Steps to Prepare for New Fixed Term Contract Rules

Allan Hall | 22 January 2024

From 6 December 2023 there have been substantial changes in the usage of fixed term contracts.

What are the New Rules?

There are new rules for fixed term contracts that are designed to regulate employment duration and extensions. These changes will bring about a significant shift in how employers engage workers on a fixed term contractual basis.

The main changes encompass three key areas:

  1. Time Limitations: Fixed term contracts cannot exceed a duration of 2 years.
  2. Renewal Limitations: Contracts cannot have an option to extend or renew to lengthen the employment period beyond the stipulated 2-year period. Additionally, extensions or renewals cannot occur more than once.
  3. Consecutive Contract Limitations: Employees cannot be offered a new fixed term contract if specific conditions apply. These include if:
    • their previous contract was fixed term, and
    • their previous and new contracts are mainly for the same work; and
    • there is continuity in the employment relationship between contracts. 

Additional considerations include whether:

  1. the employee’s previous contract contained an option to extend and was used;
  2. the total period of employment is greater than 2 years;
  3. the new contract has a clause to extend; and
  4. the previous contract was fixed term, similar work and there was substantial continuity of the employment relationship.

These new rules do not cover casual employees and contain exceptions for certain types of fixed term contracts. 

Contracts made before 6 December 2023 won’t fall under these new limitations, but the rules will apply to fixed term contracts entered into on or after this date.

Employers are mandated to provide a Fixed Term Contract Information Statement (FTCIS) to new employees engaged under these contracts after 6 December 2023. This statement outlines the regulations and entitlements related to fixed term employment.

Download the Fixed Term Contract Information Statement (FTCIS) here »

Steps to Ensure Compliance

In order to ensure compliance with the new changes, we recommend that businesses take the following steps:  

  • Familiarise yourself with the new rules as per the Fixed Term Contract Information Statement (FTCIS) above
  • Conduct an audit of any current employees on Fixed Term Contracts within the business to assess if contracts will be compliant moving forward
  • Identify whether the business or individual employee may be exempt from the new changes 
  • Revise Fixed Term Contract templates terms and conditions to ensure you are compliant.  

These changes aim to protect employees and ensure fair employment practices, while simultaneously providing clarity and guidelines for employers navigating the realm of fixed term contracts.  

Need Assistance?

At Allan Hall HR, we have a team of experienced consultants to assist with all your employment contractual arrangements and ensure your business is compliant with current legislation. If you are uncertain about how the new legislation applies to your business, please feel free to call us on 1300 675 393 or contact us here. To learn more about our HR services, please click here.