Published 6 November 2023
Key points
·From 6 December 2023, new rules apply when engaging employees on fixed term contracts.
·A fixed term contract terminates at the end of a specific period. This includes contracts where the employee is employed for a specific period.
·The new rules include:
oa requirement for employers to give any employees they’re engaging on a new fixed term contract a Fixed Term Contract Information Statement (FTCIS)
olimitations on how fixed term contracts can be used.
·There are some exceptions to who these rules apply to.
Fixed Term Contract Information Statement
From 6 December 2023, employers must give employees they’re engaging on new fixed term contracts a Fixed Term Contract Information Statement (FTCIS).
The FTCIS will be available to download from our website from 6 December 2023.
This information statement must be provided to employees before they start employment, or as soon as possible after.
Limitations on using fixed term contracts
From 6 December 2023, there are rules (called limitations) about using fixed term contracts after this date. There are 3 rules and all of them need to be followed.
Time limitation
A fixed term contract can’t be for longer than 2 years, including extensions and renewals.
Renewal limitations
A fixed 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.
Consecutive contract limitations
An employer can’t employ someone on a new fixed term contract if:
·the contract is for mainly the same work as a previous fixed term contract
·there isn’t a substantial break in the employment relationship between the previous and new contracts, and
·any of the following apply:
othe total period of employment for the previous contract and the new fixed term contract is more than 2 years, or
othe new fixed term contract can be renewed or extended, or
othe previous fixed term contract was extended, or
othere was an initial fixed term contract in place (before the previous contract) that:
§was for mainly the same work, and
§there was continuity of the employment relationship from the period of time (if any) between the initial contract and the previous contract.
Exceptions to the new rules
The new limitations on fixed term contracts don’t apply in some situations.
If one of these situations apply, an employer can offer a fixed term contract and the rules outlined above won’t apply.
Exception | Definition of exception | Example of fixed term contract where the new rules don’t apply |
Specialised skills | A contract to workthat requires specialised skills. | Vivian is a coach for a professional sports club and is engaged on a 5-year coaching contract. |
Training arrangements | A contract of employment in relation to an arrangement for the training of an employee under state or territory law. | Javier has started a plumbing apprenticeship and has been offered a 4-year fixed-term contract for the duration of his apprenticeship. |
Essential work | A contract for performing essential work during a peak demand period. | Kevin is performing essential apple picking during peak harvesting season and is on a 2-month contract which has the option to be renewed twice depending on harvest. |
Emergency circumstances or temporary absences | Working in emergency circumstances or temporary replacement of an employee. | Gerry is replacing Christina who is taking a 3-year sabbatical. Gerry is given a contract for 3-years to fill her absence. |
High-income employees | Where a person earns more than thehigh-income thresholdfor a full-time employee. If you are working part-time or for less than a year, this applies on a pro-rata basis. | Esther has just been hired on a 4-year contract as a project manager earning $240,000 per annum. |
Government funded contracts | Work that is funded by the government (completely or partially) for more than 2 years and where the funding is not likely to be renewed afterwards. | Lu is contracted to work on creating a community garden on a 3-year fixed-term contract. The project is fully funded over 3 years by the Local Government and the funding ends when the garden is completed. |
Governance positions | Contracts for a governance position that is for a limited time (based on the rules of a corporation or associations). | Sunita has been offered a 5-year contract on the board of a women’s shelter charity. |
Award provisions | If an award covers your employment and it allows for different fixed term contract options. | Ravi is covered by an award that allows him to work contract-to-contract. The award allows for multiple contract renewals as agreed between the employee and employer. |
There may be other exceptions that apply.
We’ll have more information on our website about these changes closer to 6 December 2023.
When a contract doesn’t meet the new limitations and exceptions rules
If a contract doesn’t meet these new rules, the contract’s end date will no longer apply.
Other terms and conditions in the contract will still apply, including entitlements from any relevant legislation, award or agreement.
Workplace disputes
Resolving in the workplace
If an employee and employer disagree on whether any limitations or exceptions to the new rules apply, they should first try to resolve the disagreement by discussing the issue together.
Workplace problems can usually be sorted out by having a conversation and understanding the laws that apply. Get guidance on how to start the conversation from ourRaising your problem in the workplace section.
Taking a dispute to the Fair Work Commission
If an issue can’t be resolved at a workplace level, theFair Work Commissioncan deal with disputes about the new rules. Either the employee or the employer may lodge a dispute with the Fair Work Commission.
The Fair Work Commission is the national workplace relations tribunal.
Our powers
We (the Fair Work Ombudsman) have the power to start court proceedings for alleged breaches of these provisions in line with ourCompliance and Enforcement Policy.
Small claims court
Employees can also take civil action in thesmall claims court.
https://www.fairwork.gov.au/newsroom/news/new-rules-for-fixed-term-contracts
