Fixed term contract restrictions: a further lifeline for select sectors

Restrictions affecting the use of ‘fixed term’ contracts have been in place since December 2023, however regulations were passed last year granting certain sectors a temporary reprieve by delaying the commencement of those restrictions until 30 June 2024.

You can read our article on those regulations here.

From 1 November 2024, the Fair Work Amendment (Fixed Term Contracts—Exceptions Measures) Regulations 2024 repeals the exception that previously applied to non-government funded philanthropic entities and replaces it with a set of new exceptions which will apply to contracts entered into between commencement (1 November 2024) and 31 October 2025 for the following sectors:

• philanthropic and not-for-profit;
• medical and health research; and
• public hospitals.

Employers in the relevant sectors will only be able to rely on the exceptions in very specific circumstances, which in summary are:

1. Charity and not‑for‑profit sector

Employers that are philanthropic entities (or someone on behalf of the employing entity) in relation to employment contracts for a position funded in whole or in part by:

• government funding provided by way of a grant or procurement (with some exceptions); or
• funding provided by a philanthropic entity (other than the relevant entity or an associated entity of the relevant entity); or
• funding provided as a testamentary gift or testamentary contribution to the relevant entity for a charitable purpose of the relevant entity.

There are specific requirements about the period of the project or program, the dates the funding must relate to, the period of the contract and maximum periods of service for the exception to apply.

2. Medical or health research sector

Another exception applies to employees primarily carrying out medical or health research where their employer (or someone on behalf of the employing entity) is a philanthropic entity, an entity controlled by a philanthropic entity or a public purpose body (Federal or State) (or an entity controlled by that body), and contracts for positions which are government funded or receive other specific types of funding. The positions must also be for specific types of research.

There are specific requirements about the period of the project or program, the dates the funding must relate to, the period of the contract and maximum periods of service for the exception to apply.

3. Public hospital sector

An exception applies for public hospitals within a prescribed meaning and employment contracts that relate to positions which receive specific types of philanthropic and charitable funding.

As with the other exceptions, there are specific requirements about the period of the project or program, the dates the funding must relate to, the period of the contract and maximum periods of service for the exception to apply.

What employers need to know

Despite these exceptions, many employers in these sectors will continue to grapple with difficult decisions about whether they are able to adequately fund permanent roles where fixed term contracts are no longer available.

According to the Minister’s Explanatory Statement, the new exceptions have been introduced to address issues arising from the nature of funding arrangements in the sectors ‘while ensuring that fixed term contracts are not inappropriately used where permanent employment could be provided’.

The new regulations also extended the existing exception in the higher education sector until 31 October 2025.

The Minster’s Explanatory Statement explains that the aim of the higher education extension was to allow the Fair Work Commission time to complete its review of the fixed term provisions in the Higher Education Industry — Academic Staff— Award 2020 and the Higher Education Industry — General Staff— Award 2020, in which the Commission is considering whether any changes to the awards are required as a result of the fixed term contract restrictions.

Employers in the philanthropic and not-for-profit, medical and health research, public hospital and higher education sectors should carefully consider whether the exceptions apply to each new proposed fixed term contract to ensure that they continue to comply with restrictions on the use of fixed term contracts (see our original article on the restrictions here).

Gadens’ Workplace Advisory and Disputes team regularly assists employers to comply with the fixed term contract limitations and can help assess whether an employer may fall into the new exceptions. Please get in touch with our team to discuss.

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Authored by:
Diana Diaz, Special Counsel
Amanda Junkeer, Partner