Fixed-Term Contracts Under Fair Work: Compliance Guide For Employers

Fixed-term contracts can be a practical way to bring talent into your business for a defined period - for example, to cover parental leave, handle a seasonal spike, or deliver a project with a clear end date.

But the legal landscape has shifted. From 6 December 2023, reforms to the Fair Work Act made under the Secure Jobs, Better Pay changes introduced new limits and obligations for fixed-term (and maximum-term) employment in Australia.

If you rely on fixed-term arrangements - or you’re considering them - now’s the time to make sure your contracts and HR processes align with the new rules. With the right setup, you can keep the flexibility you need while staying compliant and avoiding costly disputes.

In this guide, we break down the key rules in plain English, explain how they apply in practice, and outline the documents and processes every employer should have in place.

What Is A Fixed-Term (Or Maximum-Term) Contract?

A fixed-term contract sets a clear finish point for employment - typically a date, the conclusion of a project, or the return of an employee from leave. In a maximum-term contract, there’s also an end point, but the contract may allow either party to end early on notice.

These arrangements are different from casual employment (no firm advance commitment to ongoing work) and ongoing permanent employment (no set end date and entitlements accrue continuously).

Fixed-term and maximum-term contracts can cover full-time or part-time roles across most industries. The critical point under the new rules is how long you use them for, how often they’re renewed, and whether they’re used consecutively for substantially the same work.

What Changed Under The Fair Work Act In 2023?

The Secure Jobs, Better Pay amendments to the Fair Work Act introduced new restrictions aimed at preventing the repeated rolling over of fixed-term contracts for the same work. These changes commenced on 6 December 2023 and apply nationwide.

In summary:

• Two-year limit (including extensions): A fixed-term or maximum-term contract generally must not exceed 2 years in total length, including any extension options written into the contract.
• Restrictions on consecutive contracts: You can’t keep issuing back-to-back fixed-term (or maximum-term) contracts for the same or substantially the same work where there’s substantial continuity of employment and certain conditions are met - for example, where the earlier contract had an option to extend, or where the total period of employment across the contracts would exceed 2 years.
• Information obligations: Employers must provide both the Fair Work Information Statement (FWIS) and the Fixed Term Contract Information Statement (FTCIS) to each fixed-term employee at the commencement of employment.
• What happens if a restriction is breached: If the limits are breached, the end-date term may have no effect. In practical terms, you may not be able to rely on the contract ending automatically, and the employee could access rights such as unfair dismissal protections at the point you try to end the relationship.

There are limited exceptions in the legislation - for example, certain apprenticeships/traineeships, genuine temporary backfill (covering someone’s parental or long service leave), and some roles tied to time-limited funding or specific awards/enterprise agreements. However, these are narrowly defined and must be assessed carefully against the Act and any applicable industrial instrument.

Importantly, “high-income earner” status is not a general exemption from these rules.

How Do The New Limits Work In Practice?

It helps to look at common scenarios to see how the rules apply day-to-day.

Single Contract With A Long Term

A single fixed-term contract that runs beyond 2 years would generally be prohibited unless a specific exemption applies. Likewise, a contract with an extension option that would push the total potential term beyond 2 years may also be restricted.

Renewals And Extensions

If you engage an employee on a 12-month fixed-term contract and then extend or renew for another 12 months, you’ve reached the 2-year threshold. Issuing a third term for substantially the same work with substantial continuity will likely be prohibited.

Consecutive Contracts For The Same Work

The rules also target repeat use of fixed-term (or maximum-term) contracts for the same or substantially the same work where employment is continuous between contracts. In those cases, if certain criteria are met, you can’t rely on the end date to terminate the employment at the end of the later contract.

Genuine Temporary Needs

Fixed-term contracts still make sense - and are allowed - for genuine temporary needs with a clear end point, such as covering an employee on parental leave, a distinct project with an externally defined end date, or seasonal peaks. The key is to document the genuine, time-limited reason and ensure the arrangement fits within the rules (or a relevant exemption).

Because the nuances matter, it’s wise to refresh your templates and get targeted advice before renewing existing fixed-term arrangements. Where your business uses multiple instruments (awards or enterprise agreements), you may also need to check compliance across different classifications or teams. Our team can assist with award compliance and ensuring your contracts reflect the latest legal position.

Rights, Notice And Ending A Fixed-Term Contract

Employees on valid fixed-term or maximum-term contracts are covered by the National Employment Standards (NES) and the Fair Work Act. If they’re full-time or part-time, they accrue entitlements like annual leave and sick leave, and they’re entitled to superannuation and safe work conditions under WHS laws. Awards or enterprise agreements may set additional terms such as classification, minimum rates, allowances and overtime.

Do You Need To Give Notice?

If a fixed-term contract comes to its natural end on the agreed date, additional notice is generally not required unless the contract or an applicable award says otherwise. If the contract is a maximum-term arrangement that allows termination on notice, you’ll need to comply with the notice provisions in the contract and any minimums in the NES or industrial instrument.

