Do contracts entered into before 6 December 2023 matter?

They are not themselves governed by the limitations, but they are not irrelevant. An earlier contract can form part of the factual picture when the consecutive-contract limitation is assessed for a later contract, including on questions of same or substantially similar work and substantial continuity. Reconstruct the full contract history for the person before approving a new contract.

What changed for the charity and health-research exceptions on 1 November 2026?

As at 3 November 2026, the exceptions relating to organised sport and high-performance sport are ongoing. The qualifying charity and not-for-profit exception and the medical and health-research exception continue without their former expiry date. For contracts entered into on or after 1 November 2026, the work must be more than 50% funded by the qualifying sources specified in the regulations, and the other detailed conditions must also be met. Recheck the current regulations and the Fair Work Ombudsman guidance immediately before any contract relying on those exceptions is issued.

What happens if a contract breaches the limitations?

Under s 333G the term providing for the employment to terminate automatically at the end of the identifiable period has no effect. The contract is not void: the remaining terms continue, and statutory and instrument entitlements continue to apply. The practical result is that employment does not end automatically on that term. Any later ending must rely on another lawful basis and comply with the contract, applicable instrument and law. Entering a prohibited fixed term contract is also a civil remedy contravention.

Workplace Advisory & Compliance

Fixed-term contracts: rules, exceptions and employer controls

A practical guide to assessing, approving, documenting and monitoring fixed-term contracts under the Fair Work Act.

By the AWS Editorial Team6 August 2026

Two workplace professionals reviewing fixed-term contract documents together

Key points

Section 333E of the Fair Work Act limits relevant contracts entered into on or after 6 December 2023, subject to the s 333F exceptions; the limitations do not apply to a casual employee whose contract period is identified by reference to completion of the relevant shift.
A proposal must clear three tests: no term longer than two years, no option capable of taking total employment past two years and no more than one extension or renewal option, and the consecutive-contract test.
The consecutive-contract limitation is conjunctive — previous fixed term, same or substantially similar work, substantial continuity, and at least one statutory trigger — not a blanket ban on back-to-back contracts.
Exceptions remove a limitation only where every element is provable at the time the contract is entered into; the high income exception uses the threshold for that financial year, $190,100 from 1 July 2026, with its own calculation for part-time or part-year employees.
The Fixed Term Contract Information Statement must be given before or as soon as practicable after entering every new fixed term contract, including renewals and contracts covered by an exception, using the version current on that date.
Where a contract breaches the limitations, the automatic-termination term has no effect while the rest of the contract and all statutory and instrument entitlements continue.

Classify the arrangement before anyone opens a contract template

Fixed-term risk often begins before drafting, when the proposed arrangement is first classified. A manager says the work will last about eighteen months, someone reaches for the fixed-term template, and nobody records why a fixed end date was chosen over an ongoing appointment with an honest statement about funding or workload. Two years later the same person is still doing the same work on a third contract, and the employer has no contemporaneous reasoning to point to.

Division 5 of Part 2-9 of the Fair Work Act 2009 (Cth) — principally sections 333E to 333L — limits when an employer may enter into a contract of employment for a fixed period, an identifiable period, or a period determinable by reference to a specified task or contingency. The limitations apply to relevant contracts entered into on or after 6 December 2023, subject to a set of exceptions. They do not apply to a casual employee whose contract period is identified by reference to completion of the relevant shift, whose arrangements sit under a different part of the Act and are outside this guide.

The classification step should record why a fixed end is proposed and which statutory tests and evidence apply. A temporary business need does not itself create an exception, while a continuing need does not by itself determine whether a contract within the statutory limitations is prohibited. The decision must be made under the actual limits and exceptions.

The Fair Work Ombudsman's overview of fixed term contract employees is the practical starting reference. AWS is a workplace consultancy, not a law firm, and nothing in this guide is legal advice.

The three limitation tests

Section 333E contains three tests. A proposal must clear all of them, and failing any one of them makes the contract a prohibited fixed term unless an exception applies.

The time limitation is the simplest. The contract must not be for a period longer than two years, and that includes any extension or renewal contemplated by the contract itself. Two years is the outer boundary of the initial arrangement, not a target to be reached by increments.

