No fixed term contract can be longer than two years. This includes successive fixed term contracts
The Fair Work Commission requires Employers in Illawarra and Wollongong to review their current employment arrangements and conduct an audit of their employees on fixed and maximum-term contracts including previous contracts; and remove any clauses that provide the option to extend or renew the term. All employers should get HR help to comply with the changes.
There are now strict limits on the use of fixed-term and maximum-term contracts.
Employees can now only be engaged pursuant to a fixed-term or maximum-term contract for a maximum of two years and such contracts for the same role can only be renewed once. This means if an employee is on a fixed-term contract for two years, you cannot extend this. However, if an employee is on a fixed-term contract for one year, you have the ability to extend this contract for an additional year.
Exceptions to this include:
- The employee has specialised skills that the employer does not have, but needs, to complete a specific task;
- The employee is engaged as part of a training arrangement (for example, an apprentice or a trainee);
- The employer needs additional workers to do essential work during a peak period, such as fruit picking or other seasonal work;
- The employer needs additional staff members during an emergency, or needs to replace a permanent employee who is absent for personal or other reasons, for example, parental leave, sabbatical, or long service leave, or absence relating to workers’ compensation;
- The employee earns over the high-income threshold for the first year of the contract;
- The employer is reliant on government funding to directly finance the employee’s position either in whole or in part–the employer must receive the funding for more than two years, and there must not be any reasonable possibility that the funding will be renewed;
- The employee is appointed under governance rules of a corporation or other association, where those rules specify the length of time that the appointment can be in place; and
- The employer is permitted to enter into the fixed term contract by a term specified in a modern award that covers the employee.
Employers are now also required to issue employees engaged on a fixed-term or maximum-term contract with a Fixed Term Contract Information Statement in addition to the Fair Work Information Statement.
Ring John Morrissey to ask about pro forma employment contracts for your business.