Where you are ending employment earlier than the agreed end date, you must follow any contractual and statutory requirements. In many cases, that will include giving the correct notice (or payment in lieu of notice), and ensuring a lawful and procedurally fair process to reduce the risk of claims.

Calculating the right notice can be technical if an award applies or different service periods need to be considered - our overview on calculating employee notice periods is a helpful starting point.

If A Restriction Is Breached

Where a contract falls foul of the new limits, the end-date term may be unenforceable. Practically, this means you can’t simply end the employment by pointing to the expiry date. Ending the relationship in those circumstances without a valid reason or fair process can expose your business to disputes, including unfair dismissal claims.

This is why planning and tracking fixed-term engagements - before the contract lapses - is essential. If you’re unsure whether you can rely on a fixed end date, get advice early from an employment lawyer.

Documents And Processes To Put In Place

Good documentation is your best friend when it comes to fixed-term compliance. Here are the essentials most employers should have in place.

1) Tailored Employment Contracts

• Employment Contract (Fixed-Term or Maximum-Term): Clearly sets the start and end point, job description, remuneration, hours, leave, confidentiality, IP and early termination options (if any). Make sure the term and any extension option comply with the 2‑year limit and the rules on consecutive contracts. For ongoing roles, use an appropriate employment contract (FT/PT) rather than relying on rolling fixed-term agreements.
• Industrial Instrument Alignment: If an award or enterprise agreement applies, ensure your classification, minimum rates, allowances, penalties and overtime terms are correct. A quick award compliance check now can prevent wage underpayment issues later.

2) Mandatory Statements At Commencement

• Fair Work Information Statement (FWIS): Must be given to all new employees.
• Fixed Term Contract Information Statement (FTCIS): Must be given to every fixed-term or maximum-term employee at the start of employment.

Build these into your onboarding checklist so nothing is missed.

3) Core Workplace Policies

• Workplace Policies: Clear policies on conduct, leave, performance management, bullying and harassment, discrimination, and WHS help set expectations and support compliance. Having a centralised workplace policy suite makes it easier to train managers and ensure consistent decision-making.

4) Tracking And HR Processes

• Contract register: Record start and end dates, extension options, reasons for fixed-term use and any consecutive engagements for the same or similar work.
• Renewal controls: Implement reminders before end dates so you can evaluate options (convert to ongoing, lawfully extend within limits, or end with the right process).
• Manager training: Make sure hiring managers understand when fixed-term is appropriate, the 2‑year limit, and when consecutive contracts are restricted.

5) Ending Employment The Right Way

• Termination documents: Where a contract ends early or you’re moving to end employment, use a structured process and the right paperwork. Consider implementing an employee termination documents suite so you have compliant letters and checklists ready to go.
• Change management: If you decide not to renew a fixed-term contract, communicate early where possible and ensure payroll, access and property procedures are followed on the final day.

If you’re updating multiple templates or dealing with mixed workforces (casual, fixed-term and ongoing), it can be helpful to engage an employment lawyer to streamline your documentation and reduce risk across the board.

6) When You Need More Flexibility

There are still compliant ways to handle genuine short-term needs:

• Genuine project roles: Where the work is truly time-limited and tied to a specific project or backfill, a carefully drafted fixed-term can still be appropriate.
• Casual employment: Where there’s no firm advance commitment to ongoing work, casual arrangements may be a better fit - but ensure your casual contracts, rostering and conversion rights align with the Fair Work framework. If you later offer ongoing employment, issue a suitable full-time or part-time contract.
• Performance and conduct: If the issue is performance or behaviour rather than tenure, consider fair process and appropriate documents (for example, a show cause letter in a disciplinary process) rather than relying on fixed-term expiry.

Each option comes with different legal requirements, so weigh up the operational need and compliance obligations before deciding.

Key Takeaways

• From 6 December 2023, Secure Jobs, Better Pay reforms limit most fixed-term and maximum-term contracts to 2 years in total and restrict rolling over consecutive contracts for the same work.
• Breaching the limits can make an end-date clause ineffective, meaning you can’t rely on “automatic” expiry and may face unfair dismissal risk if you try to end employment without a fair reason and process.
• Provide both the Fair Work Information Statement and the Fixed Term Contract Information Statement to every fixed-term employee at commencement.
• Use tailored contracts, correct award classifications and a contract register to track terms, extensions and consecutive engagements for the same or similar work.
• When ending employment early, follow contractual and NES notice rules, or consider payment in lieu of notice where appropriate, supported by the right termination documents.
• If you need more flexibility, consider compliant alternatives such as casual employment or genuine project-based fixed terms, and get advice where exceptions may apply.

If you’d like a consultation on Fair Work fixed-term contract compliance - including reviewing your templates and HR processes - you can reach our team at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.