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New law limiting the use of

New law limiting the use of “Fixed Term Contracts” of employment: commenced 6 December 2023, but many exceptions – Part 2 of 3

Published on February 26, 2024 by Peter PunchPeter Punch

In a previous article on this website, we advised that changes to Federal law enacted on 6 December 2022[1] limiting the use of “fixed term contracts” by employers would commence on 6 December 2023.

That article briefly described the scope and purpose of those changes and foreshadowed that we would publish a further article on this subject close to the time of commencement of these changes in order to provide more detail, particularly on the various exemptions to the new limitations.

In Part Two of this series we will summarise the main aspects of the changes.

A further article, Part Three, will discuss the major exemptions from the new law (i.e., those instances or circumstances where employers can continue to use “fixed term contracts” that do not comply with the limitations the new law prescribes).

Summary of major features of the legislative reforms

On and from 6 December 2023 all the changes to the law on “fix term contracts” came into effect via:

  • The commencement of a number of new provisions in the Secure Jobs Better Pay Act,[1] most particularly new Division 5 in Part 2-9 of the Principal Act [2] ; and
  • The making of regulations[1] under the Principal Act specifying additional exceptions.

    These initiatives were supported by the Fair Work Ombudsman publishing the “Fair Work Fixed Term Contract Information Statement” (FTC Information Statement) that all employers are required to give employees when offering a new contract falling within the definition of a “fixed term contract”[3].

    “Headline” changes in the law

    Briefly these are the main effects of the changes:

    1. From 6 December 2023 onwards, an employer cannot employ someone on a fixed term contract that is either:

    a) More than two years in duration;

    b) More than two years when its identifiable period plus any period by which it might be extended are added together;

    c) One that has an option within it for more than one extension; or

    d) Is one of consecutive contracts that together will be more than two years in duration

      UNLESS the contract falls within one of the exceptions that the legislation and the regulations allows (as to which, see below).

      1. If a fixed term contract is entered into on or after the date of commencement of the legislation (6 December 2023) and that contract contravenes the legislation, then the term of the contract that provides that the contract will terminate at the end of the identifiable period is taken to have no effect, but the balance of the contract, without that term, remains in effect.
      2. Any dispute about the operation of the new statutory provisions may be taken by either party to the Fair Work Commission (FWC) for conciliation.
      3. Any employee offered a fixed term contract that falls within the scope of the new legislation must be given the FTC Information Statement whether the contract falls within an exception or not.

      Before looking at the main exceptions to the operation of these provisions, two general observations also need to made:

      First, the legislation does capture some situations where an employee who has a fixed term contract that was entered into prior to the legislation taking effect (6 December 2023) then enters into another such contract with the same employer that date. The situations to which this apply is dealt with in Sub sections (4) and (5) of Section 333E[4]. While there a few different situations that are covered, one simple example is as follows: if an employee had a fixed term contract for a two year period  that started before 6 December 2023 and expired after that date, the employee cannot be offered another fixed term contract by the same employer after that date if the contract is for substantially the same work and there is substantial continuity of employment between the two contracts [5].

      Second, the FWO’s FTC Information Statement is quite extensive and detailed (mainly due to the large number of exceptions), so it is very useful to read that Statement in detail before finalising a fixed term contract.

      If you have questions about a proposed or existing fixed term contract, particularly in this initial period of operation of the legislative changes, it is wise to get advice.

      Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you. 

      [1] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Secure Jobs Better Pay Act) and the Fair Work Amendment (Fixed Term Contracts) Regulation 2023 (Cth) (FTC Regulation).

      [2] Fair Work Act 2009 (Cth)

      [3] Sections 333J and 333K of the Principal Act.

      [4] These provisions are given a form of retrospectivity by Item 62 in Part 26 (concerning application, savings, transitional and miscellaneous provisions) of the Secure Jobs, Better Pay Act.

      [5] For more details and another example, see the right hand column of the FWO’s Fair Work Contracts Information Statement.

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