The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 amends the Fair Work Act 2009 (the Act) to limit the use of fixed term contracts for the same role beyond two years (including renewals) or two consecutive contracts - whichever is shorter.

From 6 December 2023, employers can no longer employ an employee on a fixed term contract that:

• is for 2 or more years (including extensions)
• may be extended more than once, or
• is a new contract:

- that is for the same or a substantially similar role as previous contracts

- with substantial continuity of the employment relationship between the end of the previous contract and the new contract, and either:

- the total period of the contracts is 2 or more years,

- the new contract can be renewed or extended, or

- a previous contract was extended.

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In Summary

Essentially there is now a limit that fixed term contracts cannot be extended beyond two (2) years or two (2) consecutive contracts (whichever is shorter).

In relation to existing fixed term contracts, the changes only apply to new contracts entered into after the commencement of the legislation (effective 6 December 2023 or earlier if by proclamation). However, any contract that was in place prior to the change of legislation, will be counted towards the limits i.e. if there was fixed term contract in place for a period from 1 January 2022 – 31 December 2023, if a new fixed term contract was to be entered into from 1 January 2024, the previous length of service would count towards the maximum 2 year limit of a fixed term contract.

In the event that a fixed term contract doesn’t comply with the new provisions (i.e. it is for a fixed-term period beyond 2 years), the contract will still remain in effect with the exception of the fixed-term expiry clause. In addition to this, the employee would also have access to notice of termination and redundancy payments (if applicable) as well as access to unfair dismissal proceedings.

You can learn more about the changes by downloading the fact sheet here.

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Article by Teneal Donaldson

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