Navigating Changes to Fixed-Term Employment Contract

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Under the Fair Work Act 2009, most fixed term employment contracts cannot run for more than two years in total, including renewals, and can only be renewed or extended once. Employers must give fixed term employees a Fixed Term Contract Information Statement and cannot use consecutive fixed term contracts to avoid offering permanent employment. Limited exceptions apply, including for casual workers, specialist or peak-demand roles, training arrangements, and employees earning above the high income threshold (currently $190,100 a year).

Since 6 December 2023, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (‘Secure Jobs, Better Pay Act’) has placed new limits on the use of fixed-term employment contracts, encouraging employers to move suitable roles into permanent employment. The rules, and the exceptions to them, have continued to evolve since then, most recently with changes to the exceptions available to charities, universities and health research bodies that took effect on 1 November 2025. This article explains where things currently stand for employers and employees.

WHAT ARE THE CHANGES?

The Secure Jobs, Better Pay Act placed time limits on fixed-term employment contracts. A fixed-term contract must not run for more than two years in total, including any extensions or renewals, and a contract can only be extended or renewed once.

Employers must also give employees on a fixed-term contract a Fixed Term Contract Information Statement at the start of their employment. The Fair Work Ombudsman released an updated version of this statement on 1 November 2025, so employers should check they are issuing the current version.

Fixed-term contracts also cannot be offered where the ‘consecutive contract’ rules are triggered. This applies where a previous contract was a fixed-term contract for essentially the same work, there is substantial continuity of employment, and at least one of the following applies:

1. the previous contract was extended;
2. the total period of the previous and new contract together is more than two years;
3. the new contract contains an option to extend or renew; or
4. there was an earlier fixed term contract in place for the same or similar work with substantial continuity of employment.

WHO DO THE CHANGES APPLY TO?

The changes apply to new fixed term employment contracts entered into on or after 6 December 2023. Earlier contracts can still be relevant, however, where an earlier contract and a new contract together would be treated as consecutive contracts under the Act.

Exceptions to the changes

A number of ongoing exceptions allow fixed-term contracts to be used outside the two-year/one-renewal limit, including for:

1. casual employees;
2. contracts for a specific task involving specialised skills;
3. training arrangements, such as traineeships or apprenticeships;
4. essential work during a period of peak demand;
5. emergency or temporary circumstances, such as covering an employee’s absence;
6. high income employees (the high income threshold is currently $190,100 a year, effective from 1 July 2026, and is adjusted every 1 July);
7. positions wholly or partly funded by government funding that is due to end, with no reasonable prospect of renewal;
8. governance positions with a time limit set out in the organisation’s governing rules; and
9. work covered by a modern award that specifically permits a longer fixed term or further renewals.

Update: the 1 November 2025 changes to sector exceptions

The original reforms also included temporary ‘sunset’ exceptions for organised sport, high performance sport, live performance, higher education and philanthropically funded positions, which applied only to contracts entered into between 6 December 2023 and 1 July 2024. Those temporary exceptions have now lapsed. Following a review, the Fair Work Regulations were amended with effect from 1 November 2025 to reset how these exceptions operate:

• higher education institutions and public hospitals no longer have access to the additional exceptions for contracts entered into on or after 1 November 2025;
• charities and not-for-profits registered with the ACNC with annual revenue of $10 million or more, and medical research bodies with revenue over $100 million, also lost access to the additional exceptions; smaller organisations below these thresholds retain limited access until 1 November 2026, for positions funded by government or philanthropic sources; and
• organised sport and high performance sport retain their exceptions for athletes, coaches and similar roles.

Employers in these sectors should review any fixed term contracts entered into, or due to be entered into, on or after 1 November 2025 to check whether an exception still applies.

CONSEQUENCES OF NON-COMPLIANCE

Civil penalties apply to employers who do not comply with the fixed term contract rules. A non-compliant contract may also be treated as an ongoing (permanent) contract, exposing the employer to an employment relationship it did not intend to create.

Anti-avoidance protections are also in place to stop employers structuring arrangements to get around the rules. Conduct caught by these protections, such as:

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

can amount to adverse action, exposing an employer to an unfair dismissal, unlawful termination or general protections claim.

SUMMARY

The rules governing fixed term employment contracts have continued to develop since the Secure Jobs, Better Pay Act took effect in December 2023, most recently with the November 2025 changes to industry exceptions. Employers should review their fixed-term contract templates and processes regularly, including the high income threshold (which changes every 1 July) and the current Fixed Term Contract Information Statement, to make sure they remain compliant. Employees should also be aware of their rights, including the protections against consecutive contracts and anti-avoidance conduct.

RAMSDEN LAWYERS – HOW WE CAN HELP

Employers can reduce their legal risk by understanding and keeping pace with the fixed-term contract rules under the Secure Jobs, Better Pay Act. Ramsden Lawyers can help you review your fixed-term contract templates, confirm whether an exception applies to your workforce, and respond if a dispute arises. Contact us today if you need help understanding your obligations, updating your employment contracts, or require representation.

The content of this article is intended to provide general guidance on the subject matter and must not be relied on as legal advice. Specific advice about your circumstances should be sought.