What Are Successive Fixed Term Contracts?

If you’ve been “rolling over” the same employee on back-to-back fixed term agreements, you’re not alone. Many Australian businesses have relied on fixed terms to manage project peaks, funding cycles or uncertainty.

However, the rules around successive fixed term contracts have tightened under the Fair Work Act. There are now strict limits on how long you can keep renewing a fixed term, when you can do it, and what information you must give employees.

In this guide, we’ll explain what counts as successive fixed term contracts in Australia, what the law now allows (and prohibits), the risks for employers, and practical ways to stay compliant while still running a flexible, efficient team.

What Is A Successive Fixed Term Contract?

A fixed term contract is an employment agreement that ends on a specified date or when a particular project or event finishes. Successive fixed term contracts simply means using more than one fixed term contract for the same employee, usually for the same role, one after the other.

For example, you hire a marketing coordinator for 12 months. When that ends, you re-engage them on another 12‑month fixed term, then later extend it again. That’s successive (or “rolling”) fixed terms.

It’s helpful to distinguish fixed term from maximum term contracts. A maximum term contract is ongoing but includes an end date and can be ended earlier on notice. A fixed term contract is intended to run to the end date and then end automatically, with early termination often carrying additional risk if not clearly allowed.

What Are The New Limits On Rolling Fixed Terms?

From late 2023, amendments to the Fair Work Act introduced new restrictions on fixed term contracts. While there are nuanced exceptions, the general position for most employees is:

• A fixed term can’t be for longer than a prescribed period (commonly two years).
• You can’t extend or renew it more than once for the same employee in the same or substantially similar role.
• You can’t use successive fixed terms if the total period across the contracts exceeds the cap (again, commonly two years), including any extensions.
• There are anti-avoidance rules. You can’t change job titles or shuffle duties to sidestep these limits if the role is substantially the same.

There’s also a requirement to provide a Fixed Term Contract Information Statement to employees engaged on fixed term arrangements, similar to the Casual Employment Information Statement. This helps ensure employees understand their rights and the new limits.

Important: there are exceptions (e.g. for genuine time-limited funding arrangements, temporary backfill of someone on leave, certain training arrangements and other specific circumstances). The detail matters, so it’s wise to assess each role against the exceptions rather than relying on a blanket approach.

When Can You Still Use Successive Fixed Terms?

Despite the new limits, fixed terms remain useful and lawful where the job truly has a defined end point. In broad terms, successive fixed term contracts may still be possible if an exception applies, such as where:

• The role only exists while specific, genuinely time-limited funding continues.
• You’re covering someone temporarily (e.g. parental leave, long service leave, or a secondment).
• It’s tied to a discrete project or training arrangement with a firm end date.
• The arrangement falls within another narrowly defined category set out in the Fair Work Act and related regulations.

Each exception has criteria. For instance, “time-limited funding” usually means funding with an identified end date and sometimes conditions that the role ceases when the funding ends. If you’re relying on an exception, keep records that prove why it applies (funding agreements, project scopes, approved leave documents, etc.).

Where no exception applies, think about alternatives. In many cases, an ongoing agreement with a clear Employment Contract and appropriate notice provisions or a maximum term contract will be more compliant and just as practical for managing workforce needs.

Key Risks Of Rolling Fixed Term Contracts

The compliance landscape has shifted. Using successive fixed terms without a valid exception can expose you to multiple risks.

1) Breaching The Fair Work Act

Non-compliance with the new limits can lead to disputes, penalties and potential claims. There are also anti-avoidance provisions, so re‑badging the role (or inserting short breaks) won’t shield you if the role is substantially the same.

2) Unfair Dismissal Exposure

Ending a fixed term at its expiry is usually not a dismissal. But the situation changes if the employee has a reasonable expectation of ongoing employment due to multiple renewals, or if you terminate early without a clear contractual right. In those cases, unfair dismissal or general protections risks can arise.

3) Early Termination And Notice

Fixed term contracts often assume the employment ends on the end date. Ending them early can be a breach if the contract doesn’t allow for early termination, potentially requiring damages or agreed sums. Where early termination is allowed, follow any notice period or pay payment in lieu of notice correctly.

4) Accrued Entitlements And Service

Successive fixed terms can create continuous service for the purposes of entitlements like annual leave and long service leave (depending on the circumstances and applicable legislation). Plan for these costs if you’re considering multiple contracts in a row.

Fixed Term vs Maximum Term vs Ongoing Employment

If your goal is flexibility, it’s worth weighing up the pros and cons of each approach.

Fixed Term

• Best when the role truly ends at a known date or on project completion.
• New limits apply to renewals and total duration unless an exception applies.
• Early termination can be high risk unless clearly permitted.

Maximum Term

• Ongoing employment with an end date, and can usually be ended earlier on notice (if drafted correctly).
• Can provide more flexibility and less risk than repeatedly using fixed terms.
• Still requires compliance with modern awards, enterprise agreements and the Fair Work Act.

