If you have ever wondered whether or not to hire a temporary resource via Peoplecorp on an hourly rate or fixed term contract, the following information may give you comfort that an hourly or daily rate is the way forward!
As of December 6 2023, employers and employees alike need to be aware of significant changes to the rules governing fixed-term contracts in Australia.
The modifications introduce limitations that impact the duration of these contracts, the number of renewals allowed, and the consecutive employment of individuals on such contracts. In this article, we’ll delve into the three key limitations imposed on fixed-term contracts.
The first and foremost change pertains to the duration of fixed-term contracts. Previously, employers had considerable leeway in setting the length of such contracts. However, the new regulations introduce a time limitation, stipulating the maximum duration a fixed-term contract can span is 24 months. Employers must now adhere to this specified time frame, ensuring that contracts do not exceed the established limit. This alteration aims to prevent the misuse of fixed-term contracts by employers seeking to circumvent the rights and benefits associated with permanent employment.
The second set of limitations involves the renewal of fixed-term contracts. Employers will now face restrictions on how many times a fixed-term contract can be renewed consecutively. This seeks to address the issue of perpetual renewals that effectively create long-term employment without the corresponding benefits and job security. By setting a cap on the number of renewals, the regulations aim to strike a balance between providing flexibility to employers and ensuring employees have clarity and stability in their employment.
Consecutive Contract Limitations
The third and final limitation focuses on employing individuals on consecutive fixed-term contracts. Employers will no longer be able to engage in a cycle of successive fixed-term contracts with the same individual indefinitely. The consecutive contract limitations are designed to prevent the exploitation of such contracts to maintain a flexible workforce without providing the stability and benefits associated with permanent employment.
Implications for Employers
These changes carry significant implications for employers, necessitating a re-evaluation of their approach to workforce management. Employers will need to carefully consider the duration of fixed-term contracts, the frequency of renewals, and the impact of consecutive contracts on job security and employee rights. HR departments should be well-versed in these limitations to ensure compliance and avoid legal repercussions.
The changes to fixed-term contract regulations effective from December 6 2023, mark a significant shift in employment dynamics. Engaging a contractor on an hourly or daily rate is a very obvious solution for Employers who are unsure of how long they will need the Contractor for. If you are a Client and you are in two minds as to how to proceed, then engaging them as a temp in the first instance provides you with a lot more flexibility.
If you want to read more about the changes, then you can find additional information on the Fair Work website https://www.fairwork.gov.au/newsroom/news/new-rules-for-fixed-term-contracts