Understanding the New Rules for Fixed Term Contracts in Medical Practices
In the ever-evolving landscape of Australian workplace law, the introduction of the recent ‘Secure Jobs, Better Pay’ legislation has marked many reforms to workplace law. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Amending Act) has introduced reforms that impact various industries, including medical practices.
A fixed-term contract is one which terminates at the end of a specific period. Effective late last year (6 December 2023, to be precise), new restrictions were imposed when engaging employees on fixed-term contracts. These regulations mandate employers to adhere to new rules, ensuring transparency and fairness and protecting the rights of all employees. As such, this article will explore the intricacies and implications of these changes to ensure medical practices can understand and comply with the updated regulations, allowing you to plan to foster a working environment that is legally compliant but also prioritises the rights and entitlements of all its employees.
What Do You Need to Know?
The updated amendments do not retroactively apply to fixed-term contracts entered into before the commencement date of 6 December 2023. However, medical practices must consider these new laws on the duration and renewal of fixed-term contracts when entering into new fixed-term employment arrangements. These changes include:
1. Time Limitations: A fixed-term contract cannot exceed a period of two years, including any extensions or renewals. Example: A pharmacist engaged on a fixed-term contract for a temporary assignment cannot have their contract extended beyond the two-year limit.
2. Renewal Limitations: Fixed-term employment contracts cannot include options to extend or renew beyond a total employment period of more than two years or have the option to extend or renew more than once. Example: A nurse employed on a fixed-term contract for parental leave cover cannot have the contract renewed more than once, ensuring fair opportunities for others.
3. Consecutive Contract Limitations: Medical practitioners, as well as other practice employees, cannot be offered a new fixed-term contract under certain conditions, such as having a previous contract for similar work, without substantial continuity between the two contracts. Example: A medical receptionist cannot be repeatedly offered short-term contracts without a break, ensuring fair employment practices.
Fixed-Term Contract Information Statement (FTCIS)
Employers, including medical practices, are now also required to provide every employee engaged under a new fixed-term contract with a Fixed-Term Contract Information Statement (FTCIS). This statement must be given to the employee upon entering the fixed-term contract or as soon as possible thereafter. The FTCIS serves as a comprehensive guide offering information to all employees about fixed-term employment and outlining the rules governing the creation of fixed-term employment contracts. Access and download the Fixed Term Contract Information Statement here.
Exceptions to the New Updates
Certain exceptions apply to the new specific fixed-term contract rules. The following examples help to illustrate how medical practices can navigate the exceptions to the new rules for fixed-term contracts while meeting the unique demands and circumstances within the healthcare industry. The new restrictions will not apply if the employee is:
Engaged to perform a specific task involving specialised skills. Example: A clinical psychologist is engaged in a specific therapeutic program tailored to address unique patient needs. In this case, the two-year limit may not apply to recognising the specialised skills for delivering effective mental health services.
Engaged under training arrangements. Example: A medical practice hires a GP Registrar on a fixed-term contract as part of their training program, and the contract extends beyond two years to allow for the completion of the program.
Engaged to work during a peak demand period. Example: During flu season, a medical practice hires additional nurses on fixed-term contracts to manage the increased patient load.
Engaged to work during emergency or temporary circumstances or in the absence of another employee. Example: A medical practice faces a sudden surge in COVID-19 cases, requiring additional medical professionals to assist.
Earning above the high-income threshold (currently at $167,500). Example: A highly experienced dentist, earning above the income threshold, is engaged by a dental clinic to lead an oral improvement program. Due to their expertise and compensation level, the fixed-term contract may exceed two years without falling under the imposed restrictions.
Performing work is subject to government funding, and there is no reasonable prospect that funding will be renewed at the end of the two-year period. Example: A speech pathologist hired for a government-funded program targeting language development in early childhood may be exempt if there is no reasonable expectation of funding renewal.
Appointed to governance positions. Example: A physiotherapist is appointed to a governance position within a healthcare facility to oversee rehabilitation services and therapy protocols.
Covered under an award provision that permits the use of fixed-term contracts. Example: A certified healthcare project manager, covered under an industry award that explicitly permits the use of fixed-term contracts for project-based work, may have a fixed-term agreement that extends beyond two years without being subject to the limitations.
Protections for Employees
Anti-avoidance protections have been implemented to prevent employers from evading these rules. Actions such as terminating employment, not re-engaging the employee or changing the type of work to evade compliance with the law are strictly prohibited. If an employer does not comply with the restrictions and there is no applicable exemption, the duration of the contract for the ‘fixed term’ becomes ineffective. However, the remaining parts of the contract will still be enforceable, and essentially, individuals initially hired on a fixed-term basis will be treated as permanent employees under the Amending Act.
Disputes about Fixed-Term Contracts
In the event a dispute arises related to a fixed-term contract within a medical practice, a collaborative approach is encouraged to resolve disagreements between medical employees and employers to resolve the dispute without the need to engage lawyers. Open communication and a mutual understanding of the relevant laws can often facilitate the resolution of workplace issues.
However, if a resolution cannot be reached at the workplace level, the Fair Work Commission stands as the national workplace relations tribunal, offering a venue for dispute resolution. Either the medical employee or the employer may initiate the dispute resolution process with the Commission. The Fair Work Ombudsman possesses the authority to commence court proceedings for alleged breaches, emphasising the importance of compliance with these provisions. Alternatively, employees have the option to pursue civil action in the small claims court. These mechanisms exist to ensure a fair and just resolution of disputes, promoting a harmonious work environment.
Fixed-Term Employment – Other Entitlements
Fixed-term employees are entitled to various benefits and protections that mirror those of permanent employees. Generally, fixed-term medical staff enjoy the same wages, penalty rates, and leave as their permanent counterparts. It's crucial for employers to ensure that fixed-term employees are afforded these entitlements, fostering a workplace environment that values and supports all staff members, regardless of their employment duration. Understanding and adhering to these entitlements contributes to a fair and equitable employment framework within your practice. Fixed-term employees are not the same as independent contractors. For more information on independent contracting and whether to engage healthcare professionals as employees or contractors, read our previous article here.
What Next?
The recent changes to fixed-term contracts bring about a notable transformation in the employment landscape in Australia. Understanding and adhering to these regulations creates a work environment that upholds the rights and entitlements of all healthcare staff. Medical practices are urged to acquaint themselves with these regulations, ensuring adherence and cultivating a workplace that upholds the rights and entitlements of all staff.
Our team has extensive experience in providing contract and employment advice and insights. To discuss your matter, contact our team here, and we will put you in touch with the best professional for your needs.