The renewal limitation has two parts, and employers regularly satisfy one while breaching the other. An option or right to extend or renew must not be capable of taking the total period of employment under the contract beyond two years; and the contract must not contain a right or option to extend or renew more than once. An eighteen-month contract with two six-month options breaches both parts at once: the options can take the arrangement past two years, and there is more than one of them.

The consecutive-contract limitation is the one most often misunderstood, and it is dealt with separately below because it depends on employment history rather than on the drafting in front of you.

How earlier contracts affect a new proposal

The consecutive-contract limitation is conjunctive. It is not a rule that back-to-back fixed term contracts are prohibited. It bites only where every element is present.

First, the employee must have been employed under a previous fixed term contract. Second, the new contract must be for the same, or substantially similar, work as the previous contract — a comparison of duties, skills, responsibilities and reporting, not of position titles. Third, there must be substantial continuity of the employment relationship between the end of the previous contract and the start of the new one. Fourth, at least one of the statutory triggers in section 333E(5) must apply.

The triggers are the part to read closely against the current compilation, because a proposal can satisfy the first three elements and still be permissible if none of them applies. In broad terms they cover the situation where the total period of the contracts exceeds two years; where the new contract contains a right or option to extend or renew; where the previous contract contained an option for extension that was exercised; and where the chain already extends beyond a single earlier contract for the same or substantially similar work with substantial continuity between each.

Two points about history. Contracts entered into before 6 December 2023 are not themselves governed by these limitations, but they are not irrelevant: an earlier contract can still form part of the factual picture when the consecutive-contract limitation is assessed for a later contract. And a short administrative gap between contracts does not automatically break continuity. Whether continuity is substantial is a question of fact about the relationship, not a question of whether the payroll system closed a record.

Record the duty comparison between the previous and proposed roles, with the evidence relied on, rather than asserting that the work is different.
Reconstruct the full contract history for the person, including pre-6 December 2023 engagements, before assessing continuity.
Treat an option for extension exercised under the previous contract as a material statutory trigger for the new assessment, not as spent history.

Exceptions: what they permit, and what they require you to prove

Section 333F sets out exceptions to the limitations. They are exceptions, not permissions. An exception removes the relevant limitation for a contract that genuinely falls within it; it does not create a general licence to use fixed terms whenever the business regards the need as temporary. There is no free-standing "genuine temporary need" exemption, and describing a role as temporary in the contract does not create one.

The exceptions include engagement to perform only a distinct and identifiable task involving specialised skills; training arrangements such as apprenticeships and traineeships; essential work during a peak demand period; emergency circumstances or the temporary absence of another employee; earnings above the high income threshold; positions attracting government funding of a kind described in the Act where there are no reasonable prospects of renewal; certain governance positions with a time limit under the rules of a corporation or association; circumstances permitted by an applicable modern award; and circumstances prescribed by the regulations.

Three of these deserve specific handling. The high income exception turns on whether, in the year the contract is entered into, the employee's earnings under the contract are above the high income threshold for that year — $190,100 from 1 July 2026. It is not satisfied by paying somebody a good salary and it is not the same concept as a guarantee of annual earnings, which is a separate mechanism dealing with the application of an award. Where the employee is part-time, or the contract runs for less than a year, the Act requires the amount to be worked out under its own statutory calculation, so the comparison must be performed rather than estimated.

The award exception requires the actual provision. If a modern award is relied on, extract the clause, confirm it permits a fixed term in the specific circumstances proposed, and keep the extract on file with the classification and coverage reasoning. Award coverage and classification have their own failure modes, which we deal with in our guide to award interpretation and classification risks.

The government-funding exception is narrower than its shorthand suggests. It depends on funding of the type the Act describes being payable for a period of more than two years, and on there being no reasonable prospects that the funding will be renewed. Both limbs need evidence at the time the contract is entered into: the funding instrument or agreement, and a documented assessment of renewal prospects made by someone who actually knows the funding position.

The exceptions amended from 1 November 2026

Regulations prescribe additional exceptions, and their currency matters more than their content. The Fair Work Ombudsman's page on additional fixed term contract exceptions is the reference to check on the day a contract is issued.

