Fixed-Term Employment Contract (Australia)

A Fixed-Term Employment Contract in Australia sets out the duties, hours, pay, leave, and termination terms between employer and employee, consistent with the minimum entitlements guaranteed by the Fair Work Act 2009 (Cth). It defines duties, remuneration, working hours, leave, and termination procedures binding employer and employee.

Prior to the Secure Jobs, Better Pay reforms, Australian employers could engage employees on successive fixed-term contracts of relatively short duration, effectively keeping workers in long-term casual or fixed-term arrangements that avoided the employee accruing entitlements associated with permanent employment — such as redundancy pay under Section 119 of the Fair Work Act and the right to request flexible working arrangements under Section 65. The reforms addressed this practice by introducing two key restrictions: first, employers cannot engage an employee on a fixed-term contract for a period of more than two years (including any extensions or renewals); and second, employers cannot engage an employee on two or more successive fixed-term contracts for the same or substantially similar work if the total period of engagement under those contracts exceeds two years, or if there is more than one extension or renewal. These anti-avoidance provisions operate alongside specific exemptions for certain categories of engagement.

The exemptions from the two-year and two-renewal rules under the Fair Work Act include: apprenticeships and traineeships (where the fixed term is the minimum period required to complete the relevant qualification); engagements that involve a substantial increase in the employee's ordinary hours of work during a peak demand period (as compared to the employee's usual hours); engagements to perform essential work during a temporary absence of a permanent employee (such as parental leave or long-term personal leave); engagements where the work is funded under a government funding arrangement and the funding is for a period shorter than two years; engagements of a high-income employee whose annualised salary exceeds the high income threshold under Section 333E of the Fair Work Act (currently $175,000); and engagements covered by a transitional exemption in the employer's Modern Award or enterprise agreement. Employers should carefully assess which (if any) of these exemptions applies before entering into a fixed-term contract that would otherwise exceed the two-year threshold.

From 6 December 2023, employers who engage employees on fixed-term contracts must provide each such employee with a copy of the Fixed Term Contract Information Statement (FTCIS) published by the Fair Work Ombudsman, before or as soon as practicable after the contract commences. The FTCIS explains the employee's rights under the new fixed-term contract provisions, the restrictions on renewals, and the remedies available if the employer breaches the rules. Failure to provide the FTCIS is a civil remedy provision under the Fair Work Act, and the Fair Work Ombudsman (FWO) may investigate and issue infringement notices or commence proceedings.

Fixed-term employees who are employed in the national system under the Fair Work Act accrue all National Employment Standards (NES) entitlements on a pro-rata basis, including annual leave (Section 87), personal/carer's leave (Section 96), compassionate leave (Section 104), community service leave (Section 108), and family and domestic violence leave (Section 106B). Fixed-term employees also accrue redundancy pay entitlements under Section 119 if their employment is terminated before the end of the fixed term without proper cause — though the expiry of a fixed-term contract at its natural end date does not ordinarily constitute a dismissal for redundancy purposes, unless the employee had a reasonable expectation of renewal and the employer refused to renew without genuine operational justification.

Superannuation guarantee contributions at the statutory rate under the Superannuation Guarantee (Administration) Act 1992 (Cth) — currently 11.5% for the 2024–25 financial year — apply to fixed-term employees in the same way as permanent employees, from the first dollar of earnings. PAYG withholding under the Tax Administration Act 1953 (Cth) also applies from the first day of the engagement. Fixed-term employees are entitled to receive the Fair Work Information Statement (FWIS) at the commencement of their employment under Section 125 of the Fair Work Act.

A Fixed-Term Employment Contract is appropriate in Australia when there is a genuine business reason for engaging an employee for a defined period rather than on a permanent basis. Since 6 December 2023, employers must also confirm that the proposed arrangement does not breach the two-year and two-renewal anti-avoidance rules under the Fair Work Act 2009 (Cth) as amended by the Secure Jobs, Better Pay Act 2022.

**Parental Leave Cover**

Engaging a fixed-term employee to cover for a permanent employee on parental leave is one of the most common and accepted uses of a fixed-term contract in Australia. The engagement is directly tied to the temporary absence of the permanent employee, and the fixed-term contract should specify that it ends when the permanent employee returns to work (or at a defined date approximating the expected return date). This use falls within the exemption for engagements to cover a temporary absence of a permanent employee.

**Defined Project or Task**

Where a business has a specific, time-limited project that requires additional workforce capacity — such as a construction project, a technology implementation, an event, or a product launch — a fixed-term contract is appropriate for the duration of the project. The contract end date may be expressed as either a specific date or upon the completion of a defined deliverable or task, provided the end event is sufficiently certain.

**Grant-Funded and Government-Funded Roles**

Organisations in the community sector, higher education, health, and research sectors frequently use fixed-term contracts to engage employees in roles funded by competitive grants or government contracts with defined funding periods. Where the funding is from a government body and is for a period shorter than two years, the engagement may qualify for the government funding exemption under the Fair Work Act's fixed-term contract provisions.

**Seasonal and Peak Demand Work**

Industries with predictable seasonal demand peaks — including hospitality, tourism, agriculture, retail, and event management — may engage fixed-term employees during peak periods. Where the engagement involves a substantial increase in the employee's ordinary hours compared to their usual hours, the peak demand exemption may apply under the Fair Work Act.

