Additional exceptions to prohibitions on Fixed Term Contracts to be lifted from 1 November 2025

From 1 November 2025, certain sectors employing employees under fixed term arrangements, will no longer be able to rely on the additional exceptions to prohibitions on fixed term contracts. Therefore, affected employers must soon ensure compliance with the standard rules governing fixed term contracts, including restrictions on duration, renewals, and consecutive engagements. 

Who should read this? 

If you are a business operating within the following sectors:

• organised sport
• high performance sport
• higher education
• charities and not-for-profit
• medical or health research
• public hospitals; and 
• have engaged employees on a fixed-term basis after 6 December 2023; or are planning to engage employees on a fixed-term basis after 1 November 2025. 

Overview of initial changes to fixed term contracts

The Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2002 introduced significant changes to businesses, including limitations on the operation of fixed term contacts.

These limitations include:

Time limitations
A fixed term contract cannot be for longer than two years.

Renewal limitations
A fixed term contract cannot be extended or renewed so the period of employment lasts longer than two years, or provide an option to extend or renew the contract more than once.

Consecutive contact limitations
An employee cannot be offered a new fixed term contract if:

1. Their previous contract was also for a fixed term
2. Their previous contract and the new contract are mainly for the same work
3. There is substantial continuity in the employment relationship between the previous and new contracts; and 
4. if any of the following applies:

• the previous contract contained an option to extend that was used;
• a total period of employment for both the previous and new fixed term contract is more than two years;
• the new fixed term contract contains an option to renew or extend, or;
• there was an initial contract in place (before the previous contract) that was for a fixed term, that was for the same or similar work, and where there was a substantial continuity in the employment relationship (i.e. an employee cannot be engage under more than two consecutive fixed term contracts for the same or substantially similar work). 

Permanent exceptions

The above limitations to do not apply to all fixed term contracts. Exceptions include in relation to contracts:

• for specialised skills for a specific task
• involving training arrangements
• for essential work
• involving emergency or temporary circumstances
• for high income employees
• for positions subject to government funding
• for governance positions; and 
• permitted by the relevant modern award. 

Additional exceptions 

Additional exceptions also apply with respect to fixed term employment contracts in specific sectors such as:

• organised sport
• high performance sport
• higher education
• charities and not-for-profit
• medical or health research
• public hospitals

Employers in these industries have been able to enter into fixed term contracts which would otherwise be prohibited between a commencement date of either 6 December 2023 or 1 November 2024 (depending on the industry), and 1 November 2025. 

What happens on and after 1 November 2025? 

However, as of 1 November 2025, the ability to do so will lapse and employers in those industries will no longer be able to avail themselves of this exception. This is, employers can no longer enter into a fixed term contract which is otherwise prohibited. 

Measures to be taken by employers 

Employers that are affected by these changes from the 1 November 2025 should do the following:

• identify all current fixed terms contracts in place in your organisation;
• check if the contracts rely on the additional exceptions to prohibitions to fixed term contracts; 
• check if any of the permanent exceptions apply;
• if no exceptions apply, note the expiry dates on the fixed term contracts and any plans for renewal;
• ensure any new fixed term contracts comply with the prohibitions on fixed-term contracts;
• provide new employees with the Fixed Term Contract Information Statement.

Need help?

If these changes raise concerns or you need a second opinion please get in touch at info@ablawyers.com.au or call 1300 565 846.