As at 3 November 2026, the exceptions relating to organised sport and high-performance sport are ongoing. The exceptions covering qualifying charities and not-for-profit entities, and certain medical and health-research roles, continue without their former expiry date under the Fair Work Amendment (Fixed Term Contracts) Regulations 2026, which commenced on 1 November 2026. For contracts entered into on or after that date, the work must be more than 50% funded by the qualifying sources specified in the regulations, and the other conditions about the nature of the entity and the role must also be met.

The operational consequence is a hard control, not a note in a policy. Any contract relying on one of the regulation-based exceptions must have the exception rechecked immediately before it is entered into, and the check recorded with the date and the source consulted. An approval that relied on one of those exceptions under the pre-November 2026 funding wording is not a safe basis for entering into a contract today. For a new contract relying on either amended exception, verify the funding requirement that applies from 1 November 2026 rather than relying on the assessment made for an earlier contract.

The Fixed Term Contract Information Statement

Under section 333K, an employer must give the employee the Fixed Term Contract Information Statement before, or as soon as practicable after, the employee enters into the contract. The obligation attaches to every new fixed term contract — including a renewal or extension issued as a new contract, and including contracts where an exception applies. An exception to the limitations is not an exception to the statement.

This is separate from the Fair Work Information Statement, which must be given to every new employee. A fixed-term employee starting work receives both; a continuing fixed-term employee entering a further contract receives the Fixed Term Contract Information Statement again. The published version of the Fixed Term Contract Information Statement changes from time to time, and the version given must be the one current when the contract is entered into.

Build the evidence into the onboarding and variation workflow rather than relying on recollection. Record which statement version was provided, the delivery method, the date, and the recipient address or system record. If the employer cannot produce the statement version and delivery record, it may be unable to demonstrate compliance.

A decision and control matrix

The matrix below is a governance tool, not a substitute for the statutory tests. It sets out the five decision points at which a fixed-term proposal should be stopped or cleared, what the decision actually turns on, the evidence that must exist before the decision is recorded, who owns it and what triggers a fresh look.

Decision point	Question that decides it	Evidence required before approval	Owner	Recheck trigger
Classification	Is the work genuinely limited by a task, funding period, season, absence or event?	Written statement of the limiting factor and its expected end, signed off by the budget or work owner.	Hiring manager, endorsed by HR business partner	Any change to the funding, task scope or end event.
Limitation test	Does the proposal clear the two-year, renewal and consecutive-contract tests?	Full contract history for the person, duty comparison, and the drafted term and option structure.	HR advisory or employment relations	Any proposed change to term length or option wording.
Exception reliance	If an exception is relied on, is every element of it provable today?	Named exception, the source text, and the documents proving each element — award clause, funding instrument, earnings calculation.	HR advisory, escalated where the exception is contested	Issue date more than 30 days after approval; any time-limited exception; a new financial year.
Statement and onboarding	Was the current Fixed Term Contract Information Statement given, and is delivery evidenced?	Version identifier, delivery method, date and recipient record; Fair Work Information Statement handled separately for new employees.	People operations	Every new contract, including a renewal or extension entered into as a new contract.
Expiry gate	What is the decision at the end date, and when must it be made?	Register entry with the end date, the decision owner and a review date set well before expiry.	Workforce planning with the line manager	Register review date reached; role or funding change before expiry.

Approval workflow and the fixed-term register

Fixed-term exposure accumulates quietly because each contract is approved on its own. The control that changes this is a single register of every fixed-term arrangement, owned by one accountable person, holding the employee, the role, the start and end dates, the term length, whether the contract contains an option and how many, the limitation assessment, any exception relied on and the evidence reference, the statement delivery record, and the decision owner for expiry.

Approval authority should scale with risk. A first contract of twelve months or less with no options and no exception reliance can sit with the HR business partner. A second or subsequent contract for the same or substantially similar work, any contract relying on an exception, and any proposal that would take total service beyond two years should require a named senior approver who sees the contract history rather than the requisition.

