Fair Work fixed term contract restrictions & opportunities

iFreelance Fixed Term Contract Exemption Checklist Charities & NFP.pdf

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1.    Fixed Term Contract Limitations

From 6 December 2023 new rules applied when engaging employees on fixed term contracts. A fixed (or maximum) term contract terminates at the end of a set period.

Unless a prescribed exception applies, a fixed term contract cannot be longer than 2 years, which includes any extensions.  This means that unless an exception applies, there can be no option to extend or renew a fixed term contract beyond 2 years. 

Additionally, a fixed term contract cannot be renewed more than once even if the total period is under 2 years.

An employee cannot be offered a new fixed term contract if the first 3 points below all apply, and one or more of the scenarios in the 4th point applies.

1. Their previous contract was also for a fixed term.

2. Their previous contract and the new contract are for the same or similar work.

3. There is substantial continuity between the previous and new contracts, and

4. Either:

   • the previous contract contained an option to extend that was used

   • the total period of employment is more than 2 years

   • the new fixed term contract contains an option to renew or extend

The new rules require employers to give employees on fixed term contracts a FWA Fixed Term Contract Information Statement as well as the FWA Information Statement.

2.    Prescribed Exceptions

When the legislation was implemented, a list of initial exceptions to the above rules applied.  Below is a comprehensive list (a-h) of the current prescribed exceptions, which take into account changes as recent as 1 November 2025.

a)    Specialised skills for a specific task

Applies to work on a specific task (i.e. project) that requires specialised skills.

Fair Work has not defined ‘specialised skills’, however the Explanatory Memorandum for the Fair Work Amendment clarifies “the employee has specialised skills that the employer does not have, but needs, to complete a specific task”. 

Laws firms have written articles pointing to the following interpretations:

• a need for unique expertise; and the task being distinct from ordinary duties

• a particular, uncommon skillset is required to perform a discrete, time limited project

• technical, niche or advanced competencies necessary for a particular piece of work

• where the employer cannot reasonably perform the task without someone possessing that particular advanced capability

Employment lawyers have cautioned that this is not a catch-all clause for professional roles and that general professional skills will not be sufficient to meet the exemption, i.e. HR, IT, Management etc.  Many roles involve expertise; however this exemption should be interpreted as genuinely specialised in the industry sense.

b)    Training Arrangements

Applies to training arrangements made under State/Territory law which combines work with study for an apprenticeship or traineeship qualification. 

c)    Essential Work During a Peak Period

Applies to the performance of essential work during a peak demand period.  While Fair Work has not expressly defined ‘essential’ work, it is linked to a peak demand.  It might help to think about a peak period as a temporary, identifiable spike in workload that requires additional labour for a limited time.  Examples might include fruit picking, harvest seasons, Christmas season or other similarly defined seasonally spiked work.

Crucially, if the contract period is longer than the peak period or there is ongoing work after the peak period, the exemption would likely not apply.  It should be interpreted narrowly, not a general “we continue to be busy” clause.

d)    Emergency or Temporary Circumstances

Applies to emergency circumstances or to replace someone who is temporarily absent.   Fair Work does not expressly define ‘emergency’, however associated materials indicate that it would apply when the employer must respond to an unplanned, unavoidable or urgent situation. 

e)    High Income Employees

Applies if the employee’s guaranteed salary is more than the current high income threshold, in the year the contract is entered.  Currently this is $183,100, indexed each 1 July. The high income threshold includes base salary and the agreed money value of non-monetary benefits, for example a fully maintained company vehicle.  Payments which cannot be determined in advance (i.e., commissions, bonuses and overtime) are excluded.

f)     Positions Dependent on Funding from the Government

Applies where the employee’s position is:

• funded by government funding (completely or in part); and

• the funding is for more than 2 years; and

• the funding is unlikely to be renewed afterwards

For positions where funding is ongoing or there is a reasonable prospect of funding renewal, then the exemption would not apply.  This exemption does not relate to working for a government agency on a fixed term contract.

g)    Governance Positions

Applies to a governance position that is for a limited time (based on the rules of a Corporation or Association), i.e. a paid role on a Board of Directors or Management Committee.

h)    Award Provisions

Applies if an Award allows any of the circumstances limited by the new rules, for example as contained in the Live Performance Award.  There does not appear to be a published list of Awards containing further exemptions, so it is recommended to read the Fixed Term clause of the relevant Award to be sure.

