Australia's fixed-term contract rules have been tightening since 2023, and the regulatory landscape continues to evolve. On 1 November 2026, temporary exceptions that have allowed charities, not-for-profit organisations, and medical and health research institutions to engage employees on fixed-term contracts beyond the standard limits will expire. For HR teams across all sectors, the deadline is a timely prompt to review current arrangements, audit existing contracts, and confirm that fixed-term contracts — new and existing — are structured in accordance with the Fair Work Act. This article covers the core limitations, the exceptions that remain in place, the anti-avoidance rules that apply, and a practical checklist for HR teams.

The fixed-term contract rules — what applies to all employers

The Fair Work Act limits the use of fixed-term contracts for employees performing the same or substantially similar work. The limitations apply to all employers, with limited exceptions, and cover three distinct restrictions.

The two-year limit

A fixed-term contract cannot require or allow an employee to work for more than two years in total, including any extensions or renewals.

The renewal limit

A fixed-term contract cannot include an option or right to extend or renew more than once.

The consecutive contracts limit

An employer cannot enter into a new fixed-term contract with an employee to perform the same or substantially similar work where there is substantial continuity in the employment relationship and the new contract would result in a total period of engagement exceeding two years, or where the employee has already been engaged under two or more consecutive fixed-term contracts for the same or similar work.

Fixed Term Contract Information Statement

Employers must provide every employee entering a fixed-term contract with the Fixed Term Contract Information Statement, before or as soon as practicable after the contract is entered into.

Consequences of non-compliance

Where a fixed-term contract contains a prohibited term, the end date has no effect and the employment continues as ongoing. The consequences of breach are detailed in the anti-avoidance section below.

Exceptions to the limitations — and what changes on 1 November 2026

The limitations on fixed-term contracts do not apply in all circumstances. The Fair Work Act and Fair Work Regulations set out a number of exceptions. Employers relying on an exception bear the evidential burden of demonstrating that the relevant conditions are met.

Ongoing exceptions

The following exceptions have no expiry date and continue to apply to eligible fixed-term contracts.

• Specialised skills for a specific task: The employee is engaged to perform only a distinct and identifiable task involving specialised skills.

• Training arrangements: The employee is engaged under a formal training arrangement, such as an apprenticeship or traineeship, made under state or territory law.

• Essential work during peak demand or temporary absence: The employee performs essential work during a peak demand period, or covers the temporary absence of another employee.

• Government-funded positions: The position is funded wholly or in part by government funding, the funding period exceeds two years, and there is no reasonable prospect of ongoing funding beyond that period.

• High-income employees: The employee's earnings exceed the high-income threshold at the time the contract is entered into.

• Organised sport and high performance sport: Certain roles in connection with organised sport or high performance sport, as prescribed by the Fair Work Regulations.

• Modern award terms: A modern award covering the employee expressly permits the use of fixed-term contracts.

Exceptions expiring on 1 November 2026

Temporary exceptions that have allowed organisations in the charities and not-for-profit sector and the medical and health research sector to engage employees on fixed-term contracts beyond the standard limitations will expire on 1 November 2026. Fixed-term contracts entered into on or after that date in these sectors will be subject to the standard limitations in full, unless a separate ongoing exception applies.

Organisations currently relying on these temporary exceptions should assess whether contracts due to commence on or after 1 November 2026 can be structured to meet one of the ongoing exceptions, or whether the relevant positions will need to be offered as ongoing employment.

For the full conditions that applied to these temporary exceptions, refer to the Fair Work Ombudsman at fairwork.gov.au.

What the anti-avoidance rules prohibit

The Fair Work Act includes anti-avoidance provisions that prohibit employers from taking actions designed to circumvent the limitations on fixed-term contracts. These provisions apply regardless of the employer's stated reason for the action — where one of the reasons for the conduct is to avoid the limitations, the prohibition applies.

The following actions are expressly prohibited under section 333H of the Fair Work Act:

• Terminating an employee's employment for a period, then re-engaging the employee to perform the same or substantially similar work

• Not re-engaging an employee and instead engaging another person to perform the same or substantially similar work

• Changing the nature of the work or tasks the employee is required to perform

• Otherwise altering the employment relationship to avoid the limitations

Where an employer engages in any of these actions, the conduct may also constitute adverse action under the general protections provisions of the Fair Work Act, which carry additional consequences.