The register also answers questions the business will eventually be asked: how many people are on fixed terms, in which functions, for how long in aggregate, and how many are approaching a decision point in the next two quarters. Where obligations, controls and evidence are already managed in a governance platform, the register belongs there rather than in a spreadsheet that only one person maintains.

The renewal and extension decision gate

A further fixed term contract is not an administrative repeat. It must be assessed against the limitations with the full history in view. An extension or renewal may operate under an option in an existing contract rather than create a new contract, but that option and any proposed further contract remain material to the statutory tests.

Set the gate early enough to be real. A review point three months before expiry allows four outcomes: convert to ongoing employment; issue a further fixed term where the limitations plainly permit it or a provable exception applies; allow the contract to run to its end date with the consequences confirmed in advance; or restructure the work so the limiting factor is genuinely resolved. A gate that opens two weeks before expiry produces only one outcome, and it is usually the one that creates the problem.

Two questions should be answered in writing at the gate. Has the work changed in substance since the previous contract, and on what evidence? And if the previous contract or the proposed contract contains an option to extend or renew, what does that do to the assessment? Where the answer to either question is uncertain, that is the point to take advice, not after the contract is issued.

If a contract breaches the limitations

The consequence under section 333G is specific and often misdescribed. Where a fixed term contract contravenes the limitations, the term that provides for the employment to terminate automatically at the end of the identifiable period has no effect. The contract is not void, and the employment does not become unlawful.

What follows is that the employment continues under the remaining terms of the contract, and all statutory and instrument entitlements continue to apply — the National Employment Standards, any applicable modern award or enterprise agreement, superannuation, leave accrual and service-based entitlements. The practical point is that employment does not end automatically on the ineffective term. Any later ending must rely on another lawful basis and comply with the contract, applicable instrument and law.

There are also contravention consequences. The prohibition on entering a prohibited fixed term contract is a civil remedy provision, and dispute or enforcement action can follow. Possible consequences include employment continuing beyond the stated end date, service records or entitlements differing from payroll assumptions, and a dispute about how the relationship was ended.

Anti-avoidance, stated accurately

Section 333H addresses conduct engaged in for the purpose of avoiding the limitations. The examples the Act identifies include ending employment for a period, delaying re-engagement, changing the nature of the work or the duties, and using another person to perform the same or substantially similar work, where the conduct is engaged in for that purpose.

Purpose is the operative element. A gap between contracts is not automatically unlawful; nor is a genuine change of duties; nor is engaging a different worker because the work genuinely changed or the previous employee left. What matters is why the step was taken. That is precisely why the classification reasoning, the duty comparison and the expiry decision should be recorded when they are made. A contemporaneous record of a genuine operational reason is the practical answer to a purpose allegation; a reconstruction written after a dispute begins is not.

The reverse discipline also applies. If the only reason a manager is proposing a three-month gap or a cosmetic change of title is to reset the clock, the control environment should surface and stop that proposal, because the register and the approval workflow make the pattern visible.

Disputes and escalation

Section 333L requires the parties to attempt to resolve a dispute about the Division at the workplace level first. That is not a formality to be documented and skipped: a meeting with the employee, a clear explanation of the assessment that was made, and a genuine willingness to correct an error serve a real purpose. It can identify whether the parties agree on the contract history, the statutory test and any exception, and whether a correction is available.

If workplace-level discussion does not resolve it, either party can apply to the Fair Work Commission. The Commission's role at that stage is limited and worth understanding accurately. As set out in its guidance on disputes about fixed term contracts, it can deal with the dispute by mediation or conciliation, by expressing an opinion, or by making a recommendation. It can arbitrate only where the parties agree. An employer that expects a binding determination as a matter of course, or that assumes no determination is possible, will both be planning against the wrong process.

Consequences at the end of a fixed term — whether notice is payable, whether redundancy pay arises, and whether the ending of employment can be challenged — are fact-sensitive and depend on the contract, the applicable instrument and how the arrangement actually operated. It is not correct to assume that every fixed-term employee receives no notice and no redundancy pay, or that expiry is always outside unfair-dismissal jurisdiction. Where a specific ending is contested, that is a question for a qualified lawyer on the facts. Our guide to managing termination risk through fair and documented processes deals with the wider process discipline.

