Fixed term contract employees

Fixed term contract employees are employed on a contract that terminates at the end of a set period. From 6 December 2023, there are rules that apply to the use of fixed term contracts.

New rules for fixed term contracts

From 6 December 2023, new rules apply when engaging employees on fixed term contracts.

A fixed term contract terminates at the end of a set period (for example, the contract ends on a set date or after a set period of time or a season).

The new rules include a requirement for employers to give any employees they’re engaging on a new fixed term contract a Fixed Term Contract Information Statement (FTCIS).

They also include some limitations on how fixed term contracts can be used. There are some exceptions to who these limitations apply to which means they don’t apply to all fixed term contracts. The limitations also don’t apply to casual employees.

Fixed Term Contract Information Statement

From 6 December 2023, employers must give every employee engaged under a new fixed term contract a copy of the Fixed Term Contract Information Statement (FTCIS). The FTCIS needs to be given when the employee enters, or as soon as possible after entering, the fixed term contract.

The FTCIS provides fixed term employees with information about fixed term employment, including the rules about when fixed term contracts are allowed to be made.

Reminder: Fair Work Information Statement

In addition to the FTCIS, employers need to provide all new employees with the Fair Work Information Statement. This is a separate document that provides information about minimum workplace rights and entitlements. For more information, go to Fair Work Information Statement.

Example: New fixed term employee

Ben is a new part-time employee at a marketing agency.

Ben is employed on a 12-month full-time contract to cover a parental leave position. He signs his fixed term contract on 18 December 2023.

Because Ben is a new employee and employed on a fixed term contract, his employer, Gina, must provide him with 2 important documents. These are the:

  • Fair Work Information Statement (FWIS)
  • Fixed Term Contract Information Statement (FTCIS).

Gina must give Ben the FWIS because he’s a new employee.

Gina must give Ben the FTCIS because he is entering a fixed term contract after 6 December 2023.

Limitations on fixed term contracts

There are rules about when fixed term contracts can be used. These are also called limitations.

These limitations apply for fixed term contracts made on or after 6 December 2023, if no exceptions apply.

Time limitations

A fixed term contract can’t be for longer than 2 years. This includes any extensions or renewals.

Example: Time limitations

John is offered a fixed term contract with a cleaning company for 3 years.

This contract breaches the limitations because it’s for more than 2 years.

Renewal limitations

A fixed term contract can’t have an option to:

  • extend or renew the contract so the period of employment lasts for longer than 2 years, or
  • extend or renew the contract more than once.

Example: Renewal limitations

Chelsea is given a contract for 6 months which has a right for her employer to extend twice for up to 4 months each time.

This contract breaches limitations because a fixed term contract can’t have an option or right to extend more than once, even if the total period is less than 2 years.

Consecutive contract limitations

An employee can’t be offered a new fixed term contract if the first 3 points below all apply, and one or more of the scenarios in the 4th point applies.

  1. Their previous contract was also for a fixed term.
  2. Their previous contract and the new contract are for mainly the same work.
  3. There is substantial continuity in the employment relationship between the previous and new contracts, and
  4. Either:
    • the previous contract contained an option to extend that was used
    • the total period of employment for both the previous and new fixed term contract is more than 2 years
    • the new fixed term contract contains an option to renew or extend, or
    • there was an initial contract in place (before the previous contract):
      • that was for a fixed term,
      • that was for the same or similar work, and
      • where there was substantial continuity in the employment relationship.

Example: Consecutive contract limitations

Ahmad was employed on a fixed term contract as a site engineer for a construction company.

His initial contract was for the period of 1 January 2022 to 31 December 2022. It included an option for a one year extension, which his employer used, making the new end date 31 December 2023.

On 1 January 2024, Ahmad signed a new fixed term contract for a term of 1 more year for the same position.

This contract breaches the limitations because:

  • the previous contract had a right to extend in it
  • the total employment period under both contracts is more than 2 years, and
  • the contracts are for the same position and there is continuity in the employment relationship between both contracts.

Snapshot: Limitations on using fixed term contracts

Heading 'Fixed term contracts' with three coloured bars reading 'Time limitations' 'Renewal limitations' and 'Consecutive contract limitations'
A visual snapshot summarising the new rules (called limitations) for using fixed term contracts. These rules apply from 6 December 2023.

Access a more detailed version at Snapshot: Limitations on using fixed term contracts.

Protections for employees

Employers can’t take certain actions to purposely avoid these rules.

