What Affects The Cost Of A Fixed Term Employment Contract?

What will affect the cost of a fixed term employment contract, and is a template enough for this hire? The reassuring answer is that you can usually choose a level of help that matches the risk and complexity of the role.

If the role is straightforward, a well-drafted template reviewed for your business may be enough. If the employee will create valuable IP, access client lists, receive bonuses, manage staff or leave before a key project finishes, it's worth getting the contract tailored.

The cost isn't just about the document. It's about getting the term, pay, duties, confidentiality, IP ownership, restraints and early exit rights right from day one, so you aren't trying to fix a messy arrangement later.

What Affects The Cost Of A Fixed Term Employment Contract In Australia?

It depends on how customised the contract needs to be and who prepares it for you. A simple contract based on a template will usually cost less than a tailored agreement for a senior or project-critical hire.

When you're comparing options, you'll usually see three broad approaches:

• Free or low-cost templates: These can be useful for spotting the main headings, but they may not reflect your Award, enterprise agreement, state-based requirements, IP needs or fixed term rules under the Fair Work Act 2009 (Cth).
• HR consultants or payroll providers: These can be helpful for process, onboarding and pay administration. Some don't provide legal advice, so check what is actually included.
• Employment lawyers: A lawyer can tailor the document to your business, explain the legal risks and draft clauses that match how the role will work in practice.

If you're searching for employment contract lawyer cost in Australia, the key distinction is usually fixed fee versus hourly billing. With hourly billing, the final cost can move depending on how many calls, revisions and issues come up. With a fixed-fee quote, you should know the price before work starts.

This can make budgeting easier when you're comparing the total cost of a new hire, including wages, superannuation, payroll setup, equipment and legal documents.

What Drives The Cost Of A Fixed Term Contract?

The cost usually increases when the contract needs to do more than record a start date, end date and salary. The more risk the role carries for your business, the more care the drafting needs.

Common cost drivers include:

• The seniority of the role: A general admin role is usually simpler than a head of sales, CTO or project manager role.
• Award or enterprise agreement coverage: If a Modern Award applies, the contract needs to sit neatly alongside minimum pay rates, penalties, allowances, overtime, breaks and classifications.
• Fixed term law compliance: Since 6 December 2023, there are extra limits on many fixed term contracts under the Fair Work Act.
• IP ownership: If the employee will write code, design branding, create content, develop processes or invent products, the IP clauses need to be clear.
• Confidentiality: If the employee will access pricing, customer lists, financial information or supplier arrangements, generic wording may not be enough.
• Restraints: Non-compete, non-solicitation and non-dealing clauses need careful drafting. Overreaching clauses are harder to rely on.
• Bonuses and commissions: Poorly drafted bonus clauses often cause disputes about whether a payment is discretionary, earned, pro-rated or payable after termination.
• Early termination rights: You need to know whether you can end the contract before the end date, and what notice or payment applies.

Say you run a software startup in Melbourne and hire a developer on a 12-month fixed term contract to build a new platform. A bare template may say the developer is an employee and has a salary, but it might not clearly assign all code, documentation and related IP to your company. That gap can create real problems when you raise capital, sell the product or bring on investors.

Do Fixed Term Contracts Have Special Legal Rules?

Yes. Fixed term contracts have special rules under the Fair Work Act 2009 (Cth), and those rules can affect both the drafting and the cost of getting advice.

For many employees, a fixed term contract can't run for more than 2 years, including extensions and renewals. In many cases, the contract also can't include an option to extend or renew more than once.

You also need to give the employee a Fixed Term Contract Information Statement before, or as soon as possible after, they enter into the fixed term contract. This is separate from the Fair Work Information Statement that employees also receive.

There are exceptions to the fixed term limits, including some roles linked to specialised skills, training arrangements, governance positions, essential work during peak demand, emergency circumstances, high income employees and certain government-funded roles. The exceptions can be technical, so it's worth checking before relying on one.

These rules matter because a contract that looks fine commercially may not be compliant. If the fixed term limit is breached, the end date in the contract may not work the way you expected, even though the rest of the contract can continue to apply.

Maximum-term contracts also need careful treatment. A maximum-term contract lets you end employment earlier by giving notice, but it may still be caught by the fixed term contract rules if it ends at the end of an identifiable period. In other words, a maximum-term contract usually isn't a way around the 2-year limit, renewal limit or consecutive contract restrictions. Its main benefit is usually early termination flexibility.

For budgeting purposes, expect the legal work to be more involved if you need advice on:

• whether the 2-year limit applies
• whether an exception is available
• whether you can renew the employee's contract
• how to structure a project role without creating avoidable risk
• whether a maximum-term contract is appropriate and compliant

What Should Be Included When You Pay For A Contract?

A good fixed term employment contract should include more than the employee's name, salary and end date. At a minimum, it should clearly explain how the employment relationship starts, operates and ends.

When you pay someone to draft or review the contract, check whether the scope includes:

• Role details: title, duties, reporting lines, location and whether duties can reasonably change over time.
• Term: start date, end date and any lawful extension or renewal process.
• Hours and work pattern: full-time, part-time, days of work, ordinary hours and any flexibility you need.
• Pay and benefits: salary or hourly rate, superannuation, allowances, bonuses, commissions and reimbursement rules.
• Leave: annual leave, personal/carer's leave and other National Employment Standards entitlements where relevant.
• Policies: how workplace policies apply, and that policies aren't automatically contractual promises unless you intend them to be.
• Confidentiality: what information must be protected during and after employment.
• IP: ownership of work created during employment, plus assignment wording where needed.
• Conflicts: outside work, directorships, side projects and competing interests.
• Restraints: carefully drafted post-employment restrictions, if they're reasonable for the role.
• Termination: when you can end the contract early, notice periods and what happens at the end date.