Worked example A — a proposed third year for substantially the same role

A data analyst has worked on two consecutive twelve-month fixed term contracts, the second entered into in 2025 with a six-month extension option that was not exercised. The manager proposes a third twelve-month contract because the reporting program has been extended. The duties are unchanged; the reporting line and system access are unchanged; there is no gap between contracts.

The assessment runs in order. The previous contract was a fixed term contract. The new contract is for the same work — not merely similar, on a duty-by-duty comparison. Substantial continuity is present. At least one trigger applies, because the total period across the contracts would exceed two years. All elements of the consecutive-contract limitation are therefore satisfied, and the proposal is prohibited unless a section 333F exception applies. None does: the work is not a distinct and identifiable task involving specialised skills, it is a continuing analytical function; the earnings are well below the high income threshold; there is no award provision permitting it; and the program funding does not meet the government-funding exception.

The alternative decision path is straightforward once the analysis is done. Convert the role to ongoing employment, reflecting the reality that the function has continued for two years and the business expects it to continue. If the business genuinely cannot commit beyond the program, the honest option is an ongoing role with a documented understanding of the funding position and a proper process if the function later ceases — rather than a third fixed term whose automatic-termination term would have no effect, so that employment would not end on that basis.

Worked example B — a funded, time-limited position

A community services employer receives a grant for a three-year program and wants to engage a program coordinator on a fixed term aligned to the funding. Nobody has held the role before, so the consecutive-contract limitation is not in issue, but the proposed term exceeds two years and therefore breaches the time limitation unless an exception applies.

The employer considers the government-funding exception. Reliance requires evidence of each element at the time the contract is entered into: the funding instrument showing funding of the relevant kind payable for a period of more than two years, and a documented assessment, made by the person who actually manages the funding relationship, that there are no reasonable prospects the funding will be renewed. A general expectation that grants are usually one-off is not that assessment. If the funding body has an established renewal round for which the program would be eligible, the second element may not be satisfied, and the exception should not be relied on.

Because the employer is a not-for-profit entity, someone suggests relying on the charity and not-for-profit exception instead. That requires two further steps. First, confirm against the current regulations that the entity, the funding and the role each meet the detailed conditions — being a not-for-profit is not itself the exception. Second, for a contract entered into on or after 1 November 2026, confirm that the work is more than 50% funded by qualifying sources. The exception continues, but the amended funding requirement and every other condition must be met.

The disciplined outcome is a recorded decision that names the exception relied on, attaches the evidence for each element, records the date of the final recheck against the Fair Work Ombudsman and legislation sources, and confirms that the Fixed Term Contract Information Statement current on the issue date was given. If no exception can be proved, the correct answer is a two-year contract or an ongoing appointment with the funding position explained, rather than a three-year term that the Act will not support.

Where AWS fits

AWS works with employers on the governance side of this problem: building the fixed-term register, setting approval thresholds and decision rights, designing the classification and renewal gates, writing the evidence requirements for exception reliance, and reviewing an existing population to find the arrangements that have already drifted past a decision point. Where obligations and evidence are managed in Strobe, the register, the recheck triggers and the statement records can be held alongside the rest of the compliance framework so the work survives a change of personnel.

AWS is a workplace consultancy, not a law firm. Drafting or settling the terms of a specific contract, advising on disputed legal rights, and any matter with litigation exposure should be referred to a qualified lawyer. Where the two overlap, we work alongside your legal advisers so the governance design and the legal position stay consistent.

