By Jennifer Andrade and Matt Hansen

Although some time has passed since the December 2023 amendments to the Fair Work Act 2009 (Cth) (“Fair Work Act”) came into effect which significantly altered the use of fixed term contracts for employment, these contracts remain so pervasive that some employers have fallen behind the standard for compliance. The Media, Entertainment & Arts Alliance’s (“MEAA”) Federal Court proceedings against the Australian Broadcasting Corporation (“ABC”) in June 2025 demonstrate that even more than a year after the reforms, some employers continue to overlook the latest limitations imposed on fixed term contracts.

If you too have forgotten these changes and need a refresher, this article should fix that as it outlines the key changes from 2023 and what they mean in practice.

What are Fixed Term Contracts?

A fixed term contract for employment is a contract that terminates employment at the end of a specified period or on a nominated date. As a result, these contracts allow employers to engage individuals for defined periods, allowing for flexible employment where work is intermittent or project-based. This is particularly beneficial in the creative and performance industries that have a high portion of freelancers and with employment availability often tied to specific productions, campaigns, seasons or other short-term initiatives, or dependent on variable funding.

Employees engaged on a fixed term contract are generally entitled to similar conditions and benefits as permanent employees, particularly in relation to leave entitlements. However, they are also provided with less protections compared to permanent employees when it comes to unfair dismissal, notice of termination or redundancy considering they have committed to a fixed termination date.

So, while fixed term contracts offer operational and budgetary flexibility for employers, they can create uncertainty for employees and provide limited job security which is why the changes to the Fair Work Act aimed to target employers that exploit these contracts.

What are the Limitations on Fixed Term Employment Contracts?

Under section 333E of the Fair Work Act, there are three key limitations that apply to fixed term contracts:

1. Time limit

A fixed term contract cannot be longer than two years including any extensions or renewals.

2. Renewal

A fixed term contract cannot include provisions that allow:

• The contract to be extended or renewed so that the total period of employment lasts longer than two years; or
• The contract to be extended or renewed more than once, even if the total period of employment remains under two years.

3. Consecutive contracts

An employer cannot enter a new fixed term contract with an employee where all the following apply:

• The employee was previously engaged under a fixed term contract;
• The new fixed term contract is for the same or substantially similar work covered under the previous contract;
• There is “substantial continuity” in the employment relationship between the previous and new contract; and
• One or more of the following apply:

– The previous contract included an option to extend that was exercised;

– The total period of employment across both the previous and new fixed term contracts exceeds two years;

– The new contract contains an extension or renewal option; or

– There is a chain of earlier fixed term contracts with an initial fixed term contract in place before the previous contract which covered the same or similar work, with continuity of employment.

Consecutive Contracts and the ABC

The limitation on consecutive contracts is particularly significant as it was introduced in response to a growing practice of employers engaging workers on rolling fixed term contracts in circumstances that essentially resemble permanent employment.

In June 2025, the MEAA commenced proceedings against the ABC at the Federal Court and accused the ABC of engaging employees in successive fixed term contracts for the same role breaching the consecutive contracts limitation under the Fair Work Act. This included a situation where an employee had been employed by the ABC on three consecutive annual fixed term contracts since 2023 for a long-running television program, which exceeded the two-year time limitation. Note that while the limitations apply to contracts entered on or after 6 December 2023, earlier contracts are still considered when assessing the total period of employment for the purpose of the consecutive contract limitation. So, the ABC’s first fixed term contract entered with the employee prior to 6 December 2023 formed part of the total three years of employment.

The MEAA has sought orders from the Federal Court to remove the fixed termination date from the third contract and impose pecuniary penalties on the ABC, the outcome of which is still pending. Yet, the case against the ABC, an independent and publicly funded broadcaster, highlights the practical difficulties businesses face while operating in project-based or publicly funded work, and the struggle with balancing operational flexibility with regulatory compliance. It also demonstrates an increasing scrutiny on employers that shift financial pressure onto its employers by overusing consecutive fixed term contracts considering the effects for those employees include prolonged job insecurity and economic stress.

