Understanding the new fixed term contract regulations

Introduction to New Regulations

Starting December 6, 2023, significant changes will be implemented regarding the engagement of employees on fixed term contracts. This article provides a detailed guide on what these changes entail and how they will impact both employers and employees.

Fixed Term Contract Basics

Fixed term contracts are those that terminate at the end of a specified period. From the specified date, employers must adhere to new regulations when engaging employees under these contracts.

Mandatory Fixed Term Contract Information Statement (FTCIS)

A key change is the introduction of the FTCIS. Employers are required to provide this statement to employees before they commence employment or as soon as possible thereafter. The FTCIS will be available for download from our website starting December 6, 2023.

New Limitations on Fixed Term Contracts

These limitations, effective from December 6, 2023, include:

1. Time Limitation: A fixed term contract, including extensions and renewals, cannot exceed a duration of 2 years.
2. Renewal Limitations: Contracts cannot be extended or renewed more than once, nor can they be structured to extend the total employment period beyond 2 years.
3. Consecutive Contract Limitations: Employers are restricted from employing someone on a new fixed term contract for mainly the same work without a substantial break, especially if the total employment period exceeds 2 years or if the contract includes options for extension or renewal.

Exceptions to the New Rules

Certain situations exempt employers from these limitations, such as contracts requiring specialized skills, training arrangements under state or territory laws, essential work during peak demand periods, emergency circumstances, high-income employees, government-funded contracts, governance positions, and specific award provisions.

Consequences of Non-Compliance

Contracts that fail to comply with these new regulations will no longer have a valid end date, although other terms and conditions, including entitlements from any relevant legislation, award, or agreement, will still apply.