New rules now apply to fixed and maximum term contracts in Australia.
These include:
- A term contract cannot be extended or renewed more than once; and
- A term contract can’t be for longer than 2 years, including extensions and renewals;
- There is a requirement to issue a Fixed Term Contract Information Statement to employees on engagement on a term contract including any extension.
Penalties apply for misuse of term contracts.
Please carefully consider if it is appropriate to issue this contract or whether an ongoing contract should be utilised in its place. For additional guidance about this issue, or to access a copy of the Fixed Term Contract Information Statement, please access the Fair Work Ombudsman site at this link.
In addition to the above, the new rules now include:
- A term contract can’t have an option to:
- Extend or renew the contract so that employment period (including the extension or renewal period) is longer than 2 years, or
- Extend or renew the contract more than once;
- Exceeding the time limit or extension rules will automatically mean the employee becomes an ongoing employee; and
- There are limits on rules for offering new term contracts for employees already engaged on rolling contracts prior to 6 December 2023.
There are some exceptions to the new limits including:
- Specialised task contracts;
- Training arrangements;
- Essential work during a peak demand period;
- Emergency circumstances or temporary replacements;
- Where a person earns more than the high-income threshold;
- Government funded work;
- Limited time government positions; and
- Award covered employment with fixed-term options.
We encourage our clients to seek specialist advice for any questions or concerns about the using these contracts.