Fixed-Term Contract Rules in Australia (2026): The 2-Year Limit Explained

Since 6 December 2023, the Fair Work Act has capped how employers can use fixed-term (and "maximum-term") contracts. The core limits are:

• Two-year maximum. A fixed-term contract — including any extensions or renewals — generally can't run for longer than two years.
• One renewal only. The contract can't be extended or renewed more than once.
• No rolling re-contracting. An employer can't keep you on consecutive fixed-term contracts for the same, or substantially similar, work where the total period exceeds two years or breaks the single-renewal rule.

The point of the rules is to stop "permanent" jobs being disguised as a string of short contracts that deny employees security and entitlements like redundancy pay.

Whenever an employer enters into a new fixed-term contract, they must give the employee a copy of the Fixed Term Contract Information Statement (FTCIS), published by the Fair Work Ombudsman. It must be provided before, or as soon as practicable after, the employee signs. This is separate from the standard Fair Work Information Statement that all new employees receive — a fixed-term hire should get both.

The limits don't apply to every fixed-term arrangement. Recognised exceptions include contracts where the employee:

• Earns above the high-income threshold (currently $190,100, indexed each 1 July);
• Is engaged for specialised, distinct skills, or in essential work during a peak or emergency;
• Is an apprentice or trainee, or covered by certain training arrangements;
• Holds a governance position with a fixed term under a constitution or rules; or
• Is funded wholly or partly by government funding for more than two years where there's no reasonable prospect the funding will be renewed.

Some of these exceptions are time-limited or subject to revenue thresholds, so the precise position can shift year to year — check the current Fair Work Ombudsman guidance for your situation.

If a fixed-term contract breaches the limits, the end-date term has no effect — the rest of the contract stands, but the agreed expiry falls away. In practice that can make the employment ongoing (permanent), with all the entitlements that come with it. Employers also can't take deliberate steps to avoid the rules (for example, delaying re-engagement or shuffling duties); anti-avoidance provisions cover that.

Disputes about fixed-term contracts can be taken to the Fair Work Commission. If you're not sure whether your contract is caught by the limits, run it through the contract reviewer or ask FairWork Mate AI.