3.    Additional Exemptions

As of 1 November 2025, the following additional exemptions have been granted, assuming the conditions associated with the exemption are met.

Charities and Not For Profits

This exemption applies to fixed term contracts entered into/after 1 Nov 2024 until 1 Nov 2026.

The Organisation must be:

• a charity registered under the Australian Charities & NFP Commission Act 2021; and

• After 1 Nov 2025, the Organisation has less than <$10m total annual revenue; and

• the funding for the fixed term position is provided in whole or in part:

  • by government funding such as grant/procurement (not individual payments); or

  • by a different philanthropic entity; or

  • as a testamentary gift or contribution for a charitable purpose. 

AND

• the work is to be performed for a specific program that the funding relates to; and

• the program is to run for a period of no more than 5 years, taking into account any period for which the program has already run; and

• the fixed term contract is substantially the same length of the program; and

• the fixed term contract would not result in the employee being employed on a continuous basis for more than 7 years in total; and

• the employee is not covered by the Higher Education Academic Staff Award or Higher Education General Staff Award when the contract is entered into; and

• any funding described above starts on or after 1 November 2024.

Please download the attached checklist prepared by iFreelance to assist NFP organisations to quickly determine whether the above exemptions apply to their Organisation.

Organised Sport

This exemption applies to fixed term contracts entered into on or after 6 Dec 2023.

The Organisation must be one of the following:

• a national sporting organisation; or

• a national sporting organisation for people with disability recognised by ASC; or

• a governing body for an organised sport in a State/Territory; or

• a body conducting a State/Territory level competition for an organised sport; or

• an organisation that is a member of, or otherwise affiliated with, any of these bodies.

The roles covered under the exemption include athlete, coach for an athlete, match official, performance support professional for an athlete or match official whose work primarily involves direct support or assessment of the individual’s participation or performance. 

High Performance Sport

This exemption applies to fixed term contracts entered into on or after 6 Dec 2023.

High performance sport is performed at the elite level by athletes; or athletes with a disability.

The Organisation must be one of the following:

• the international organising body for the international event; or

• the Australian organising body for the international event; or

• the Australian organising body for the particular international event; or

• the international event is not regularly held in Australia; and either:

  • the international organising body or the international event has granted the employer the right to host the particular event, or

  • the employer is seeking to be granted the right to host the event.

The functions covered under the exemption include work that primarily involves direct support of the administration, or organisation of an international event for a high performance sport.

Medical or Health Research

This exemption applied initially on a temporary basis from 6 Dec 2023 until 1 Nov 2024.  The exemption has now been extended to fixed term contracts entered into until 1 Nov 2026.

The Organisation must be:

• a philanthropic entity; or

• an entity controlled by a philanthropic entity; or

• a public Commonwealth, state or territory body; or

• an entity controlled by such a body. 

AND

• After 1 Nov 2025, the Organisation has less than <$10m total annual revenue; and

• the funding for the position is provided in whole or in part:

  • by government funding; or

  • by a different philanthropic entity; or

  • if the employer is a philanthropic entity, for a charitable purpose, including a testamentary gift or contribution.

• the work primarily involves either basic research, pre-clinical research, clinical research or translational research; and

• the work is performed for a specific program that the funding relates to; and

• the program is to run for a period of no more than 5 years, taking into account any period for which the program has already run; and

• the fixed term contract is substantially the same length of the program; and

• the fixed term contract would not result in the employee being employed for more than 7 years; and

• the employee is not covered by the Higher Education Academic Staff Award or Higher Education General Staff Award when the contract is entered into; and

• any funding described above starts on or after 1 November 2024.