Ongoing (Permanent) Employment

• Often the simplest option when work is expected to continue beyond a short project or funding cycle.
• Gives employees certainty and can support retention and engagement.
• If things change, you can rely on performance management, lawful variation of duties, or a restructure process where appropriate (always take advice).

There’s no one-size-fits-all answer. The right structure depends on the role, your pipeline of work, funding certainty and your risk appetite. If you need to change arrangements later, be mindful of consultation duties and the rules around changing employment contracts.

How To Manage Successive Fixed Term Contracts Safely

You can stay compliant and still keep your workforce agile by building better processes around time-limited roles.

1) Define The Genuine Business Need

Document why the role is time-limited (e.g. project timetable, leave cover, confirmed funding with an end date). This evidence helps demonstrate that any exception applies and protects you if the arrangement is challenged.

2) Choose The Right Contract Type

Assess fixed term, maximum term and ongoing options before making an offer. For many roles, a carefully drafted Employment Contract with clear duties, notice and flexibility clauses may be the most robust option.

3) Build Contract Discipline

• Use a compliant template that reflects the latest legal limits and includes required notices or information statements.
• Track end dates and set reminders well in advance.
• Avoid informal renewals or automatic rollovers-reassess the business case each time.

4) Check Awards And Enterprise Agreements

Modern awards and enterprise agreements can add extra rules or consultation requirements. Always cross‑check your proposed arrangement with any instrument that covers the employee.

5) Plan For Ending Or Converting The Role

Decide early whether the role will end, be converted to ongoing, or move to a different contract type. If you’re ending employment, make sure any notice period, final pay and leave payout are handled correctly. If the role is continuing, consider a conversion pathway or, where appropriate, a negotiated separation agreement if ending one arrangement and starting a different one.

6) Train Managers And HR

Educate anyone involved in hiring so they understand the new limits, when exceptions apply, and the importance of using the correct contract. A short checklist at offer stage can prevent costly mistakes.

Ending A Fixed Term: What Are Your Obligations?

Even when a contract is set to expire, it pays to close things out properly.

• Confirm the end in writing ahead of time. This avoids any suggestion of implied renewal or misunderstanding.
• Calculate final pay correctly, including any accrued leave and superannuation.
• If you need to end early, check the contract for an early termination right, follow any notice requirements or make payment in lieu, and consider whether garden leave is appropriate.
• Collect company property and revoke access in a structured process to maintain security.

If there’s a dispute about the ending, think about negotiation options and, where needed, a well-drafted deed of release. For more complex exits, a tailored Employee Separation Agreement can help both parties move on with certainty.

What Should Your Employment Contracts Include?

Solid employment documents are critical-especially when you’re dealing with time-limited roles. At minimum, make sure your contracts and policies clearly set out:

• Role And Duties: Keep duties broad enough to allow reasonable variation as business needs change.
• Type Of Engagement: Whether it’s fixed term, maximum term or ongoing-and why.
• Duration And End Date: For fixed/maximum terms, state the start and end dates unambiguously.
• Early Termination: If permitted, outline grounds and process (including notice and any payments).
• Remuneration And Benefits: Salary, loadings, allowances and superannuation details.
• Hours And Flexibility: Standard hours, rostering approach and lawful flexibility provisions.
• Confidentiality And IP: Protect sensitive information and clarify ownership of work product.
• Post-Employment Protections: Reasonable restraints and non-solicitation terms if appropriate.
• Award/Agreement Coverage: If applicable, reference the instrument and classification level.

For fixed term roles, also ensure you are meeting any requirement to provide the relevant information statement at the start of employment.

Practical Alternatives To Rolling Fixed Terms

If an exception doesn’t apply, you still have options to manage variability in your workforce:

• Maximum Term Contracts: Offer flexibility to end earlier on notice if drafted properly, without relying on successive fixed terms.
• Ongoing Employment + Planning: Keep the role permanent but use forecasting, project planning and cross-skilling to manage peaks and troughs.
• Role Redesign: If the business changes, follow proper process to vary duties or consider a restructure, ensuring you meet consultation duties and consider redeployment.
• Hours Management: Where appropriate under awards or agreements, plan rosters and consider lawful adjustments to hours rather than renewing fixed terms. If changing hours is on the table, get advice-there are rules around reducing employee hours.

Key Takeaways

• Successive fixed term contracts are multiple fixed terms used back-to-back for the same employee, often in the same role.
• New Fair Work Act limits cap the length and number of renewals for most fixed term arrangements, with anti-avoidance provisions and a requirement to provide an information statement.
• Exceptions exist (e.g. genuine time-limited funding, leave cover, training), but each has criteria-document your reasons and keep supporting records.
• Consider alternatives such as maximum term or ongoing employment, supported by a carefully drafted Employment Contract, to manage flexibility while staying compliant.
• If you end a fixed term early or at expiry, follow the contract and handle notice, final pay and processes correctly; tools like separation agreements and garden leave may be useful in some cases.
• Train your hiring managers, track end dates and reassess the business case before any renewal to avoid unintended non‑compliance.

If you’d like a consultation about using fixed term, maximum term or ongoing employment arrangements in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.