These are called the anti-avoidance protections. These protections include:

  • ending employment or not re-employing the employee for a period of time
  • not re-engaging the employee and employing someone else to do the same or substantially similar work instead, or
  • changing the type of work or tasks that an employee does or changing the employment relationship.

If an employer does any of these things, it may also be adverse action.

Find out more about adverse action at Protections at work.

Fixed term contracts before 6 December 2023

The limitations don’t apply to fixed term contracts entered into before 6 December 2023. However, fixed term contracts entered into before 6 December must be considered when applying the consecutive contracts limitation for a new fixed term contract that is entered into on or after 6 December 2023.

Example: Contract made before 6 December 2023

Carlos is an accountant. He was engaged on a fixed term contract in January 2023 by Joseph, a financial broker, for 12 months.

Joseph finds out that the new rules about fixed term contracts apply for contracts made on or after 6 December 2023. Joseph sees these rules don’t apply to Carlos’ initial contract but will be considered if Carlos’ is engaged on a new fixed term contract.

Joseph is planning to extend Carlos’ employment for an additional 18 months in January 2024 under a new 18 month fixed term contract.

Joseph reviews the consecutive contract limitations on our website. Joseph sees that he can’t offer Carlos this contract, because:

  • the previous contract was for a fixed term
  • the previous contract and the new contract are for mainly the same work
  • there is substantial continuity in the employment relationship between the previous and new contracts
  • the total period of employment for both the previous and new fixed term contract will be more than 2 years.

Joseph discusses with Carlos, and they agree to a new 12 month contract.

Exceptions to the limitations

There are some exceptions to these rules that mean the limitations don’t apply to all fixed term contracts. They also don’t apply to casual employees.

The table below shows which fixed term contract arrangements the limitations don’t apply to.

The exception Example

Specialised skills for a specific task

Work only on a specific task that requires the employee’s specialised skills.

Vivian is a technology professional who is engaged to provide specialised technology support on a particular project. Her contract is for a period of 6 months, with 3 options to extend for one month in case of delays.

Training arrangements

Engaging an employee under a formal training arrangement made under State or Territory law. This is an arrangement that combines work with study for a qualification like an apprenticeship or traineeship.

Javier has started a plumbing apprenticeship and has been given a 4 year fixed-term contract for the duration of his apprenticeship.

Essential work

Performing essential work during a peak demand period.

Kevin is an experienced ski patroller with strong first aid skills. He is hired by a ski resort on a 2 month contract during the ski season, with the opportunity for 2 renewals of one month each depending on ski conditions.

Emergency or temporary circumstances

Working in emergency circumstances, or to replace someone who is temporarily away.

Gerry is engaged on a fixed term contract to replace Christina who is taking 24 months parental leave. During this time, Christina has another child and takes an additional 12 months. Gerry’s contract is renewed for an additional 12 months to cover this leave period.

High income employees

If the employee’s guaranteed salary is more than the high income threshold in the year the contract is entered into (pro rata for part-time employees or employees that work for less than a year).

Esther is hired as an IT project manager earning $240,000 per year on a 3 year fixed term contract, which is above the high income threshold for the year the contract was entered into.

Positions subject to government funding

Where the employee’s position is funded by government funding (completely or in part), the funding is for more than 2 years and the funding is unlikely to be renewed afterwards. This isn’t the same as working for a government agency or department on a fixed term contract.

Lu is engaged on a 3 year fixed term contract to work on creating a community garden for a community organisation. The project is fully funded over 3 years by the Local Government and the funding ends at the end of this period.

Governance positions

A contract for a governance position that is for a limited time (based on the rules of the corporation or association).

Sunita is engaged on a 5 year contract on the executive board of a land management council.

Award provisions

If an award covers your employment and it allows any of the circumstances limited by the new rules.

Ravi is covered by an award that allows him to work contract-to-contract. The award expressly allows for multiple (more than one) contract renewals as agreed between the employee and employer.

Calculating the high income threshold

The high income threshold changes each year. From 1 July 2023, it is $167,500.

For the purposes of the high income employees exception, the high income threshold for part time employees or employees working less than a year is calculated by:

  • considering the number of hours that the employee is required to work under the contract in that year
  • dividing that number by the number of hours that a full-time employee would work in that year (rounding to 3 decimal places)
  • multiplying the result by the high income threshold for the financial year in which the contract is entered into.

To determine the number of hours that a full time employee would work in a given year:

  • take the number of hours the employee is required to work under the agreement or award that applies to the employee
  • if no enterprise agreement or award applies, take the number of hours of comparable full-time employees working for the same employer.

