New Rules For Fixed Term Contracts

From 6 December 2023, new rules apply when engaging employees on fixed-term or maximum-term contracts.

A fixed term/maximum-term contract terminates at the end of a specific period where the employee is employed for a specific period.

The New Rules Include:

• a requirement for employers to give any employees they’re engaging on a new fixed term contract a Fixed Term Contract Information Statement (FTCIS)
• limitations on how fixed term contracts can be used.

There are some exceptions to who these rules apply to.

Fixed Term Contract Information Statement

Reminder: Fair Work Information Statement

In addition to the FTCIS, employers need to provide new fixed term contract employees with the Fair Work Information Statement (click here). This is a separate document that provides information about minimum workplace rights and entitlements.

Limitations 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. These limitations relate to:

• how long a fixed term contract can be (time limitation)
• renewing a fixed term contract, including how many times a contract can be renewed (renewal limitations)
• employing a person on consecutive contracts (consecutive contract limitations).

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

1. An employer can’t employ someone on a new fixed term contract if:
2. The contract is for mainly the same work as a previous fixed term contract
3. There isn’t a substantial break in the employment relationship between the previous and new contracts, and

Any of the following apply:  

• the total period of employment for the previous contract and the new fixed term contract is more than 2 years, or
• the new fixed term contract can be renewed or extended, or
• the previous fixed term contract was extended, or
• there 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.

There may be other exceptions that apply
and the Fair Work Commission will release those changes closer to the
implementation date of 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.

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.

Akyra’s Key Takeaways for Employers

• New rules apply for fixed-term and maximum-term agreements from the 6 December 2023 – i.e. no more than two x 2 year agreements.
• There are some exceptions to these new rules.
• In addition to the Fair Work Information Statement, a Fixed-Term Contract Information Statement (FTCIS) must be provided to anyone who is employed under a fixed-term or maximum-term agreement. The FTCIS will be available for download from the Fair Work website from 6 December 2023.

If you have any queries about management of your fixed-term and/or maximum-term agreements, contact a HR Advisor at Akyra for assistance.