Fixed-Term Contracts of Employment

In Australia, a person may be offered employment on a permanent basis or on a fixed-term contract. The law on fixed-term contracts changed in 2023 and these agreements are no longer permitted to last for a period of more than two years (with some exceptions). This page deals with fixed term employment contracts under the Fair Work Act 2009.

The Fair Work Act

The Fair Work Act 2009 applies to all national system employees in Australia. This includes most, but not all, employees in Australia. Division 5 of the Fair Work Act 2009 contain the laws that govern fixed-term contracts.

Employees who are not national systems employees include employees of state and local government departments and agencies. These employees may have an enterprise agreement or an industry-specific award that applies to them.

The below information applies to national system employees.

Fixed Term Contract Information Statement

The Fair Work Ombudsman produces a Fixed Term Contract Information Statement. Employers must provide this statement to all employees who are engaged on fixed term contracts. The statement contains information about the law with respect to fixed term contracts.

Two-year limit

As of 6 December 2023, a person must not be employed under a fixed term contract for more than two years. An employer must not renew a fixed-term contract so that the total period of employment is more than two years.

However there are some exceptions.

An employer may employ a person on a fixed term basis for more than two years if:

• the contract was entered into before 6 December 2023
• the contract is for a person to carry out a specific task that requires specific skills
• the contract is for carrying out work under emergency circumstances or to replace somebody who is temporarily away
• the contract is for an arrangement that combines work with study — for example, an apprenticeship
• a contract for a governance position for a limited period of time (based on the roles of the corporation or association)
• the contract is to perform essential work during a peak demand period
• their salary is more than the high-income threshold (currently $167,500)
• the position is funded by government funding that is unlikely to be renewed for a period of more than two years
• the employment is covered by an award that allows for the circumstances limited under the new rules

Prohibited fixed-term contracts

If an employer contravenes the rules about fixed term contracts and engages a person for a longer period, the contractual term that stipulates the end date of the employment period has no effect. The other contractual terms will not be affected.

Avoidance of law on fixed-term contracts

An employer must not avoid the restrictions on fixed-term contracts by:

• terminating a person’s employment for a period
• delaying re-engaging an employee
• not re-engaging a person engage someone else to perform the same work
• changing the nature of the work or tasks a person performs.

Awards may permit fixed term contracts

A modern award may include terms that allow employees to be engaged on fixed term contracts. Awards do not apply when a company has an enterprise agreement or another type of registered agreement.

To find out what award applies and what the terms of that award are, visit the Fair Work site.

Casual workers

Under section 15A of the Fair Work Act 2009, a  person is a casual employee if their employment agreement includes no firm advance commitment of continuing and indefinite work according to an agreed pattern. Casual employment continues until the person’s employment status is converted to full-time or part-time, or until they accept an alternative offer of employment.

After a person has worked as a casual employee for 12 months, with at least six months of working a regular pattern of hours, they may be entitled to conversion to full time or part time employment. Under section 66B, an employer must offer to convert a casual worker’s employment to full time (if they have worked the equivalent of full time hours) or to part time (in any other case) unless there are reasonable grounds for not making the offer.  

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