4.    Repealed Exceptions

Those prescribed exceptions which have ended from 1 November 2025 for fixed term contracts relate to:

• higher education sector employees

• private hospital employees 

• live performance industry employees 

• employees of non-government funded philanthropic entities who are not covered by the exemptions for charity and not-for-profit sector employees. 

5.    Disputes About Fixed Term Contracts

Ideally any concerns around a fixed term contract can be discussed and resolved in the workplace.  Alternatively, either an employer or employee may lodge a dispute with the Fair Work Commission.  Employees can also take civil action in the small claims court.

6.    Protections for employees

Employers cannot take certain actions to purposely avoid these legal requirements.  These are called the anti-avoidance protections, which cover actions such as:

• making changes to the timing or terms of a fixed term contract as an avoidance tactic;

• ending employment or not re-employing the employee for a period of time so as to artificially break continuity of employment;

• not re-engaging the employee, and instead employing someone else to do the same or substantially similar work, so as to avoid making the employee permanent; or

• artificially changing the work duties between two contracts, so that the employee could not be said to be performing the same or similar work; or 

• otherwise making a change to the employment relationship.

It must be determined that the employer made a decision to implement avoidance tactics (i.e. it was not a genuine error).   If an employer deploys such tactics, it may also constitute adverse action, which would invoke other workplace rights.

7.    Effect of Entering Into Prohibited Fixed Term Contracts

The following are the potential effects of entering prohibited fixed term contracts:

• If the fixed term contract is invalid, the term that ends the contract is also invalid, and the employment would be deemed to be permanent.

• The employee would not be considered to have been employed on a fixed term contract for the purpose of being able to claim unfair dismissal.

• If the contract contains clauses requiring the employer to provide notice of termination, or payment in lieu of notice of termination, and to provide redundancy pay to the employee, the employee may be able to rely on these clauses, as long as they are more beneficial than the minimum NES Standards.

• In the above situation, notice period and redundancy pay would be calculated from the start of the employment relationship, not from the start of the fixed term contract.

• Civil penalties may be imposed, with penalty amounts varying according to the severity of the actions, and whether carried out by an individual or the organisation.

• The Fair Work Ombudsman has the power to start court proceedings for alleged breaches of these provisions and to conciliate and arbitrate such disputes. 

• Employers may also be liable for compensation or other relief (i.e., unfair dismissal).

8.    Termination of Fixed Term Employment

Fixed term employees do not receive notice of termination or redundancy if their employment terminates at the end of a fixed term contract.  Nor are fixed term employees eligible to unfair dismissal remedies.

For small employers (<15 employees) redundancy pay does not apply.

9.    Summary

In summary, fixed term contracts can be used for a maximum of two years, with only one extension permitted. Employers must carefully consider whether a fixed term contract is needed and select the appropriate duration from the outset.

As temporary exemptions are subject to review by 1 November 2026, any changes could mean new fixed term contracts beyond that date are strictly limited to the two-year maximum. If the temporary exemptions for applicable employers end, employers may need to provide notice of termination or convert roles to permanent positions.

This legislation was introduced to address employers who relied on rolling fixed term contracts to avoid ongoing responsibilities. Ultimately, staying informed about exemptions and seeking advice if unsure is essential, as getting this wrong could have lasting consequences for both employers and employees.

Disclaimer:  The information provided in this document is intended for general information only and does not constitute legal, financial or insurance advice. While the content draws on professional experience in human resources and safety and care has been taken to ensure the accuracy of the material, readers are encouraged to consider their individual circumstances and seek appropriate professional advice for their specific situation. The reader should reach their own conclusions about the veracity of the information presented.

Prepared by Gina Clayton, Consultant and Owner of iFreelance.  Information sourced from legislation and other public sources.  Current as at time of publication.  Last reviewed November 2025.