Ten-point employer checklist for fixed-term governance

Maintain a single fixed-term register naming one accountable owner, with the employee, role, dates, option structure, exception relied on and evidence reference for every arrangement.
Require a written classification statement identifying the limiting factor — task, funding, season, absence or event — signed by the work or budget owner before any template is opened.
Reconstruct the full contract history, including pre-6 December 2023 engagements, before approving any contract for a person who has held a fixed term with the organisation.
Record a duty-by-duty comparison whenever a new contract follows an earlier fixed term, with the evidence relied on for any conclusion that the work differs.
Check the drafted term and every option against the two-year and renewal limitations, and confirm the contract contains no more than one right or option to extend or renew.
For any exception relied on, name the provision, attach the source text and hold documentary proof of each element — award clause extract, funding instrument, renewal-prospects assessment, or the statutory earnings calculation.
Recheck the current exception conditions on the day the contract is entered into, including the charity, not-for-profit and medical or health-research funding requirements applying from 1 November 2026, and record the date and source consulted.
Give the Fixed Term Contract Information Statement current on the issue date for every new fixed term contract, including renewals and contracts covered by an exception, and retain the version, method, date and recipient record.
Open a renewal decision gate at least three months before every expiry, with a named decision owner and four documented options: convert, further fixed term, run to expiry, or restructure the work.
Escalate to a senior approver, and take legal advice where the position is contested, before issuing any second or subsequent contract for the same or substantially similar work, or any contract taking total service beyond two years.

Frequently asked questions

Can a fixed-term contract still run for more than two years?: Only where an exception in s 333F of the Fair Work Act applies to the contract and every element of that exception can be proved at the time the contract is entered into. Without an exception, the contract must not be for a period longer than two years, and any option to extend or renew must not be capable of taking the total period of employment under the contract beyond two years. Naming a business reason in the contract does not create an exception.
Are consecutive fixed-term contracts prohibited?: Not as a general rule. The consecutive-contract limitation applies only where all elements are present: the employee was employed under a previous fixed term contract, the new contract is for the same or substantially similar work, there is substantial continuity of the employment relationship between the two, and at least one of the statutory triggers in s 333E(5) applies. Assess the actual duties and the actual history rather than assuming either that all back-to-back contracts are unlawful or that a change of title is enough.
Do contracts entered into before 6 December 2023 matter?: They are not themselves governed by the limitations, but they are not irrelevant. An earlier contract can form part of the factual picture when the consecutive-contract limitation is assessed for a later contract, including on questions of same or substantially similar work and substantial continuity. Reconstruct the full contract history for the person before approving a new contract.
How does the high income exception actually work?: It depends on the employee's earnings under the contract measured against the high income threshold for the financial year in which the contract is entered into — $190,100 from 1 July 2026. Where the employee is part-time or the contract runs for less than a year, the Act requires the amount to be worked out under its own statutory calculation, so the figure must be calculated rather than estimated. It is a distinct mechanism from a guarantee of annual earnings, which deals with the application of a modern award.
What changed for the charity and health-research exceptions on 1 November 2026?: As at 3 November 2026, the exceptions relating to organised sport and high-performance sport are ongoing. The qualifying charity and not-for-profit exception and the medical and health-research exception continue without their former expiry date. For contracts entered into on or after 1 November 2026, the work must be more than 50% funded by the qualifying sources specified in the regulations, and the other detailed conditions must also be met. Recheck the current regulations and the Fair Work Ombudsman guidance immediately before any contract relying on those exceptions is issued.
When must the Fixed Term Contract Information Statement be given?: Before, or as soon as practicable after, the employee enters into the contract, for every new fixed term contract — including a renewal or extension issued as a new contract, and including contracts where an exception applies. It is separate from the Fair Work Information Statement given to every new employee. Use the version current when the contract is entered into and retain evidence of the version, delivery method, date and recipient.
What happens if a contract breaches the limitations?: Under s 333G the term providing for the employment to terminate automatically at the end of the identifiable period has no effect. The contract is not void: the remaining terms continue, and statutory and instrument entitlements continue to apply. The practical result is that employment does not end automatically on that term. Any later ending must rely on another lawful basis and comply with the contract, applicable instrument and law. Entering a prohibited fixed term contract is also a civil remedy contravention.
What can the Fair Work Commission do about a fixed-term dispute?: The parties must first attempt to resolve the dispute at the workplace level. If that does not resolve it, either party may apply to the Commission, which can deal with the dispute by mediation or conciliation, by expressing an opinion or by making a recommendation. It can arbitrate only where the parties agree. Whether notice, redundancy pay or an unfair-dismissal claim arises at the end of a particular contract is fact-sensitive and should be referred to a qualified lawyer.

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