Proposed Changes to Fixed Term Contracts

Many Employers have Fixed-Term Contracts in place to suit their operational needs for the short term. However, there is currently discussion within Government concerning fixed term contracts negatively impacting job security and wages. It is likely we will see changes that will impact legislation around fixed term contract arrangements in the upcoming IR changes under the Labor Government.

In the second reading speech for the Fair Work Legislation Amendments (Secure Jobs, Better Pay) Bill 2022 (Bill), the Honourable Tony Burke, Minister for Employment and Workplace Relations (and Minister for the Arts and Leader of the House), identified that:

• the number of workers on fixed term contracts has increased by over 50% since 1998,

• more than half of all employees engaged on fixed term contracts are women, and

• more than 40% of fixed term employees have been with their employer for two or more years.

The new Bill is designed to limit the use of fixed term contracts for the same role beyond two years or two consecutive contracts (whichever is shorter, including renewals).

The Bill also includes provisions for maximum term contracts (ie one that has an identifiable end date but contains terms that provide for it to be terminated before the end date.)

The provisions of the Bill will have some exceptions to certain rules and are listed below.

We will continue to provide information on these changes as it becomes available and should they become law.

Here are some provisions in the Bill around fixed term contracts:

1. An employer will be in breach of the new provisions for fixed term contracts if:

• the term of the contract is greater than two years;

• the term of the contract and any other period for it can be extended or renewed is greater than two years;

• the contract provides for an option or right to extend or renew the contract more than once.

2. There are some limited exceptions to these new provisions, including:

• the employee is engaged to perform only a distinct and identifiable task involving specialised skills;

• the employee is engaged in relation to a training arranment;

• the employee is engaged to undertake essential work during a peak demand period;

• the employee is engaged to undertake work during emergency circumstances or during a temporary absence of another employee;

• in the year the contract is entered into the employee earns more than the high-income threshold (currently $162,000) for that year.

How can Essential HR help?

If you have any queries or wish to review your current employment contracts, we have a wealth of expertise in this area and can assist you in effectively managing the employee and employer relationship.

As specialists in human resource management and industrial relations we assist Australian businesses navigate their way through the complexities around employing people.

To learn more how we can assist your workplace visit our website at: www.esshr.com.au.