Fixed Term Employment Contracts in Australia: The 2026 Rules

What is a fixed-term employment contract?

A fixed-term employment contract is an employment contract that terminates on a specified date, at the end of a specified period, or on completion of a specified season or task. It contrasts with ongoing (permanent) employment, casual employment and independent contracting.

Traditionally, fixed-term contracts have been used for parental leave cover, project-based roles, funded programs, and — increasingly and problematically — as a way of avoiding the unfair dismissal regime by rolling over consecutive fixed-term arrangements.

The new rules — what changed on 6 December 2023

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 introduced three limits on fixed-term contracts, now set out in section 333E of the Fair Work Act:

1. Two-year limit — a fixed-term contract cannot be for a period longer than 2 years, including any option to extend.
2. Extension limit — a fixed-term contract can only be extended once, and only if the total period (including the extension) does not exceed 2 years.
3. Consecutive contracts prohibition — an employer cannot engage the same person on consecutive fixed-term contracts if:
   • each contract is for the same or substantially similar work,
   • there is substantial continuity between the contracts, and
   • the total continuous engagement exceeds 2 years, OR the current contract has been extended before, OR there was a previous fixed-term contract for the same work.

Consequences of a non-compliant fixed-term contract

If a fixed-term contract breaches section 333E, the expiry provision is treated as having no effect. The employee is treated as ongoing. That has three practical consequences:

• Unfair dismissal rights — the employee can bring an unfair dismissal claim when the "term" ends, because there is no valid expiry.
• Notice must be given — under section 117 of the Fair Work Act.
• Redundancy pay may be payable under section 119 if the role is no longer required and the employee has 12+ months' continuous service.

The employer may also face civil penalties under section 333F.

Exceptions — when fixed-term is still permitted

Section 333F of the Act lists exceptions where the two-year limit and consecutive-contract prohibition do not apply:

• Specialised skills for a specific task or project
• Training arrangements where the fixed term corresponds to the training program
• Essential work during a peak demand period
• Emergency or temporary absence cover (e.g. parental leave replacement)
• Roles funded by external funding of more than 2 years but where funding is time-limited and not reasonably expected to be renewed
• Governance positions under a statutory or constitutional term
• High-income employees earning above the Fair Work high-income threshold (currently around $175,000+, indexed annually)
• Modern award exceptions — some awards permit fixed-term arrangements under specific conditions
• Regulations — additional exceptions can be prescribed by regulation

The Fixed Term Contract Information Statement

Employers entering into a fixed-term contract on or after 6 December 2023 must give the employee the Fixed Term Contract Information Statement (FTCIS), published by the Fair Work Ombudsman. It must be given before, or as soon as reasonably practicable after, the contract is entered into. Failure to provide it is a civil penalty offence.

The FTCIS is separate from — and additional to — the Fair Work Information Statement and the Casual Employment Information Statement.

Anti-avoidance rules

Section 333G contains anti-avoidance rules preventing employers from:

• Terminating and re-engaging to reset the clock,
• Delaying re-engagement to create an artificial break in continuity,
• Varying the work substantially to argue it's a different role,
• Changing the identity of the employer (e.g. within a corporate group) to sidestep the rules.

Practices designed principally to avoid the fixed-term rules are treated as if the rules had not been avoided.

What employers should do now

1. Audit all current fixed-term contracts against section 333E and identify anything at or approaching the 2-year threshold.
2. Update employment contract templates — remove or heavily qualify fixed-term provisions.
3. Provide the FTCIS at the point of engagement or renewal.
4. Decide whether ongoing employment is more appropriate for repeat engagements — often it is, and it reduces litigation risk.
5. Review award coverage — some awards have specific provisions that interact with section 333E.
6. Consider casual conversion and independent contractor alternatives, each of which has its own rules under the Act.

Related considerations

• Redundancy calculation — see our guide on how to calculate redundancy pay in Australia.
• Severance vs redundancy — see severance vs redundancy pay.
• Time off in lieu arrangements — see time in lieu Australia.

Frequently asked questions

Can a fixed-term employment contract be longer than 2 years?

Generally no. Section 333E of the Fair Work Act limits fixed-term contracts to 2 years including any extension, unless one of the exceptions in section 333F applies (specialised skills, training, high income, funded roles, etc.).

Can I renew a fixed-term contract?

You can extend a fixed-term contract once, provided the total period (initial term plus extension) does not exceed 2 years. A second extension breaches section 333E.

What is the Fixed Term Contract Information Statement?

It is a statement prescribed by the Fair Work Ombudsman that employers must give to fixed-term employees before or as soon as reasonably practicable after entering the contract. Failure to provide it is a civil penalty offence.

Do the fixed-term rules apply to casual employees?

No. The section 333E limits apply to fixed-term employment contracts, not casual employment. But an employer can't use casual engagement to sidestep the rules — the anti-avoidance provisions in section 333G apply broadly.

What happens if my fixed-term contract breaches the Fair Work Act?

The expiry clause is invalid and the employee is treated as ongoing. Unfair dismissal rights apply, notice is required, and redundancy may be payable. The employer may also face civil penalties.

Get your employment contracts reviewed

Envision Legal reviews and updates employment contract templates, audits fixed-term arrangements against the Fair Work Act, and drafts compliant fixed-term contracts for the genuine exceptions. Book a review before your next renewal cycle.

This article contains general information only and does not constitute legal advice. Envision Legal accepts no liability for any loss arising from reliance on this content. You should seek independent legal advice tailored to your specific circumstances. For enquiries, contact Envision Legal.