Temporary Reprieve on Fixed and Maximum Term Contract Restrictions - Kingston Reid

Temporary Reprieve on Fixed and Maximum Term Contract Restrictions

Restrictions on the use of fixed and maximum term contracts were one of the significant and well-publicised reforms introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amendment Act) in late 2022 which are set to commence in just a week’s time, from next Wednesday 6 December 2023.

Throughout 2023, employers across Australia have been taking steps to review their hiring practices and existing workforce composition to ensure compliance with the new provisions on and from 6 December. These reforms have a particular impact on employers with uncertain funding arrangements, particularly in the tertiary education and not-for-profit sectors.

Last Friday afternoon, Minister Burke introduced the Fair Work Amendment (Fixed Term Contracts) Regulations 2023 (Regulations), which create further exceptions for the purposes of the limitation on fixed term contracts provisions which apply in respect of organised sports, live performance industry employees, philanthropic entities and – as anticipated – higher education employees.

In effect, the Regulation essentially operates as a ‘stay’ of the commencement of the application of the new restrictions for fixed term contracts in the abovementioned areas for a limited period of 6 months – that is, until 1 July 2024. However, only contracts entered into on or after next Wednesday 6 December 2023 (and before 1 July 2024) will be exempted from the restrictions.

The challenge that the Regulations respond to is that employers in these sectors are typically (significantly) dependent on government or other funding to operate their core functions. In relation to tertiary education, the current manner in which funding is allocated creates significant difficulties in applying the new provisions of the FW Act relating to fixed term contracts. For example, where funding is allocated to particular projects under largely recurrent government schemes, but in variable amounts, or where the funding is allocated on an annualised basis, the exceptions to the restrictions introduced by the Amendment Act are unlikely to apply. This creates a difficulty which would appear to require employers to engage employees on ongoing contracts, despite not having certainty from Government that the positions will, in fact, be funded on an ongoing basis.

While the tertiary education sector provides a particularly sharp example of this issue, it is not alone. In the not-for-profit sector, projects are often funded by recurrent short-term government grants, with employment contracts fixed to a duration reflecting the funding. These recurring grants cause the same issue as those faced in the community sector.

The purpose of the Regulations is to allow for additional time for relevant employers to continue discussions with DEWR in relation to the application of the fixed term contract limitations, and it remains to be seen what will emerge from those discussions in the lead up to 1 July 2024 – importantly, whether any new (permanent) exceptions will be introduced.

For comprehensive discussion of the reforms introduced under the Amendment Act, including but not limited to the new limitations on fixed and maximum term contracts, please see our Insight here.

As we communicated last week (in a separate Insight article looking at recent developments arising in respect of the Government’s Closing Loopholes Bill), Minister Burke has now agreed to certain amendments in respect of the Bill’s gig-economy provisions as well as the “same job, same pay” provisions. A revised Bill reflecting certain amendments to these provisions (arising whilst the Senate inquiry into the Bill continues) is expected to be tabled in the House of Representatives this week.

To understand whether your organisation may be able to take advantage of the reprieve in the regulation of its fixed and maximum term contracts, please contact a member of the Kingston Reid team.

 

Luke Maroney
Senior Associate
+61 2 9169 8433
[email protected]
Katie Sweatman
Partner
+61 3 9958 9605
[email protected]

 

Jane Silcock
Executive Counsel – Knowledge
+61 2 9169 8419
[email protected]