New rules for fixed term contracts apply from 6 December 2023

From 6 December 2023, new rules apply when engaging employees on fixed term contracts.

New rules for fixed term contracts

A fixed term contract terminates at the end of a set period (for example, the contract ends on a set date or after a set period of time or a season).

The new rules include a requirement for employers to give any employees they’re engaging on a new fixed term contract a Fixed Term Contract Information Statement (FTCIS).

They also include some limitations on how fixed term contracts can be used. There are some exceptions to who these limitations apply to which means they don’t apply to all fixed term contracts. The limitations also don’t apply to casual employees.

Fixed Term Contract Information Statement (FTCIS)

From 6 December 2023, employers must give every employee engaged under a new fixed term contract a copy of the Fixed Term Contract Information Statement (FTCIS). The FTCIS needs to be given when the employee enters, or as soon as possible after entering, the fixed term contract.

The FTCIS provides fixed term employees with information about fixed term employment, including the rules about when fixed term contracts are allowed to be made.

To download the latest version, Login to your BetterHR account and visit: Documents > Forms & Templates’.

Or download from the FWO website: Fixed Term Contract Information Statement.

Reminder: Fair Work Information Statement

In addition to the FTCIS, employers need to provide all new employees with the Fair Work Information Statement. This is a separate document that provides information about minimum workplace rights and entitlements.

To download the latest version, Login to your BetterHR account and visit: Documents > Forms & Templates’.

Or download from the FWO website: Fair Work Information Statement.

Limitations on fixed term contracts

There are rules about when fixed term contracts can be used. These are also called limitations.

These limitations apply for fixed term contracts made on or after 6 December 2023, if no exceptions apply.

Time limitations

A fixed term contract can’t be for longer than 2 years. This includes any extensions or renewals.

Renewal limitations

A fixed term contract can’t have an option to:

• extend or renew the contract so the period of employment lasts for longer than 2 years, or
• extend or renew the contract more than once.

Renewal limitations

A fixed term contract can’t have an option to:

• extend or renew the contract so the period of employment lasts for longer than 2 years, or
• extend or renew the contract more than once.

Protections for employees

Employers can’t take certain actions to purposely avoid these rules.

These are called the anti-avoidance protections. These protections include:

• ending employment or not re-employing the employee for a period of time
• not re-engaging the employee and employing someone else to do the same or substantially similar work instead, or
• changing the type of work or tasks that an employee does or changing the employment relationship.
• If an employer does any of these things, it may also be adverse action.

Fixed term contracts before 6 December 2023

The limitations don’t apply to fixed term contracts entered into before 6 December 2023. However, fixed term contracts entered into before 6 December must be considered when applying the consecutive contracts limitation for a new fixed term contract that is entered into on or after 6 December 2023.

Exceptions to the limitations

There are some exceptions to these rules that mean the limitations don’t apply to all fixed term contracts. They also don’t apply to casual employees.

The table below shows which fixed term contract arrangements the limitations don’t apply to.

The exception	Example
Specialised skills for a specific task	Vivian is a technology professional who is engaged to provide specialised technology support on a particular project. Her contract is for a period of 6 months, with 3 options to extend for one month in case of delays.
Work only on a specific task that requires the employee’s specialised skills.
Training arrangements	Javier has started a plumbing apprenticeship and has been given a 4 year fixed-term contract for the duration of his apprenticeship.
Engaging an employee under a formal training arrangement made under State or Territory law. This is an arrangement that combines work with study for a qualification like an apprenticeship or traineeship.
Essential work	Kevin is an experienced ski patroller with strong first aid skills. He is hired by a ski resort on a 2 month contract during the ski season, with the opportunity for 2 renewals of one month each depending on ski conditions.
Performing essential work during a peak demand period.
Emergency or temporary circumstances	Gerry is engaged on a fixed term contract to replace Christina who is taking 24 months parental leave. During this time, Christina has another child and takes an additional 12 months. Gerry’s contract is renewed for an additional 12 months to cover this leave period.
Working in emergency circumstances, or to replace someone who is temporarily away.
High income employees	Esther is hired as an IT project manager earning $240,000 per year on a 3 year fixed term contract, which is above the high income threshold for the year the contract was entered into.
If the employee’s guaranteed salary is more than the high income threshold in the year the contract is entered into (pro rata for part-time employees or employees that work for less than a year).
Positions subject to government funding	Lu is engaged on a 3 year fixed term contract to work on creating a community garden for a community organisation. The project is fully funded over 3 years by the Local Government and the funding ends at the end of this period.
Where the employee’s position is funded by government funding (completely or in part), the funding is for more than 2 years and the funding is unlikely to be renewed afterwards. This isn’t the same as working for a government agency or department on a fixed term contract.
Governance positions	Sunita is engaged on a 5 year contract on the executive board of a land management council.
A contract for a governance position that is for a limited time (based on the rules of the corporation or association).
Award provisions	Ravi is covered by an award that allows him to work contract-to-contract. The award expressly allows for multiple (more than one) contract renewals as agreed between the employee and employer.
If an award covers your employment and it allows any of the circumstances limited by the new rules.

Calculating the high income threshold

The high income threshold changes each year. From 1 July 2023, it is $167,500.

For the purposes of the high income employees exception, the high income threshold for part time employees or employees working less than a year is calculated by:

• considering the number of hours that the employee is required to work under the contract in that year
• dividing that number by the number of hours that a full-time employee would work in that year (rounding to 3 decimal places)
• multiplying the result by the high income threshold for the financial year in which the contract is entered into.

To determine the number of hours that a full time employee would work in a given year:

• take the number of hours the employee is required to work under the agreement or award that applies to the employee
• if no enterprise agreement or award applies, take the number of hours of comparable full-time employees working for the same employer.
• If the number of hours can’t be worked out by either of the above methods, then the number of hours a full time employee would work in a given year is taken to be 38 hours per week.

Additional exceptions

There are additional exceptions to the limitations that apply to some fixed term contracts made on or after 6 December 2023 and before 1 July 2024.

There are specific rules that need to be followed and they only apply in relation to:

• organised sport
• high performance sport
• live performance
• higher education
• positions funded by philanthropic entities or testamentary gift or contribution

Fixed term contracts that don’t meet the limitations

If a fixed term contract doesn’t meet the limitations, the contract’s end date will no longer apply. This means the contract won’t automatically come to an end at the end of that time.

Other terms and conditions of employment under the contract will still apply, including entitlements from any relevant legislation, award, agreement or employment contract.

Disputes about fixed term contracts

Resolving a dispute in the workplace

If an employee and employer disagree on whether any limitations or exceptions to the rules apply, they should first try to resolve the disagreement by discussing the issue together.

Workplace problems can usually be sorted out by having a conversation and understanding the laws that apply. Get guidance on how to start the conversation from our Raising your problem in the workplace section.

Taking a dispute to the Fair Work Commission

The Fair Work Commission (the Commission) is the national workplace relations tribunal.

If a dispute about fixed term contracts can’t be resolved at a workplace level, the Commission may be able to help. Either the employee or the employer may lodge a dispute with the Commission.

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