Never Gonna Give You Up: How Fixed Term Contracts now Rickroll….

We're no strangers to love [HR issues]

You know the rules and so do I (do I)

A full commitment's what I'm thinking of

You wouldn't get this from any other guy [employer]

I just wanna tell you how I'm feeling

Gotta make you understand

Never Gonna Give You Up: Rick Astley

With the changes to the Australian Fair Work Act 2009 (Cth) brought about by the Secure Jobs Better Pay Act, can an employer even put someone on a fixed term contract anymore? Is the reality that an employer is never gonna give you up? Or have we all been Rickrolled?

Fixed term contract legislation

Essentially, an employer can now only put an employee on a fixed term contract for up to two years unless they can argue an exception.  Therefore, unless the employee falls within that exception, the “end date” clause will have no effect i.e. the employee will simply continue their employment after that supposed end date.  These provisions came into effect on 6 December 2023, however, any time period worked prior to 6 December 2023 will count towards that two year limit.

What are the exceptions?

There are a number of potential exceptions including:

·         the employee is engaged under a contract to perform only a distinct and identifiable task involving specialised skills – this is likely to be rare and would have to be very specialised;

·         the employee is engaged under a training arrangement;

·         the employee is engaged to undertake essential work during a peak demand period;

·         the employee is engaged under emergency circumstances or during a temporary absence of another employee;

·         the employee’s earnings are above the high income threshold for the year;

·         the contract is funded in whole or in part by government funding, the funding is for a period of more than two years and there are no reasonable prospects that the funding will be renewed after the end of the period;

·         the contract relates to a governance position that has a time limit under the governing rules of the organisation;

·         a modern award that covers the employee permit a fixed term contract in the circumstances;

·         the contract is of a kind prescribed in the regulations.

As outlined above, some of the exceptions are fairly straightforward, but some are also unclear.  What is a “distinct and identifiable task involving specialised skills”? What about philanthropic funding as opposed to government funding? What is “essential work”?

For many organisations that rely on grants, if the grant does not fall within this exception, if an employee’s role does have to be made redundant due to the ending of the grant, then employers should consider including a provision for potential redundancy pay when preparing grant applications.

It is suggested that employers consider whether their employees genuinely fall within an exception, if so consider taking legal advice on the issue, or else otherwise assume that permanent employment is likely to be the norm.

How do you terminate a contact if not at the end of the fixed term?

As outlined earlier, if the contract has been for more than two years (even if it involves a series of shorter, successive contracts that collectively amount to two years), then the contract is considered an ongoing contract, unless it falls within an exception.

Therefore, in order to terminate a contract, it has to be for a valid reason, with procedural fairness to avoid any claims of unfair dismissal.  To avoid any claims of adverse action, an employer will also need to ensure that there was a valid reason for the dismissal that is not due to a discriminatory reason or due to an employee exercising a workplace right.

It is recommended that employers seek advice on this difficult issue, otherwise, it will feel like you’ve been Rickrolled….

Never gonna give you up

Never gonna let you down

Never gonna run around and desert you

Never gonna make you cry

Never gonna say goodbye

Never gonna tell a lie and hurt you

Remotely Legal can assist employers and boards on all aspects of employment law, including advising on difficult people issues, reviewing policies and assisting with enterprise bargaining.  Remotely Legal can train your boards and management teams on how to deal with incidents and investigations.  Remotely Legal can also be your fully outsourced HR and people legal team.

RL Investigations, part of Remotely Legal, are a team of highly experienced and qualified lawyers and investigators, who can function as your independent, external investigation team providing fast, comprehensive and reliable investigation reports, workplace culture reviews and suggestions for organisational improvement. RL Investigations can also help your internal HR or investigation team to improve their investigations and assist decision makers in considering the right factors when making key decisions.

This blog is general advice only.  Please obtain legal advice in relation to your specific circumstances.  This blog was written by a human so please seek permission if you wish to copy any of it.