Fixed Term Employment Contracts – What you need to know about recent changes in this space 

Fixed term contract employees are employed on a contract that terminates at the end of a set period.  

From 6 December 2023, there were new rules established that apply to the use of fixed term contracts which include: 

    • Contract term can’t be longer than 2 years including any extensions or renewals
    • Contract cannot have an option to extend or renew the contract more than once
    • An employee cannot be offered a new fixed term contract if the first 3 points below all apply, and one of the scenarios in the 4th point applies:
                1. Their previous contract was also for a fixed term
                2. Their previous contacts and the new contract are for mainly the same work
                3. There is substantial continuity in the employment relationship between the previous and new contracts and
                4. Either
                  • The previous contract contained an option to extend that was used
                  • The total period of employment for both the previous and new fixed term contract is more than 2 years
                  • The new fixed term contract contains an option to renew or extend, or
                  • There was an initial contract in place (before the previous contract):
                    1. That was for a fixed term,
                    2. That was for the same or similar work, and
                    3. Where there was substantial continuity in the employment relationship.

                  There are some exceptions to these rules that mean the limitations don’t apply to all fixed term contracts. The exceptions can be found in a handy table at Fixed term contract employees – Fair Work Ombudsman. One notable exception is a contract for a high income employee, the threshold for this from 1/7/23 was $167,500 pa and changes each year. They also don’t apply to casual employees. 

                  We hope you find this information helpful.

                  If you want to discuss your situation with a HR specialist please reach out to us so we can make the introduction. Click the ‘Get In Touch’ button below.

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