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.

There are also sector exceptions for registered charities and not-for-profits (Fair Work Regulations reg 2.15(7)) and medical or health research employers (reg 2.15(9)). They cover a contract tied to a funded program or project of up to 5 years, made on or after 1 November 2024, and only if every condition is met. For contracts made from 1 November 2025, the employer's annual revenue must be under $10 million (charities) or $100 million (medical or health research).

The Fair Work Ombudsman's guidance (updated 30 September 2026) says these two exceptions only apply to contracts entered into before 1 November 2026 "unless those exceptions are extended". They have since been extended. The Fair Work Amendment (Fixed Term Contracts) Regulations 2026, made on 1 October 2026, take effect on 1 November 2026 and remove the end date. There is one new condition: for contracts made on or after that date, including renewals, the position must be more than 50% funded by government, philanthropic or testamentary sources. Before then, funding "in whole or in part" was enough. You can check your dates in our fixed-term contract cap checker. (Checked 8 October 2026.)

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.