Consequences of breach

Where a fixed-term contract contains a prohibited term, the end date specified in the contract has no effect. The employment continues as ongoing employment, with all associated entitlements. Civil penalties may apply to employers found to have provided employees with a prohibited fixed-term contract. Where an employer relies on an exception in civil penalty proceedings, the evidential burden of proving that the exception applies rests with the employer.

Common misunderstandings

Three patterns of conduct are frequently misunderstood as permissible but fall within the scope of the anti-avoidance provisions.

Issuing a new contract document does not reset the count under the consecutive contracts or two-year limits. The Fair Work Act assesses the substance of the employment relationship, not the form of the documentation.

Assigning marginally different tasks or titles to an employee does not constitute a change to the nature of the work for the purposes of the anti-avoidance provisions, where the work performed remains the same or substantially similar.

Introducing a short break between contracts does not interrupt continuity of the employment relationship where the employee is re-engaged to perform the same or substantially similar work.

A practical checklist for HR teams

The following steps provide a structured basis for reviewing fixed-term contract arrangements in light of the current rules and the upcoming changes on 1 November 2026.

1. Audit current fixed-term contracts

A complete inventory of current fixed-term contracts should identify, for each contract:

• The start date, end date, and total duration including any extensions or renewals

• Whether the role is the same or substantially similar to a previous fixed-term position held by the same employee

• Whether the contract relies on a specific exception, and whether the conditions for that exception continue to be met

• Whether the contract is approaching the two-year limit or the consecutive contracts limit

For organisations in the charities, not-for-profit, or medical and health research sectors, the audit should specifically identify contracts that rely on the temporary sector exceptions and that are due to be renewed or extended after 1 November 2026.

2. Review contracts scheduled to commence on or after 1 November 2026

Any fixed-term contract intended to commence on or after 1 November 2026 in the charities, not-for-profit, or medical and health research sectors should be assessed against the ongoing exceptions. Where no ongoing exception applies, the position will need to be offered as ongoing employment.

For all other sectors, planned fixed-term contracts should be reviewed against the standard limitations and the available ongoing exceptions before the contract is entered into.

3. Prepare for transition to ongoing employment where required

Where a fixed-term contract cannot be renewed or extended without breaching the limitations — and no exception applies — the employment relationship transitions to ongoing employment. HR teams should ensure the following are in place ahead of any such transition:

• Confirmation of applicable award or enterprise agreement entitlements for ongoing employees in the relevant role

• Updated employment documentation reflecting the change from fixed-term to ongoing employment

• Internal communication to the employee and relevant managers

4. Confirm the current Fixed Term Contract Information Statement is in use

The Fixed Term Contract Information Statement must be provided to every employee entering a fixed-term contract. Organisations should confirm that the most recent version is being used and that it is being provided at the correct time.

5. Seek advice on complex arrangements

Where fixed-term contract arrangements involve multiple exceptions, long-running funded projects, or uncertainty about whether the limitations apply, advice from a workplace relations specialist or the Fair Work Ombudsman's advisory service is recommended.

The fixed-term contract framework under the Fair Work Act places ongoing compliance obligations on all employers. The expiry of the temporary sector exceptions on 1 November 2026 narrows the circumstances in which charities, not-for-profit organisations, and medical and health research institutions may engage employees on fixed-term contracts — but the broader rules apply across all industries and require consistent attention.

For HR teams, the most effective approach is a structured audit of current arrangements, conducted well ahead of any relevant deadlines, to identify contracts that may require transition to ongoing employment or restructuring to meet an applicable exception. Where arrangements are complex or involve multiple funding sources, advice from a workplace relations specialist or the Fair Work Ombudsman is recommended.

Official sources:

• Fair Work Ombudsman — Fixed-term contract employees

• Fair Work Ombudsman — Additional fixed-term contract exceptions

• Fair Work Ombudsman — Fixed Term Contract Information Statement

Last updated: July 2026