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Fixed term contracts under the Fair Work Act
The Fair Work Act 2009 (Cth) (Fair Work Act) places restrictions on the use of fixed term contracts.
These restrictions were introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) and generally apply to fixed term contracts entered into on or after 6 December 2023.
The rules restrict:
- how long a fixed term contract can operate
- when a fixed term contract can be renewed or extended, and
- when an employer can use consecutive fixed term contracts for the same or substantially similar work
Generally, a fixed term contract cannot run for more than two years (including any extensions), and employers cannot use multiple fixed term contracts to avoid these limitations.
However, contracts entered into before 6 December 2023 may still be relevant when assessing whether the restrictions on consecutive contracts apply.
Our fact sheet explains:
- fixed term contracts and maximum term contracts
- restrictions on fixed term contracts
- restrictions on consecutive fixed term contracts
- exceptions to the fixed term contract limitations
- funding-related exceptions that may apply to some not-for-profit organisations
- consequences of breaching the fixed term contract rules
The fact sheet also includes practical examples and a compliance checklist for organisations using fixed term contracts.
More information
See the fact sheet on limiting the use of fixed-term contracts published by the Department of Employment and Workplace Relations and the Fair Work Ombudsman webpage ‘New rules for fixed term contracts’.
Common questions about fixed term contracts
How long can a fixed term contract run?
Generally, a fixed term contract cannot run for more than two years, including any extensions. There are exceptions in certain circumstances, including some funded positions and other roles covered by an exception under the Fair Work Act 2009 (Cth) or the Fair Work Regulations 2009.
How many times can a fixed term contract be renewed?
Generally, a fixed term contract can include one option to renew or extend the contract. The total period of the contract, including any extension, cannot generally exceed two years unless an exception applies.
Employers are also restricted from using consecutive fixed term contracts to avoid the fixed term contract limitations.
Are there exceptions for grant-funded roles?
Yes. The Fair Work Act 2009 (Cth) includes an exception for some funded positions. The Fair Work Regulations 2009 also contain additional exceptions that may apply to certain charity and not-for-profit sector roles funded through government grants, philanthropic funding or testamentary gifts.
Whether an exception applies depends on the source of the funding and the circumstances of the position. Organisations should carefully assess whether an exception is available before relying on it.
What is the difference between a fixed term contract and a maximum term contract?
A fixed term contract ends on a specified date and generally does not give either party a right to end the employment before that date, except where permitted by the contract or by law.
A maximum term contract specifies the latest date on which the employment will end, but allows either party to end the employment earlier in accordance with the contract.
Need more information? Download our Fixed term contracts fact sheet for detailed guidance on the fixed term contract limitations, exceptions and compliance requirements.
The content on this webpage was last updated in September 2026 and is not legal advice. See full disclaimer and copyright notice.
