Introduction:

The Australian workforce is on the brink of a major transformation with the next part of the ‘Secure Jobs and Better Pay’ Act (see here), set to take effect on December 6, 2023. This landmark legislation introduces significant changes to workplace laws, particularly impacting fixed-term employment contracts. In this blog, we’ll delve into what these changes entail and how they will affect both employers and employees.

Understanding Fixed-Term Employment Contracts:

Before diving into the changes, it’s crucial to understand what a fixed-term employment contract is. Also known as a ‘maximum-term employment contract,’ this type of agreement is explicitly temporary, ending on a specified date outlined in the contract. Traditionally, such contracts were governed by common law, but with the new act, they will now fall under the purview of the Fair Work Act, leading to additional regulations.

Key Changes to Fixed-Term Employment Contracts:

1. Duration Limitations:
   • The new act stipulates that a fixed-term contract cannot exceed two years in duration. This includes any extensions or renewals of the contract, ensuring the total period does not surpass the two-year mark.
2. Restrictions on Extensions and Renewals:
   • Contracts can no longer be extended or renewed more than once. This rule applies even if the total duration, including extensions and renewals, remains under two years.
3. Employment Engagement Conditions:
   • There are specific conditions under which an employer cannot engage an employee on a new fixed-term contract. These include:
     • The work is substantially the same as that of the previous contract.
     • There is no significant employment break between the two contracts.
     • Additional conditions that indicate continuity, such as the combined employment period exceeding two years, provisions for extension or renewal in the new contract, or the previous contract having been extended.

Exceptions to the Rules:

While these conditions are broadly applicable, there are exceptions. These include contracts for trainees or apprentices, employees who earn above the high-income threshold, or situations where an award allows rolling fixed-term contracts.

Implications for Employers and Employees:

1. For Employers:
   • Employers must now provide a fixed-term contract information statement to all employees engaged under such contracts.
   • They must ensure compliance with the new regulations to avoid unintentional creation of permanent contracts.
2. For Employees:
   • Employees have more clarity and protection regarding the duration and terms of their employment.
   • The act guards against the misuse of fixed-term contracts to deny employees the benefits and security of permanent employment.

Conclusion:

The ‘Secure Jobs and Better Pay’ Act is a significant step towards fairer employment practices in Australia. By regulating fixed-term contracts, the act aims to provide greater job security and better working conditions for employees. Both employers and employees need to be well-informed about these changes to ensure compliance and make the most of the benefits they offer.

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