Contracts are an important part of any business engagement. If your contracts aren’t clear and your conduct doesn’t reflect the terms that you agreed to, then as an employer, you may find yourself dealing with conflicts and misunderstandings. 

On the other hand, when done properly, contracts can help avoid that very scenario.

This is especially important when it comes to successive fixed term contracts. 

When used correctly, successive fixed term contracts can be useful for both parties. However, if you’re not careful, then you could end up breaching employment laws and creating disputes with your employees. 

It’s wise to learn everything you can about successive fixed term contracts so you can get the best out of them. Keep reading to learn more. 

What Is A Successive Fixed Term Contract?

A successive fixed term contract is a temporary contract that is offered on an ongoing basis. 

Let’s break the terms down a little more here. 

Successive refers to something that occurs consecutively or regularly. 

A fixed term contract is a legal agreement that lasts for a temporary period. For example, if a fixed term contract is for a 6 month period, the contract will end after 6 months unless the parties agree to extend the contract or enter into a new one. 

Therefore, a successive fixed term contract is when two or more parties agree to continuously enter into temporary legal agreements, usually one after the other. 

Jordan owns a construction company where certain projects require the help of an electrician. In order to complete these tasks, Jordan hires Jamie, a talented electrician, under fixed term contracts for each job where Jamies services are required. Recently, a lot of projects have required Jamie’s knowledge and skill set causing Jordan to hire Jamie under a successive fixed term contract. 

Successive Fixed Term Employment Contracts

In a ‘gig economy’, fixed term contracts can provide employers and employees with an opportunity of equal value. 

For employees, they are able to work on a job for a short period of time before moving on and employers are able to hire someone specifically to get a task done. 

If the relationship is good and both parties continue to have a need for one another, they can continue to work together. This is usually carried out as a ‘successive fixed term contract’. 

However, in order for this arrangement to work, there needs to be equal value to both parties. 

This isn’t always the case. Fixed term contracts can put employees in an unfair position. Fair Work Australia has recognised this and made an effort to try and combat the legal issues that arise with fixed term employment contracts. 

What Does The Fair Work Act Say?

There are certain situations where employees  are most likely to be in a vulnerable position with their employers, which is why fair work legislation exists.   

The Fair Work Act 2009 is the primary Australian legislation that aims to protect the rights of employees in the workforce.   

In 2022, changes to the Fair Work Act, known as the Fair Work Legislation Amendments (Secure Jobs, Better Pay) Bill 2022, was introduced as a way to address any unfairness that can result from fixed term contracts.  

For example, some employers may use fixed term contracts to avoid fulfilling certain employer obligations or payment obligations under Australian employment laws. 

The main matters the bill covered includes:  

  • Making it unlawful to enter into a fixed term contract that exceeds a two year period 
  • Renewal and extension 
  • Offences and penalties for the misuse of fixed term contracts 
  • Multiple uses of a fixed term contract

Essentially, the bill outlaws the use of fixed term contracts in a number of circumstances. The new changes host a number of regulations and exceptions which can be confusing. 

It’s always safe to  get in touch with an Employment Lawyer and receive advice that is tailored specifically to your business. 

Michael Nasr v Mondelez Australia Pty Ltd

The case of Michael Nasr v Mondelez Australia Pty Ltd was a good example of how important it is to have a clear fixed term contract. In this case, it was noted that fixed terms contracts should clearly state an end date and effectively communicate the nature of the employment. 

Micahel Nasr attempted to bring a claim against his former employer, Mondelez, after working with them for a period of 8 years under successive fixed term contracts. After the last contract ended, Nasr did not receive a renewed contract and felt he had been dismissed unfairly. However, the Fair Work Commission disagreed and took the side of Mondelez, stating they had clearly communicated that employment was for a fixed term, therefore, unfair dismissal was not applicable in this scenario. 

The case is a strong example in effectively communicating with employees how a fixed term contract will work and going about it the right way. Additionally, Saeid Khayam v Navitas English Pty Ltd demonstrated the Fair Work Commision will look at more than just the terms of a contract, but rather, the employment relationship as a whole. 

Therefore, if you’re an employer engaging in contracts of this nature, it’s advisable to have the help of a legal professional so you can be assured you are taking the right steps to prevent potential disputes down the line. 

Get A Lawyer To Review Your Contracts

One of the most important factors when it comes to a fixed term contract is clearly establishing the terms of the contract, including the date it is expected to end with the other party. Furthermore, the way you conduct yourself and your business operations can also impact the legitimacy of your agreement, so you need to make sure your actions and processes reflect this. 

The first step to avoiding any unwanted disagreements with your employees is getting a strong Employment Contract in place. Whether or not you’re thinking of hiring employees for a fixed term, it’s important that the legal agreement you have in place is clear, concise and in line with Fair Work obligations. 

This is why it’s best to get legal experts to take a look at and draft your contracts for you. They’ll be able to pick up on things that you might not identify, and tailor the contract in a way that can protect your best interests. 

Get in touch with our Specialist Employment Lawyers today! 

Key Takeaways

Successive fixed terms contracts can be a useful way to hire an employee for their skill set, however, it’s important to be aware of any legal duties you may have. To summarise what we’ve discussed: 

  • Fixed term contracts are agreements with a specific end date
  • Successive fixed term contracts refer to consistent legal agreements over a period of time i.e getting one right after another has ended 
  • Successive fixed term contracts are commonly found in employment arrangements
  • Fair Work Australia recently made changes to protect employees, as contracts of these nature can put them in an unfair position 
  • Cases overseen by Fair Work regarding fixed term contracts emphasise the importance of strong employment agreements and conduct 
  • Getting your contracts drafted by a legal expert and seeking the advice of an expert in employment law can help avoid disagreements and conflict down the line!

If you would like a consultation on your business’ agreements and contracts, you can reach us at 1800 730 617 or for a free, no-obligations chat.

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