Contract clause
Fixed term clause for an Australian employment contract
A fixed term clause sets when an employment contract starts and ends, why it is for a fixed period, whether it can be ended early, and whether it can be extended. Since 6 December 2023 Australian law limits fixed term contracts to 2 years in total and one extension, unless an exception applies.
A fixed term clause gives employment a set end date, such as the end of a festival season or a parental leave cover. Since 6 December 2023 the Fair Work Act stops most fixed term contracts running past 2 years, including extensions, or carrying an option to extend more than once, and employers must give the Fixed Term Contract Information Statement.
Indunil Asanka · Co-founder
3 min read · Published
Sample clause
Written for fixed term contract for a volunteer and logistics coordinator at Saltbush Arts Festival Ltd, a fictional regional festival, for the 2027 season.
The Term. (a) Employment starts on Monday 12 October 2026 and ends on Friday 12 March 2027, two weeks after the Festival closes, unless ended earlier under this clause. (b) The term is fixed because the role exists only to plan and deliver the 2027 Festival. (c) Either party may end the employment before the end date by giving the notice required by the National Employment Standards and the Award, or payment in lieu of it. (d) The term may be extended once, by written agreement before the end date, for no more than 3 months. (e) The Employee has received the Fixed Term Contract Information Statement with this contract. (f) Nothing in this contract is a promise of further employment after the end date.
Sample wording, not legal advice.
Variants
Parental leave cover
A role that covers a permanent employee's parental leave, where the end date depends on their return.
Employment ends on 30 June 2027 or, if earlier, four weeks after the date the Employee on leave returns to work, which the Employer will confirm in writing as soon as it is known.
Project based term
A role tied to a funded project, where the term follows the project's completion.
Employment ends on the earlier of 31 December 2027 and the date the Project is completed, as notified in writing by the Employer with at least four weeks' notice.
Exception for high income employees
A fixed term role paid above the high income threshold, one of the exceptions to the limitations.
The parties agree this contract is for 3 years. The Employee's guaranteed annual earnings exceed the high income threshold in the Fair Work Act at the date of this contract.
What to negotiate
Two years and one extension
For contracts made on or after 6 December 2023, a fixed term contract cannot run longer than 2 years including extensions, and cannot carry an option to extend or renew more than once or beyond 2 years. Rolling an employee onto a new contract for the same work can also breach the limits. A term that breaches them is void, and the employee is treated as permanent.
Ending early
A fixed term contract without an early termination clause may oblige the employer to pay out the rest of the term if it ends the job early. Most fixed term contracts let either party end them on NES notice, as the sample does. Employees should check what they lose if the contract ends early and whether redundancy applies.
Exceptions
The limits do not apply to some contracts, including those for employees earning above the high income threshold, training arrangements, essential work in emergencies, seasonal work, specialised skills for a specified task, and roles funded by government for more than 2 years. Relying on an exception should be stated in the contract and checked against the Fair Work Ombudsman's list.
The risk of leaving it out
A contract described as fixed term without a clear end date and reason may be treated as ongoing, so the employee has the protections of permanent employment and the employer has no end date. A contract that breaches the 2023 limits is worse: the fixed term is void and the employer may face penalties for having offered it.
The 2023 limitations
The Fair Work Ombudsman explains that for contracts made from 6 December 2023, a fixed term contract cannot be longer than 2 years including extensions or renewals, cannot have an option to extend or renew it more than once or beyond 2 years, and generally cannot be followed by a new fixed term contract for the same or similar work with substantial continuity. Employers must also give every new fixed term employee the Fixed Term Contract Information Statement. Law checked on 21 October 2026. This page explains how the law works and is not legal advice.
A contract that breaks the rule
The Fair Work Ombudsman gives two examples. A 3 year fixed term contract with a cleaning company breaches the time limit. A 6 month contract with the employer's right to extend twice, by up to 4 months each time, breaches the renewal limit even though the total is under 2 years, because there can be only one extension. The sample allows a single extension of up to 3 months, which keeps the festival role well inside both limits.
Entitlements during the term
Fixed term employees are full time or part time employees for the term, with the same National Employment Standards as permanent staff: annual leave, personal leave, public holidays and, when the term ends early by dismissal, notice and possibly redundancy pay. At the natural end of the term, notice and redundancy pay generally do not apply. Accrued annual leave is paid out.
Where the clause sits in a generated document
Fixed term employment contracts carry this clause first, before the role. When asking the AI document generator for one, give the start and end dates, the reason for the term, the early ending rule, any single extension, and a note that the Fixed Term Contract Information Statement is given.
Documents that carry this clause
Questions people ask
How long can a fixed term contract be in Australia?
For contracts made from 6 December 2023, no longer than 2 years including any extensions or renewals, unless an exception applies. A contract can carry an option to extend only once, and the extended period must still end within 2 years.
What happens if a fixed term contract breaks the rules?
The term that breaches the limits is void, so the employee is treated as permanent, and the employer may face civil penalties. The rest of the contract continues. Disputes about the limits can be taken to the Fair Work Commission.
Can either side end a fixed term employment contract before its end date?
Only if the contract allows it, or for serious misconduct. Most fixed term contracts let either party end them on the notice the NES and the award require. Without such a clause, ending early may mean paying the rest of the term.
Do fixed term employees get redundancy pay?
Not when the contract ends on its agreed date, because that is not a redundancy. If the employer ends the employment early because the job is no longer needed, redundancy pay under the NES may apply, depending on service and business size.
Who must receive the Fixed Term Contract Information Statement?
A document published by the Fair Work Ombudsman explaining the rules on fixed term contracts. Since 6 December 2023, employers must give it to every employee entering a new fixed term contract, when or as soon as possible after the contract is made.
Put the clause in a finished document
The button opens the document generator with a starting description already filled in. Change it to match your own agreement before you run it.
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Written and checked by the OneCraft team. Last checked .