Fixed term contracts: new laws from December 2023

The Secure Jobs, Better Pay Bill amendments to the Fair Work Act gives employees new workplace rights around fixed term contracts.

A fixed term contract is a contractual arrangement between an employee and an employer that lasts for a specified period of time. Arrangements of this nature typically have a start and finish date specified on the contract. As the employment concludes on a specified and agreed date, employers and employees generally don’t need to give notice or take any action to terminate the relationship.

Fixed term contracts have traditionally offered employers benefits in certain situations. These include:

• covering periods of parental leave or long service leave
• temporarily increasing team numbers to undertake a special project
• meeting workforce needs during periods of economic uncertainty (such as entering new markets).

From 6 December 2023, employers can no longer employ an employee on a fixed term contract that:

• is for 2 or more years (including extensions)
• may be extended more than once, or
• is a new contract:

1. that is for the same or a substantially similar role as previous contracts
2. with substantial continuity of the employment relationship between the end of the previous contract and the new contract, and either:

• the total period of the contracts is 2 or more years,
• the new contract can be renewed or extended, or
• a previous contract was extended.

Employers must not take certain actions to avoid the new restrictions from applying. For example, they can’t:

• delay re-engaging an employee for a period
• re-engage the employee and engage someone else instead to do the same or substantially similar role.

Some exceptions will apply, including if the fixed term contract is:

• for a training arrangement, or
• the employee is covered by an award that allows fixed term contracts in the above circumstances.

From 6 December 2023, employers will have to give employees they’re engaging on new fixed term contracts a Fixed Term Contract Information Statement. This statement will be available on the Fair Work Ombudsman website before this date.

Disputes about the new requirements will be heard by the Fair Work Commission. Employees will also have access to small claims court too, should they elect to take civil action instead.

While employees will still have the opportunity to utilise fixed-term contracts, the ongoing use of these employment arrangements will be more strictly regulated with the introductions of the new laws.

Employees currently on fixed term contracts? Need to know what your options are in preparation for the new Fair Work Act laws kicking in from 6 December? Give Bare Bones Consulting a call. We’ll fix things for you!