Recently, the Australian Government has taken strides to bolster job security and prioritise gender equality in the workplace. These changes are a part of a broader commitment to enhance the Australian employment landscape. One key aspect of these reforms is the limitation placed on the use of fixed-term contracts.

What's Changing?

Fixed-term contracts have long served legitimate purposes in the business world. However, their continuous use for certain employees has, over time, morphed into a source of job insecurity. These contracts, when employed for the same role over an extended period or subject to perpetual renewals, can exacerbate uncertainty among employees.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) has introduced critical changes to address this issue. It amends the Fair Work Act 2009 (Cth) to restrict the use of fixed-term contracts for the same role beyond two years, including renewals, or two consecutive contracts—whichever is shorter. If these rules are breached, the contract remains valid, except for the term specifying its expiry on a set date.

Several exceptions exist to allow fixed-term contracts beyond these limits when genuinely necessary and appropriate. These exceptions include performing a discrete task for a fixed period, apprentices and trainees, peak demand periods, temporary replacements during long employee leaves, or earning above the high-income threshold. Exemptions also apply where fixed-term contracts are permitted by an applicable modern award, and the Minister can make regulations to address sector-specific arrangements.

Employee Protections

Employers will soon be required to provide a Fixed-Term Contract Information Statement to all employees entering into fixed-term contracts. This statement, which will be developed by the Fair Work Ombudsman, outlines details regarding fixed-term contract limitations, exceptions, and the dispute resolution procedure.

In cases where disputes arise between employees and employers concerning fixed-term contracts, resolution mechanisms are in place. The Fair Work Commission, along with the Federal Circuit and Family Court of Australia and Magistrates Courts, can handle disputes under the small claims procedure.

It's important to note that these changes apply to new contracts entered into after the legislation's commencement. However, any contracts in place before the commencement will be counted towards the limits.

What Do These Changes Mean?

These changes strike a balance between employer flexibility and employee protection. Employers can still manage their workplace needs while providing safeguards for employees vulnerable to exploitation through improper use of fixed-term contracts.

Employees entering into contracts in violation of the new provisions will be deemed permanent employees. The contract's term, specifying its expiry on a set date, will be rendered ineffective, while the rest of the contract remains valid. Such employees will also gain access to essential safety net provisions, including notice of termination, redundancy payments, and access to unfair dismissal proceedings.

Effective Date and Future Considerations

The changes are set to take effect from 6 December 2023, or an earlier date that may be proclaimed. This gives employers ample time to understand their new obligations and allows for further consultations on sector-specific rules, which may be implemented through regulations.

These reforms represent a significant step towards fostering job security and gender equality in Australian workplaces, reinforcing the commitment to create a fair and balanced employment landscape.