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New rules for Australia’s 400,000 fixed term contract workers a ‘clear win’ for employees

New rules for Australia’s 400,000 fixed term contract workers a ‘clear win’ for employees

A major overhaul of the nation’s fixed-term contract rules will provide vital protection against exploitation for close to 400,000 Australian employees, experts say.

Under new rules, which will apply from Wednesday, December 6, workers will be prohibited from being employed on a fixed-term contract (FTC) for more than two years.

Employers will also be forbidden from extending or renewing worker contracts more than once, even if the sum of the employment period is less than 48 months.

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“The federal government has a clear focus on secure employment and these changes are intended to prevent employers from entering into rolling fixed-term contracts which can potentially reduce permanent employment opportunities,” Decipher Workplace Law director and principal lawyer Sarah Blackman told 7NEWS.com.au.

“In respect of these changes, the onus rests with employers and not employees.

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“In practice, this generally means that if a fixed-term contract extends beyond two years, is renewed more than once or there are more than two consecutive fixed-term contracts, the contract term that provides for an expiry date will be void and have no effect.

“The remaining contract will remain on foot, meaning the employee will have access to permanent employment conditions, including redundancy pay and protection from unfair dismissal.”

The impending FTC changes are one element of the federal government’s reform of Australia’s workplace laws under the Fair Work Legislation Amendment Act, called Secure Jobs, Better Pay.

Workers on FTCs are hired for a specific period of time and have a defined end date locked in, unlike permanent staff who are employed on an ongoing basis.

Recent data from the Australian Bureau of Statistics showed 390,000 Australian workers, or 3.4 per cent of the nation’s workforce, were employed on fixed-term contracts. Seventy-six per cent of these workers are on a contract of one year or less.

Workers in education and training, media and telecommunications, and public administration are most commonly on FTCs.

‘Clear reform winners’

Workplace experts say fixed-term contracts can be an important lever for genuine employers with short-term resourcing requirements, including when staff are on leave, and when more hands are needed for specific projects.

However many say they have become a tool for employers to deny workers the security of permanent employment.

Jewell Hancock Employment Lawyers principal Trent Hancock said employees “are the clear winners from these reforms”, which remove the ability for employers to misuse FTCs and “exacerbate job insecurity”.

“Regrettably, many employers have been using successive fixed-term contracts to create a new form of insecure work for employees,” he said.

“Even if a role is required on a permanent ongoing basis, employers have been too often engaging workers on fixed-term contracts to facilitate their easy departure or to exert an unfair level of pressure and control during the relationship, including in salary negotiations.

“In our experience, this practice has been particularly prevalent in education and the not-for-profit sector where employees are regularly directed to sign a new fixed-term contract every one or two years, even if the duties are required on a permanent basis.”

He was confident fixed-term workers would in most cases be converted to permanent positions, saying the reforms would curtail the ability for employers to end someone’s employment unfairly, “meaning more people are likely to remain in their employment than lose it”.

The industries with the highest proportion of employees on an FTC are education and training, media and telecommunications, and public administration and safety. File image. Credit: Tom Werner/Getty Images

Australian Council Of Trade Unions secretary Sally McManus said the cloud of insecurity cast by FTCs was amplified by the fact contracts typically finish in December, meaning many families are left worrying about bills over Christmas.

“Australia has one of the highest rates of insecure work in the OECD, so the Albanese government’s limits on the use of fixed-term contracts through the Secure Jobs, Better Pay Bill is an important step to addressing the insecure work crisis that has engulfed working people across all industries,” she said.

“The changes will provide protections to workers to minimise exploitation by these contracts and ensure more working families have the security and dignity that comes from reliable permanent employment.”

‘Catastrophic impact’

There will be some exceptions to the FTC rules, including for government-funded contracts, high-income employees, training arrangements and apprenticeships, workers with specialised skills including coaches, and essential work during peak demand periods, including fruit pickers.

The Australian Higher Education Industrial Association and the Association of Australian Medical Research Institutes have been among the voices calling for even more exemptions.

They argued earlier this year that the reforms will impact universities and medical research institutes that employ teams on fixed-term contracts based on unpredictable funding cycles and force them to “face enormous additional costs”.

“As it currently stands, implementation of the new workplace laws for fixed-term contracts, under the act, will have a catastrophic impact on Australia’s health and medical research community,” they said in a joint submission to the federal government.

“It is crucial to strike a balance between promoting job security and providing flexibility to adapt to the unique challenges faced by our sector.”

Reform countdown

Blackman said it was critical that employers had reviewed current resourcing to ensure existing arrangements are compliant, with the changes to apply to all fixed-term contracts entered into on or after December 6, including any renewals or extensions.

“Employers are exposed to civil liability proceedings where a breach is established and consideration must also be given to the anti-avoidance provisions,” she said.

For workers, Hancock said employees should familiarise themselves with the new provisions so they can recognise a prohibited contract if it is offered to them.

“Employees should also obtain legal advice from an experienced employment lawyer if they believe they are employed under, or have been offered, an unlawful fixed-term contract,” he said.

“Employees should also be prepared to speak up about unlawful fixed-term contracts, particularly given the anti-avoidance provisions that are being introduced, which prohibit an employer from terminating an employee, delaying the re-engagement of an employee, changing the nature of their work, or otherwise altering an employment relationship in order to avoid any right or prohibition relating to unlawful fixed-terms.”

For full details from the Fair Work Ombudsman, click here.

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