It looks like 2025 is going to be the year of improved job security and more long-term employment opportunities. With the recent amendments to the Fair Work Act 2009, effective from 6th December 2023, all fixed-term contracts (FTCs) are now restricted to a maximum of two years with one renewal or extension allowed within this timeframe, unless specific exemptions apply.

While FTCs will remain valid for roles including apprenticeships, specialised skills or parental leave replacement, any breaches of these amendments can incur penalties of up to $82,500 for corporations and can result in contracts being deemed ongoing employment agreements.

This might leave you wondering, what impact will this have on retention rates? What actionable strategies can hiring leaders and TA professionals implement to help navigate any potential challenges while continuing to support stability in their teams?

Current Workforce Retention Trends

The first piece of good news is that so far there seems to have been minimal impact on retention factors or rates since the law’s implementation (phew). While we may not need to go into a full panic about holding on to our valuable employees, this doesn’t mean there haven’t been a few noticeable changes and trends emerging.

High Talent Mobility - For those in the tech industry, it seems talent mobility is going to remain high. There are still plenty of great professionals out there seeking new job opportunities who are driven by factors including a great work-life balance, strong leadership and career progression/development. Businesses that can offer these benefits will be at the forefront of attracting top talent.

Openness to Change   - Our recent Tech Talent Outlook Report showed us that 70% of tech and transformation professionals are currently considering new roles. These statistics make it clear that the market is currently being driven by a high demand for flexibility, growth and leadership engagement.

Market Dynamics Overshadow Legislation - While legislation may be changing, prime market forces are still proving to be the main determinants of retention, with skill shortages and high demand for specialised roles currently being the current driving factors

Work-life Balance is Critical - Something we keep coming back to time and time again, giving your talent a work-life balance is the key to retention and the recent amendments haven’t changed that. With our report highlighting that 51% of tech talent feel work-life balance is their primary motivator for considering new roles over the next 12 months, now isn’t the time to change up or decrease flexibility in your workplace.

Adaptations by Employers

While the recent amendments may not be having a sudden and direct impact on the market, they are still causing some small changes within workplaces.

Transition to Permanent Roles -  In response to the amendments,   some employers have begun offering more permanent contracts to comply with the law and attract candidates who prioritise job stability. However, this trend is not uniform across all sectors.

Exemptions Available - Industries that are reliant on project-based work or short-term funding, such as higher education and live performance, can continue leveraging the use of fixed-term contracts due to the exemptions allowed under the Act.

Tech Talent Report Insights - Speaking of contractual shifts, our recent report also highlighted that employers are moving away from traditional in-office setups to offering more hybrid and remote work models. This flexibility option paired with increasing permanent positions is what may give businesses a competitive edge in talent attraction

Compliance Challenges

Though we may not be seeing a major industry shake-up, there are still changes businesses need to make and a few challenges to grapple with as a result.

Contract Reviews & Audits - Unsurprisingly, many businesses are currently having to shift focus to reviewing their existing contracts and adapting hiring processes to align with the new rules, particularly in sectors with a heavy reliance on FTCs. Ensuring all existing FTCs comply with the new amendments can prove to be a resource-intensive process, especially for organisations with large contingent workforces.

Process Adjustments - Many hiring workflows are also in need of significant adjustments to incorporate new templates, additional disclosures and tracking systems to prevent any breaches, another resource-heavy process.

Risk Management - Employers are also having to be vigilant and cautious of penalties and potential legal disputes arising from non-compliance, including civil penalties and automatic conversion of FTCs to ongoing roles. Understanding these new risks and ensuring everything is done to negate them is a learning curve for many businesses.

Long-Term Predictions

While most of us are grappling with the more immediate effects of these changes, it’s also important to think ahead. What long-term effects and shifts will we see?

More Permanent Employment -  Probably the most obvious change that will come from these recent amendments is employers increasingly offering permanent roles over FTCs to avoid compliance risks, automatic contract conversions or penalties. This could lead to a long-term cultural shift in hiring practices, particularly in industries where FTCs were the norm.

Rise of Contingent Workforce Alternatives -   With FTCs no longer a viable option, businesses may begin to rely more on independent contractors, gig workers or outsourcing partners for any short-term or project-based work. As a result, a parallel labour ecosystem outside traditional employment contracts may be created.

Stability as a Differentiator -  Employees may begin to gravitate toward employers who emphasise stability through compliance with the recent changes and offering meaningful career growth opportunities. Ensuring your employer branding highlights stability, fairness and cultural alignment will become a critical retention tool.

High Demand for Non-Monetary Benefits -  With retention motivations increasingly tied to work-life balance (51%) and career progression (42%), employers will need to ensure they prioritise these aspects over just simply offering longer contracts.

What Does This Mean for Employers?

Despite the new FTC restrictions, our 2024 Tech Talent Outlook report shows that top talent priorities remain unchanged, with flexibility, leadership quality and career development continuing to drive their decisions to choose and/or remain with an employer. With these factors unaffected but other contract requirements being shaken up, what should employers be focusing on to ensure they comply with the new amendments without diminishing their attraction and retention rates?

• Conduct workforce planning - It’s time to sit down and work out how your business is going to balance offering permanent and fixed-term roles while also addressing market needs.
• Audit Contracts - Ensure all your current FTCs comply with the new rules and use exemptions strategically, if and where applicable.
• Redefine Stability - Make sure your employer branding is emphasising culture, leadership and career growth over contractual terms.
• Adapt to Flexibility - If you haven’t already, try to tailor your work arrangements to align with the top motivators of the modern workforce (flexible working options).
• Communicate Clearly - As we always say, communication is key. Build further trust with your employees by openly addressing the new changes and their implications.
• Invest in Technology - Nothing wrong with a little helping hand. Utilise tools to enhance compliance, streamline HR operations and support greater talent acquisition.

Preparing for 2025

While the amendments to the Fair Work Act 2009 may have had a minimal impact on employee retention, it’s important to be aware of the changes and ensure your business is still addressing the main motivators for top talent. Along with ensuring your business and any existing contracts are compliant with the legislative changes, putting actionable strategies in place to help foster flexibility, career progression opportunities and leadership development will give you long-term success in not only attracting but retaining the talent you’re business has been searching for.

Want to get an insight into what top talent are currently looking for and learn more about how to improve your attraction and retention strategies, make sure to check out our 2024 Tech Talent Outlook report.