**Traineeships and Apprenticeships**

Fixed-term contracts for the minimum period required to complete a recognised vocational qualification under an Australian Apprenticeships arrangement are exempt from the two-year rule. Apprenticeships and traineeships are governed by the relevant state or territory training legislation as well as the applicable Modern Award and the National Vocational Education and Training Regulator Act 2011 (Cth).

**High-Income Employees**

Where the employee's annualised salary exceeds the high income threshold under Section 333E of the Fair Work Act (currently $175,000), the two-year and two-renewal restrictions do not apply. Employers should confirm the current threshold with the Fair Work Ombudsman before relying on this exemption, as the threshold is adjusted annually.

**Before Committing to Permanent Employment**

Some employers use fixed-term contracts as an extended probationary or assessment period. However, employers should be aware that a fixed-term contract employee may have unfair dismissal rights if they are dismissed before the end of the term, and that using rolling fixed-term contracts to avoid permanent employment may breach the anti-avoidance provisions if the engagement exceeds two years without a qualifying exemption applying. The Fair Work Commission has jurisdiction to order conversion to permanent employment where the anti-avoidance rules are breached.

A compliant Fixed-Term Employment Contract for Australia must include specific elements to satisfy the Fair Work Act 2009 (Cth) and the amendments introduced by the Secure Jobs, Better Pay Act 2022.

**Term and End Date**

The contract must clearly state the commencement date and either the end date (expressed as a specific calendar date) or the triggering event that terminates the contract (such as completion of a defined project or the return of a permanent employee from parental leave). The contract should also state whether any notice is required to end the contract before the specified end date, and under what circumstances early termination is permitted.

**Fixed Term Contract Information Statement**

From 6 December 2023, employers must provide every fixed-term employee with a copy of the Fixed Term Contract Information Statement (FTCIS) published by the Fair Work Ombudsman, before or as soon as practicable after the contract commences. A reference to the provision of the FTCIS should be recorded in the contract.

**Role, Duties and Reporting**

The contract must describe the employee's job title, key duties and responsibilities, and the person to whom they report. For fixed-term contracts covering a temporary absence, the contract should identify the permanent employee being covered (where appropriate).

**Remuneration and Award Compliance**

The salary or wage rate must be stated and must meet or exceed the applicable Modern Award minimum rate or enterprise agreement rate for the employee's classification. For award-covered employees, the contract should identify the applicable Modern Award — such as the Clerks Private Sector Award 2020, the Health Professionals and Support Services Award 2020, or the Professional Employees Award 2020 — and the employee's classification level. Annualised salary arrangements under the relevant Modern Award must comply with the record-keeping and reconciliation requirements introduced by the Fair Work Commission's annual wage review decisions.

**Hours of Work**

Ordinary hours of work, the spread of hours, and any overtime or penalty rate arrangements must be addressed, consistent with the applicable Modern Award or enterprise agreement and the NES maximum of 38 ordinary hours per week under Section 62 of the Fair Work Act.

**NES Entitlements**

The contract must not exclude or reduce any NES entitlement. Fixed-term employees accrue annual leave (4 weeks per year), personal/carer's leave (10 days per year), compassionate leave (2 days per occasion), community service leave, and family and domestic violence leave (10 days paid per year) on the same basis as permanent employees, pro-rated for part-time employees. The contract should address how accrued but untaken annual leave will be paid out at the end of the term.

**Superannuation**

The contract should confirm that the employer will make superannuation guarantee contributions at the statutory rate to the employee's nominated complying superannuation fund (or to the employer's default fund if no nomination is made), as required by the Superannuation Guarantee (Administration) Act 1992 (Cth).

**Anti-Avoidance Compliance**

Where the proposed fixed-term arrangement is intended to exceed two years or involves more than one renewal, the contract should identify the applicable exemption under the Fair Work Act and explain how the arrangement complies. If no exemption applies, the contract must not extend beyond two years and must not be renewed more than once for the same or substantially similar work.

**Termination Provisions**

The contract should address the circumstances in which either party may terminate the contract before the end of the fixed term — including the notice period, any payment in lieu of notice, and any entitlement to redundancy pay if the employment ends early due to genuine redundancy. The forms-legal.com Fixed-Term Employment Contract (Australia) template incorporates all mandatory NES provisions, the FTCIS reference, and the anti-avoidance compliance provisions required under the Fair Work Act 2009 (Cth) as amended.

**Additional Compliance References**

The Superannuation Guarantee (Administration) Act 1992 (Cth) Section 19 sets the superannuation guarantee rate applicable to fixed-term employees from day one. The superannuation guarantee charge is imposed under Section 16 of the Superannuation Guarantee (Charge) Act 1992 (Cth) for non-compliant employers. The Paid Parental Leave Act 2010 (Cth) Section 6 extends government-funded paid parental leave to fixed-term employees who meet the work test. Long service leave entitlements are governed by state legislation including the Long Service Leave Act 1955 (NSW), the Long Service Leave Act 2018 (Vic), and Section 59 of the Industrial Relations Act 1999 (Qld). The forms-legal.com Fixed-Term Employment Contract (Australia) template incorporates all mandatory National Employment Standards provisions, the Fixed Term Contract Information Statement reference, and anti-avoidance compliance under the Fair Work Act 2009 (Cth) as amended by the Secure Jobs, Better Pay Act 2022.