A fixed-term contract is an employment contract that ends at the end of a set period (for example 12 months), on the completion of a specified task, or at the end of a season. They are common in projects, government-funded roles and parental leave cover. Since 6 December 2023, the Fair Work Act 2009 (Cth) has limited how they can be used (ss 333E to 333L), to stop employees being kept on rolling contracts indefinitely.
The Limits
An employer must not enter into a fixed-term contract with a non-casual employee if (s 333E):
- the contract is for more than 2 years;
- the contract has an option or right to extend or renew it that could take it beyond 2 years in total;
- the contract can be extended or renewed more than once; or
- it follows a previous fixed-term contract for the same or substantially similar work, with substantial continuity of employment between them, and either the total of the two periods is more than 2 years, the new contract can itself be renewed or extended, the previous contract was already extended, or there was an earlier contract in the chain.
The rules apply to contracts for a specified period of time, a specified task, or the duration of a specified season.
The Exceptions
The limits do not apply where (s 333F):
- you are engaged to perform only a distinct and identifiable task involving specialised skills;
- you are engaged under a training arrangement (for example an apprenticeship);
- you are engaged for essential work during a peak demand period, such as harvest or the holiday season;
- you are engaged for work during emergency circumstances, or during another employee's temporary absence (for example parental leave cover);
- your earnings under the contract in the year it is entered into are above the high income threshold ($190,100 from 1 July 2026; $183,100 in 2025-26);
- the role is funded by government funding for more than 2 years with no reasonable prospect of renewal;
- the contract is for a governance position with a time limit under the organisation's rules; or
- a modern award that covers you permits it.
An employer that relies on an exception has to point to evidence of it.
What Happens If The Contract Breaks The Rules?
If an employer enters into a fixed-term contract that breaches the limits:
- the term that says the contract ends on a fixed date has no effect, but the rest of the contract stays in force (s 333G). In practice you are treated as an ongoing employee, and the employer would need to end your employment in the ordinary way, with notice and, where it applies, redundancy pay; and
- the employer has contravened a civil remedy provision and can face penalties.
This matters most when a contract "expires". Normally, the end of a genuine fixed term is not a dismissal. If the fixed-end term had no effect, the end of your employment may be a dismissal, which could open up an unfair dismissal claim (with its 21-day time limit) and entitlements to notice and redundancy pay.
The Fixed Term Contract Information Statement
An employer that enters into a fixed-term contract must give you the Fixed Term Contract Information Statement before, or as soon as practicable after, the contract is entered into (s 333K). The Fair Work Ombudsman publishes it, with more information about fixed-term contract employees.
Disputes
A dispute about these rules must first be discussed at the workplace level. If that fails, either side can refer it to the Fair Work Commission, which will deal with it and can arbitrate if both parties agree (s 333L).
WA State System Employees
These limits are in the Fair Work Act and apply to national system employees. If you are in the WA state system, they do not apply to you. If your employment has ended, see unfair dismissal in the WA state system.
How We Can Help
We can check whether your fixed-term contract complies, advise you before a contract ends or is renewed, and help if your employment has ended at the end of a term that may have had no effect. Contact us for a free confidential discussion.