024, including:

1. organised sport;
2. high performance sport;
3. live performance;
4. higher education; and
5. positions funded by philanthropic entities or testamentary gift or contribution.

Consequences of Non-Compliance

Civil penalties will apply to employers who are non-compliant with the new changes after 6 December 2023.

Further, there is a risk that a non-compliant contract may be considered an ongoing contract, exposing employers to unwanted employment relationships.

Anti-avoidance protections have also been introduced to prevent employers purposely avoid the new rules. If an employer engages in anti-avoidance protections, it can be considered adverse action which can result in an employee having an unfair dismissal, unlawful termination or general protection dismissal claim.

The anti-avoidance protections include:

1. ending employment or not re-employing the employee for a period of time;
2. not re-engaging the employee and employing someone else to do the same, or substantially similar work instead; and
3. changing the type of work or tasks that an employee does or changing the employment relationship.

Summary

As we navigate the complexities introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, both employers and employees must stay informed and adapt to these significant changes in fixed term employment contracts. Understanding the intricacies of these reforms is key to ensuring compliance and harnessing the benefits intended by the legislation—promoting secure and stable employment relationships.

If you’re an employer, now is the time to review your employment contract practices and ensure they align with the new requirements. The risk of non-compliance is not just a legal concern but also a matter of maintaining a positive workplace environment and reputation. For employees, awareness of your rights and the protections afforded under the Secure Jobs, Better Pay Act is essential for advocating for fair and secure employment terms.

RAMSDEN LAWYERS – HOW WE CAN HELP

Employers can mitigate their legal risks by understanding and complying with the Secure Jobs, Better Work Act. Do not let the complexities of these legal changes overwhelm you. Ramsden Lawyers are here to guide you through every step of this transition. Our experienced professionals are ready to provide you with the clarity and assistance needed to navigate these reforms confidently. Contact us today if you’re seeking to understand your obligations, need help adjusting your employment contracts, or require representation. Together, we can embrace these changes, ensuring they work to the advantage of employers and employees alike, fostering a more secure, equitable, and productive workforce.

The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice. Specific advice about your circumstances should be sought.