EXPLANATORY STATEMENT
Issued by the authority of the Minister for Employment and Workplace Relations
Fair Work Act 2009
Fair Work Amendment (Fixed Term Contracts) Regulations 2023
AUTHORITY
The Fair Work Act 2009 (the Act) provides a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians. The Fair Work Regulations 2009 (the Principal Regulations) support matters of detail within the legislative framework contained in the Act.
Section 796(1) of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Section 333F of the Act provides, in part, that the Governor-General may make regulations prescribing exceptions that may apply to the limitations on fixed term contracts, and regulations prescribing the method for calculating the high-income threshold for the purposes of the exception contained in subsection 333F(2).
Row 27 of the table at section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 provides that sunsetting of legislative instruments does not apply to regulations made under the Act. Pursuant to section 12, these regulations would not be subject to ordinary sunsetting processes.
The Act specifies no conditions that need to be satisfied before the power to make the proposed Regulations may be exercised.
PURPOSE AND OPERATION
The purpose of the Fair Work Amendment (Fixed Term Contracts) Regulations 2023 (the Regulations) is to amend the Principal Regulations to prescribe:
- the method of calculating the high-income threshold for the purpose of subsection 333F(2) of the Act, where an employee is required to work fewer than full-time hours for a year and where an employee is required to work for only part of a year.
- further sources of funding, in addition to legislated sources, for the purposes of the exception contained in subsection 333F(1)(f)(i) of the Act. Types of excepted funding include philanthropic funding, and testamentary gifts or contributions for charitable purposes. This exception will apply to contracts entered into on or after 6 December 2023 and before 1 July 2024.
- further exceptions for the purposes of subsection 333F(1)(i) in relation to organised sports, high performance international sporting events, the live performance sector, and the higher education sector. This exception will apply to contracts entered into on or after 6 December 2023 and before 1 July 2024.
On 6 December 2022, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Secure Jobs, Better Pay Act) received Royal Assent. Part 10 of Schedule 1 of the Secure Jobs, Better Pay Act amended the Act to prohibit the use of fixed term contracts for the same role beyond two years or two consecutive contracts (whichever is shorter), including renewals, providing limited exceptions for genuine fixed term contracts, and expanded the regulation making powers under the Act. The provisions were introduced to provide protections for employees engaged under successive fixed term contracts, while allowing employers to continue to use fixed…
Overview
The Fair Work Amendment (Fixed Term Contracts) Regulations 2023, enacted under the Fair Work Act 2009, aim to address the gaps and issues arising from the use of fixed-term contracts in the Australian workforce. The regulations were introduced to provide employees with more security and to ensure that fixed-term contracts are used appropriately, while allowing employers flexibility in certain circumstances. Developed and authorised by the Parliament of Australia, these regulations seek to balance the interests of both employers and employees by setting out specific exceptions to the limitations on fixed-term contracts, thus promoting fair workplace relations. The policy objective is to safeguard employees from unfair dismissal while enabling employers to utilise fixed-term contracts for legitimate purposes, such as in organised sports, high-performance international sporting events, the live performance sector, and the higher education sector.
Scope and Application
The Fair Work Amendment (Fixed Term Contracts) Regulations 2023 applies to the regulation of fixed term contracts under the Fair Work Act 2009 at the Commonwealth level, affecting employers and employees engaged in various industries across Australia. These Regulations are particularly pertinent to employers and employees involved in sectors such as organised sports, high performance international sporting events, the live performance industry, and the higher education sector, as well as those positions funded by non-government sources such as philanthropy and testamentary gifts or contributions for charitable purposes. The Regulations do not apply to fixed term contracts that are not subject to the exceptions outlined in the Act and the Regulations themselves. The Regulations came into effect on 6 December 2023 and will remain in force until 1 July 2024. The Fair Work Act 2009 allows for the creation of subordinate legislation to further specify the application of the Act, and these Regulations are an example of such legislative instruments.
Key Provisions
- The Fair Work Amendment (Fixed Term Contracts) Regulations 2023 (the Regulations) amend the Fair Work Regulations 2009 (Principal Regulations) to introduce new exceptions to the limitations on fixed term contracts, aligning with the Fair Work Act 2009 (the Act). Section 2 of the Regulations specifies the commencement date of 6 December 2023, which coincides with the commencement of Part 10 of Schedule 1 to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. These Regulations are made under section 333F of the Act, which allows for the prescription of exceptions to the limitations on fixed term contracts, and the method for calculating the high-income threshold for the purposes of certain exceptions.
- The Regulations impose specific obligations on employers and employees. Employers must ensure that any fixed term contracts entered into between 6 December 2023 and 1 July 2024 comply with the newly prescribed exceptions. For instance, they must verify that the contract falls under one of the specified exceptions, such as employment in organised sports, high performance international sporting events, the live performance sector, or the higher education sector. Additionally, employers must calculate the high-income threshold accurately for employees working part-time or for less than a full year, using the formula provided in new subregulation 2.14. Employees, on the other hand, must be aware of their rights and entitlements under the Act, ensuring that their employment contracts do not contravene the provisions of the Regulations.
- Breach of the provisions in the Regulations can lead to civil and criminal consequences. Employers found to be in breach of the Regulations by improperly using fixed term contracts may face enforcement actions by the Fair Work Ombudsman. This could include fines, orders for compliance, or even court proceedings. For example, if an employer enters into a fixed term contract that does not meet the exceptions outlined in the Regulations, they could be subject to penalties under the Act. The Fair Work Act provides for penalties for non-compliance, which can include fines of up to $21,000 for individuals and $105,000 for bodies corporate, depending on the nature and seriousness of the breach. These penalties underscore the importance of adhering to the provisions of the Regulations to avoid legal repercussions.
- Area of Law
- Employment & Labour Law
- Instrument
- Regulation
- Concepts
- Definitions & Interpretation
- Regulatory Standards
- Exceptions & Exclusions
- Enforcement Powers