Exceptions to the Limitations

Section 333F sets out exceptions to the above limitations including, but not limited to:

• Roles funded by government grants that are time-limited and unlikely to be renewed;
• Positions requiring specialised skills to be performed for a distinct and identifiable task;
• Employees engaged under a training arrangement (such as an apprenticeship or traineeship);
• Employees earning above the high-income threshold for that financial year;
• Employment governed by an award that allows certain fixed term arrangements; and
• Employees performing essential work during a peak demand period.

The above is just a summary, and given the breadth and complexity of these exceptions, employers should seek legal advice before implementing or altering their contracting practices to determine whether the fixed term contract limitations apply to them.

It should also be noted that where a dispute is brought to the Fair Work Commission against an employer regarding the application of an exception, the Commission will likely take a narrow stance so that these exceptions only apply when genuinely necessary and suitable, especially considering the disadvantages employees face under fixed term contracts. Thus, before relying on an exception, employers should first review other strategies to comply with the limitations and potentially consider engaging their employees on an on-going basis instead. Otherwise, it will be their responsibility to establish that an exception validly applies to them and provide evidence to support their position.

Anti-Avoidance Provisions

At first glance, it may seem as though there are a few ways to get around these limitations. Such as by not engaging an employee to break the continuity in the employment relation or perhaps replacing an employee after their contract ends with someone else for the same work. However, the reforms also introduced anti-avoidance provisions to prevent employers from purposely circumventing the limitations.

Under section 333H of the Fair Work Act, employers must not take deliberate steps to avoid the operation of the limitations, including by:

• Terminating employment to reset contractual arrangements;
• Delay re-engaging an employee to break continuity of the working relationship;
• Replacing an employee with another individual performing the same or substantially similar work; or
• Changing the nature of the work involved or the employment relationship.

An employer may still change the timing or terms of a fixed term contract for other reasons unrelated to the operation of the limitations under section 333E. However, if one of those reasons is to avoid the operation of the limitations, the anti-avoidance provisions will be triggered. So, employers must carefully document the reasons behind any changes to their working arrangements with fixed term employees and maintain appropriate evidence to establish those reasons to mitigate potential claims under the anti-avoidance provisions.

Fixed Term Contract Information Statement

In addition to the above limitations, the 2023 reforms introduced a requirement under section 333K for employers to provide employees entering into a fixed term contract with a Fixed Term Contract Information Statement.

The statement, which is published by the Fair Work Ombudsman on their website,  must be provided at the commencement of employment or as soon as possible after and aims to ensure employees are informed about the rules surrounding fixed term contracts and their rights if they suspect a contract fails to meet these rules. 

What Happens if a Fixed Term Contract Fails to Comply?

If a fixed term contract does not comply with the statutory limitations under the Fair Work Act, then under section 333G, the termination date originally specified in the contract will not apply. Rather than the contract automatically terminating at the end of that specified date/period, its terms (other than the termination date/period) will continue to operate. The employee will effectively be treated as an ongoing, permanent employee and will be entitled to the corresponding protections and benefits.

Additionally, disputes concerning fixed term contracts can be referred to the Fair Work Commission and non-compliance with the limitations, anti-avoidance provisions or the requirement to provide Fixed Term Contract Information Statements, can expose employers to civil penalties. 

Fixing the Problem

The limitations to fixed term contracts should not be underestimated particularly given non-compliance could result in an unintended transformation to an employer’s working arrangements with an employee, and expose employers to further actions including adverse action or unfair dismissal claims.

Employers should frequently review their compliance under the Fair Work Act and remain informed about their obligations under the relevant provisions concerning fixed term contracts. This is by obtaining legal review of their existing and template contracts to ensure that they do not include provisions conflicting with the time, renewal or consecutive contract limitations. Employers should also maintain appropriate records of their working arrangements with employees and review any current fixed term employment arrangements and consider whether a permanent arrangement is more appropriate. Ultimately, as employer/employee relationships can be dynamic and complex, legal advice if vital to ensure working arrangements remain as intended and valid under Australian law.

Contact us

If you would like further information on the Fair Work Act and how the provisions on fixed term contracts affect you, please contact one of our experts below.