Also ask whether the fee includes a consultation, one or more rounds of revisions, Award checks, advice notes, and related onboarding documents. A cheaper quote may not be cheaper overall if it only gives you a document with no explanation or tailoring.

Can You Use A Template Instead Of A Lawyer?

Yes, you can use a template, but you should be careful about using it as a finished contract without tailoring. Templates often miss the commercial details that matter most to your business.

A template may be reasonable where:

• the role is low risk and short term
• the employee won't create valuable IP
• there are no commissions, bonuses or unusual benefits
• you're confident about the applicable Award and pay rates
• you don't need restraints or detailed confidentiality clauses

A lawyer review is usually a better investment where:

• the employee will access customer lists, pricing or trade secrets
• the role is senior or client-facing
• the contract is being used for a key project
• you want to include a bonus, commission or equity-related incentive
• you may need to end the contract early if funding or project work changes
• you're unsure whether the fixed term limits apply

Fill-In Outline For A Fixed Term Employment Contract

This outline can help you brief your lawyer or sense-check a template. It isn't a finished legal document, and a lawyer should tailor it before you use it.

1. Parties: Write the full legal name of your business, including ACN if it's a company, and the employee's full name.
2. Position And Duties: Describe the role, reporting line and key responsibilities.
3. Term: Insert the start date, end date and any lawful extension process.
4. Hours And Location: Set out ordinary hours, work days, workplace and remote work expectations.
5. Pay And Benefits: State salary or hourly rate, superannuation, allowances, bonus rules and payment timing.
6. Leave And Minimum Entitlements: Refer to the National Employment Standards, Award or enterprise agreement where relevant.
7. Confidentiality: Define confidential information and when it can and can't be used.
8. Intellectual Property: Confirm who owns work created during employment and include assignment wording where needed.
9. Policies And Conduct: Explain how workplace policies apply and where the employee can find them.
10. Ending The Contract: Cover expiry, early termination, notice, return of property and final payments.

How Do Early Termination, Bonuses And Restraints Affect The Price?

These clauses often increase the drafting cost because small wording choices can have big practical consequences. They're also the clauses most likely to be tested when the relationship ends.

Early Termination

If you want the right to end the contract before the end date, the contract should say so clearly. Without an early termination clause, you may face an argument that the employee is entitled to be paid for the balance of the fixed term, depending on the circumstances.

The contract should also line up with minimum notice under the National Employment Standards. For many employees, the minimum notice period is based on length of service, from 1 week for not more than 1 year of service up to 4 weeks for more than 5 years of service, plus an extra 1 week if the employee is over 45 and has at least 2 years of service.

Bonuses And Commissions

Bonus clauses need to answer practical questions. Is the bonus discretionary? What targets apply? Does the employee need to be employed on the payment date? Is it pro-rated if the contract ends early?

For example, Mike runs a Brisbane cleaning business and hires a sales manager for 9 months to win commercial contracts. The contract promises a $10,000 bonus for reaching $200,000 in new annual contract value, but it doesn't say whether the bonus is payable if contracts are signed after the end date. That uncertainty can turn into a dispute. A clearer clause might say exactly when revenue is counted, when the bonus is earned and when it's paid.

Restraints

Restraints aren't one-size-fits-all. A restraint for a senior sales employee with deep client relationships will look different from a restraint for a junior admin role. The clause needs to be reasonable in scope, geography and duration, and tailored to what you're trying to protect.

How Should You Compare Quotes Before You Hire Someone?

You should compare the scope, not just the price. Two quotes can look similar but include very different levels of advice, drafting and support.

Before you approve a quote, ask:

• Will the contract be drafted for my business, or is it a generic template?
• Will you check whether a Modern Award or enterprise agreement may apply?
• Will you advise on the fixed term contract rules under the Fair Work Act?
• Will IP, confidentiality, restraints, bonuses and early termination be tailored?
• How many rounds of revisions are included?
• Will I get a call or written advice explaining the key clauses?
• Are related documents included, such as the Fixed Term Contract Information Statement, Fair Work Information Statement, policies or onboarding letters?
• Is the fee fixed, or will I be billed by the hour?

You can also reduce legal time by preparing the key details before you ask for help. Have these ready:

• your legal business name, ABN and ACN if you have one
• the employee's role title, duties and reporting line
• the start date, end date and reason for the fixed term
• salary, superannuation, bonuses, commissions and allowances
• expected hours, location and remote work arrangements
• any Award or classification you think may apply
• what confidential information and IP the employee will access or create
• whether you may need to end the contract early

If the role is simple, this preparation may keep the scope tight. If the role is complex, it helps your lawyer focus on the real risks instead of spending time chasing basic details.

Key Takeaways

• The fixed term employment contract cost depends on the role, legal complexity and whether you use a template, HR provider, fixed-fee lawyer or hourly lawyer.
• Since 6 December 2023, many fixed term contracts are limited to 2 years and one renewal or extension, unless an exception applies.
• Maximum-term contracts can still be caught by the fixed term rules, so they're mainly useful for early termination flexibility rather than avoiding the limits.
• Custom clauses for IP, confidentiality, restraints, bonuses and early termination are often where tailored drafting gives you the most value.
• A template can be useful as a starting point, but it should be checked against your Award, pay arrangements and business risks before you use it.
• When comparing quotes, look at what is included: advice, revisions, Award checks, fixed term compliance and practical explanations.

If you'd like help with your fixed term employment contracts, tailored IP and confidentiality clauses, early termination rights or bonus and restraint wording, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.