Aligning Fixed-term Employment with Government Funding Grants and Procurement Agreements: The New Regulatory Exception for the Charitable and Not-for-profit Sector

November 4, 2024

A surprising but welcome change to the Fair Work Regulations 2009 (Cth) will enable charitable and not-for-profit employers to better align the period of their fixed-term employment contracts to the duration of government-funded projects and programs.

The Fair Work Amendment (Fixed Term Contracts—Exceptions Measures) Regulations 2024, commencing in November 2024, replaces the previous narrow exceptions to the two-year limitation on fixed-term contracts. The changes enable ‘philanthropic entities’ to employ staff engaged to perform work in programs funded through grants or charitable contributions for a maximum of 5 years aligned to the duration of the program. Understanding the changes is important for compliance and efficient workforce management.

Key Changes

Philanthropic entity means any entity registered under the Australian Charities Not-for-profits Commission Act 2012.

The exception under the regulation applies to a contract of employment entered into on or after 1 November 2024 and before 1 November 2025, subject to certain conditions. Here’s what employers need to know:

  1. Funding-Based Contracts for Specific Programs or Projects: Fixed-term contracts of up to 5 years are permitted when roles are linked to specific projects and programs funded by government grants or donations from philanthropic entities.
  1. Clear Project Duration: Employment contracts must be substantially aligned to the program’s full term and employment capped at a maximum of five years. This ensures that employment is tied to the funding period rather than a series of renewable short-term contracts.
  1. Avoidance of Long-Term Renewal Loopholes: Current employees may have their fixed-term employment extended. However, the period of employment in total must not be more than seven years of continuous employment. This prevents indefinite renewals and encourages a transparent transition if longer employment terms are required.
  1. Specific Conditions for Charitable Funding: Any government payments made to or for the benefit of an individual and any payments made for the purposes of the Commonwealth Home Support Programme are excluded. The 2-year limit for fixed-term employment continues to apply.

Re-aligning the period of fixed-term employment

Employment and other social and community service organisations managing staff engaged in government programs and philanthropic-funded projects may take advantage of the changes by taking the following steps:

  • Review and Update Contracts: Ensure that contracts for project-based roles funded through philanthropy explicitly define the project timeline, funding source, and intended completion date to comply with the five-year maximum. Contracts nearing their expiry should be renewed in accordance with the project duration.
  • Plan for Workforce Continuity: Plan for contract adjustments proactively to avoid disruptions, especially where the roles are essential for ongoing projects. The regulation discourages using fixed-term contracts merely to bypass standard employment obligations.
  • Coordinate with Funding Providers: Engage in open communication with government agencies and philanthropic entities providing project funding to align contract terms accurately with funding conditions, ensuring transparency and legal compliance.
  • Seek Legal Advice: The new regulations carry specific compliance requirements that may necessitate legal assistance. Consulting with a legal advisor can ensure that contracts meet all Fair Work standards, especially regarding project duration and renewal limits.

Further Advice

For further information and advice on how this specifically impacts your business contact us here.

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