If the number of hours can’t be worked out by either of the above methods, then the number of hours a full time employee would work in a given year is taken to be 38 hours per week.

Source reference: Fair Work Amendment (Fixed Term Contracts) Regulations 2023 2.14

Example: Calculating the high income threshold for a part time employee

Kara is a doctor. Kara is offered a part-time fixed term contract by a private medical practice to work 30 hours a week for 3 years. Under the limitations, a fixed term contract can’t be for more than 2 years unless an exception applies.

Her yearly part-time salary will be $140,000.

Sarah is an administrator for the centre and reviews whether Kara would above the high income threshold for her contract. If so, then the fixed term limitations rules don’t apply.

Under the contract, each year Kara would work 30 hours a week for 52 weeks, totalling 1560 hours.

A full-time employee in that role, covered by the Medical Practitioners Award, would work 38 hours a week, totalling 1976 hours over the same 52 week period.

Sarah divides the hours Kara is offered by the full-time hours and multiplies the result by the high income threshold amount for the financial year the contract starts.

1560/1976 = 0.789 x $167,500 = $132,236.84

Kara’s salary of $140,000 is above the calculated high income threshold for the year her contract will be entered into so her fixed term contract is exempt from the limitations.

Additional exceptions

There are additional exceptions to the limitations that apply to some fixed term contracts made on or after 6 December 2023 and before 1 July 2024.

There are specific rules that need to be followed and they only apply in relation to:

  • organised sport
  • high performance sport
  • live performance
  • higher education
  • positions funded by philanthropic entities or testamentary gift or contribution

For more information, visit Additional fixed term contract exceptions.

Fixed term contracts that don’t meet the limitations

If a fixed term contract doesn’t meet the limitations, the contract’s end date will no longer apply. This means the contract won’t automatically come to an end at the end of that time.

Other terms and conditions of employment under the contract will still apply, including entitlements from any relevant legislation, award, agreement or employment contract.

Example: Fixed term contract doesn’t meet the limitations

Amir is employed on a fixed term contract as a warehouse manager for a distribution company.

Amir’s initial contract was from 1 January 2022 to 31 December 2022. It included an option for extension, which his employer exercised for an extra year (to 31 December 2023).

On 1 January 2024, Amir signs a new contract for one more year for the same position. The clause in the contract specifying the end date of the contract will no longer apply:

  • the previous and new contracts are fixed term contracts for the same position
  • there is substantial continuity in employment between his new contract and previous contract
  • the total employment period under both contracts is more than 2 years
  • the previous contract had an option to extend.

Disputes about fixed term contracts

Resolving a dispute in the workplace

If an employee and employer disagree on whether any limitations or exceptions to the rules apply, they should first try to resolve the disagreement by discussing the issue together.

Workplace problems can usually be sorted out by having a conversation and understanding the laws that apply. Get guidance on how to start the conversation from our Raising your problem in the workplace section.

Taking a dispute to the Fair Work Commission

The Fair Work Commission (the Commission) is the national workplace relations tribunal.

If a dispute about fixed term contracts can’t be resolved at a workplace level, the Commission may be able to help. Either the employee or the employer may lodge a dispute with the Commission.

For more information visit Disputes about fixed term contracts

Our powers

We (the Fair Work Ombudsman) have the power to start court proceedings for alleged breaches of these provisions in line with our Compliance and Enforcement Policy.

Small claims court

Employees can also take civil action in the small claims court.

Fixed term employment – other entitlements

Fixed term employees are generally entitled to the same wages, penalty rates, and leave as permanent employees.

An award or registered agreement may provide extra terms and conditions for a fixed term employee.

Termination of employment

Fixed term employees generally don’t receive notice of termination or redundancy if their employment is terminated at the end of the contracted period.

For more information visit Who doesn’t get notice?

They’re also generally not eligible for unfair dismissal if their employment finishes at the end of the contracted period.

Independent contractors

Fixed term employees aren’t the same as independent contractors.

For more information on independent contracting, visit Independent contractors.

About our information

The information on this page is general in nature and outlines the rules for the use of fixed term contracts under the Fair Work Act only.

We (the Fair Work Ombudsman) can’t provide specific advice about individual arrangements under employment or other contracts or make determinations about the law or how it applies in your circumstances. For tailored advice about your specific situation, consider contacting:

  • a union
  • an employer or industry association
  • a lawyer for legal advice.

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