You’re probably very familiar with standard full-time, part-time and casual employment arrangements. However, ‘fixed-term’ contracts might be just what you – and your employees – have been looking for.
Unlike permanent or casual employment, fixed-term employees are engaged for a pre-determined period of time with no guarantee of work after the contract reaches its expiry date. This type of employment contract is recognised by the Fair Work Act 2009 and a person can be employed on a fixed-term basis regardless of whether they’re position is covered by a Modern Award (including the Banking, Finance and Insurance Award 2010 and the Clerks-Private Sector Award 2010).
Fixed-term employment contracts offer you and your employees a number of significant benefits, which include the following:
- Employees can work for fixed periods of say 6 or 8 months – when firms are busiest – and then use the quieter months of the year as they please. This ensures an excellent work/life balance for those who do can afford extended periods without regular income
- Employees engaged on a fixed-term basis cannot bring an ‘unfair dismissal’ claim against your firm if the contract is not renewed upon its expiry. This provides Practice Managers with certainty and peace-of-mind
- Each new fixed-term contract can be negotiated ‘from scratch’. If the firm’s requirements have changed in the months since the employee was last engaged, terms and conditions of employment can be tailored accordingly.
- Where there are extended breaks between periods of engagement, the fixed-term employee will generally become ineligible for expensive redundancy payments.
- Fixed-term employees still enjoy all the usual National Employment Standards (NES) entitlements such as pro-rata accrual of paid annual leave and personal/carer’s leave. Accrued and unused annual leave is simply be paid out at the end of each fixed-term period.
It’s important to remember that if the employee is covered by a Modern Award, they will need to be provided with all of their usual, Award-based entitlements. Further, fixed-term contracts should not be end-to-end, with one contract beginning the day after the previous contract ends. Such arrangements could result in investigation by the Fair Work Ombudsman (FWO) and are genuinely not considered reasonable.
When used fairly, fixed-term contracts can provide both firms and their employees with increased flexibility, improved productivity and enhanced client satisfaction. They may be just what you need.
David Bates – Managing Director, Workforce Guardian
This paper is based on legislation and case law current at November, 2013
Disclaimer: This paper is intended to provide commentary and general information only. It should not be relied upon as legal advice. Formal legal advice may be necessary in a particular transaction or on matters of interest arising from this article. Workforce Guardian Pty Ltd is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission contained within this article.
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