The Fair Work Ombudsman has announced a major overhaul to the rules of fixed-term contracts in Australia that’s set to improve the careers of 400,000 workers.
Under the new rules, which come into effect on December 6, workers will be prohibited from being employed on a fixed-term contract (FTC) for more than two years.
Employers will also be barred from extending or renewing an FTC more than once, even if the sum of the employment period is less than 48 months.
Workers on FTCs are hired for a set period of time and have a predetermined end date written into their contracts, unlike permanent staff, who are employed on an ongoing basis.
Many experts believe that, due to the employment gaps that can occur between contracts, workers on FTCs miss out on both salaries and superannuation, as well as the job stability that comes from a permanent role.
Recent data from the Australian Bureau of Statistics showed that 390,000 Australian workers, or 3.4 per cent of the workforce, were employed on fixed-term contracts, 76 per cent of whom are on a contract of one year or less.
Education and training, media and telecommunications and public administration were the three industries that most often use FTCs, the ABS found.
The changes to FTCs are just one element of the government’s wide-reaching overhaul of Australian workplace laws under the Fair World Legislation Amendment Act, which is termed “Secure Jobs, Better Pay”.
The new act is part of the government’s election promise to get Aussie wages moving upwards, after nearly a decade of wage stagnation.
“The federal government has a clear focus on secure employment and these changes are intended to prevent employers from entering into rolling fixed-term contracts which can potentially reduce permanent employment opportunities,” said Decipher Workplace Law director and principal lawyer Sarah Blackman.
“In respect of these changes, the onus rests with employers and not employees.
“In practice, this generally means that if a fixed-term contract extends beyond two years, is renewed more than once or there are more than two consecutive fixed-term contracts, the contract term that provides for an expiry date will be void and have no effect.
“The remaining contract will remain on foot, meaning the employee will have access to permanent employment conditions, including redundancy pay and protection from unfair dismissal.”
Trent Hancock, principal of Jewell Hancock Employment Lawyers, said the changes will prevent employers from misusing FTCs.
“Regrettably, many employers have been using successive fixed-term contracts to create a new form of insecure work for employees,” he said.
“Even if a role is required on a permanent ongoing basis, employers have been too often engaging workers on fixed-term contracts to facilitate their easy departure or to exert an unfair level of pressure and control during the relationship, including in salary negotiations.
“In our experience, this practice has been particularly prevalent in education and the not-for-profit sector where employees are regularly directed to sign a new fixed-term contract every one or two years, even if the duties are required on a permanent basis.”
There will be some exceptions to the FTC rules, including for government-funded contracts, high-income employees, training arrangements and apprenticeships, workers with specialised skills including coaches, and essential work during peak demand periods, including fruit pickers.