Changes to operation of exceptions applying to fixed term contracts from 1 November 2025

From 1 November 2025, several industries will be affected by changes to exceptions applicable to the prohibition on fixed term contracting under the Fair Work Act 2009 (Cth) (FW Act).  These changes will impact the ability they have to enter into contracts with employees on a fixed term basis. 

Who should read this? 

If you are a business operation within the following sectors:

·    Higher Education
·    Public Hospitals
·    Organised sport
·    High performance sport
·    Charities and not-for-profit and 
·    Medical and health research 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, with a limited list of exceptions.

These limitations include:

•    Time limitations
•    Renewal limitations
•    Consecutive contract limitations.

For more detail on the above limitations, and the exceptions to the limitations, refer to our previous article here. 

What happened on and after 1 November 2025?

Prior to 1 November 2025, the Fair Work Regulations 2009 (FW Regs) set out additional industry exceptions to the limitations. Those additional industry exceptions have now changed. 

Charities and not-for-profit sector

A philanthropic entity relevantly registered Australian Charities and Not-for-Profits Commission Act (ACNC) 2012 (Cth) (or entity belonging to a reporting group) with a total annual revenue equal to or more than $10 million will no longer be able to rely on the additional exceptions and cannot enter into fixed term contracts which are prohibited under the FW Act. 

However, for relevant philanthropic entities in this sector with a total annual revenue of less than $10 million, additional exceptions will continue to apply to fixed term contracts that are entered into on or after 1 November 2024 and before 1 November 2026. 

Such entities can continue to enter into fixed term employment contracts until 1 November 2026, which would otherwise be prohibited by the FW Act, in relation to certain positions funded by:

a)    government grant or procurement other than government payments to individuals or payments made through the Commonwealth Home Support Programme.

b)    another philanthropic entity (other the entity or an associated entity of it) relevantly registered under the ACNC Act. 

c)    a testamentary gift or contribution to the philanthropic entity for a charitable purpose of that entity.

Further conditions on the use of these contracts are:

• The work performed under the contract must be for the specific program or project to which the funding relates. 
• The project itself can be only conducted over a period of no more than 5 years. 
• The end date of the contract should coincide with the end of the project. 
• The contract cannot result in the employment of the employee lasting more than seven years.
• The employee cannot be covered by either the Higher Education Industry – Academic Staff or Higher Education on Industry – General Staff modern awards.
• Arrangements relating to the funding took or take effect on or after 1 November 2024.

Medical and health research sector 

Entities in this sector (or businesses belonging to a reporting group) with a total revenue equal to or more than $100 million will no longer be able to rely on the additional exceptions and cannot enter into fixed term contracts which are prohibited by the FW Act. 

For certain entities in this sector with a total annual revenue of less than $100 million, the additional exceptions will continue to apply to fixed term contracts that are entered into on or after 1 November 2024 and before 1 November 2026. 

Such entities can continue to enter into fixed term employment contracts, which would otherwise be prohibited by FW Act, with employees primarily doing medical or health research until 1 November 2026 in relation to certain positions funded by:

a)    government funding

b)    another philanthropic entity (other the entity) relevantly registered under the ACNC Act

c)    in the case of funding by a philanthropic entity, funding provided for a charitable purpose of the entity (including a testamentary gift or contribution).

Further conditions on the use of these contracts are:

• The employing entity must be a philanthropic entity relevantly registered under the ACNC Act, an entity controlled by a philanthropic entity, or a body established under a Commonwealth, state, or territory law for apublic purpose (or entity controlled by such a body).
• The work performed under the contract must be for the specific program or project to which the funding relates. 
• The project itself can be only conducted over a period of no more than five years. 
• The end date of the contract should coincide with the end of the project. 
• The contract cannot result in the employment of the employee lasting more than seven years. 
• The employee cannot be covered by either the Higher Education Industry – Academic Staff or Higher Education Industry – General Staff modern awards.
• Arrangements relating to the funding took or take effect on or after 1 November 2024.

Other changes

Employers in the following industries can enter into certain fixed term contracts, which would otherwise be prohibited:

• Organised sport and
• High performance sport where the employer is an international event organisation body.

That is, the additional exceptions will apply to certain fixed term contracts that are entered into on or after 6 December 2023 and will continue to apply for contracts entered into on or after 1 November 2025.

The exceptions are: 

 However, the additional exceptions will not apply to fixed term contracts entered into on or after 1 November 2025 for businesses in the following sectors: 

•  Public hospitals and 
•  Higher education.

Businesses in these industries no longer will have the benefit of the additional exceptions to the prohibitions on fixed term contracting and must comply with the limitations in the FW Act like other employers.

Measures to be taken by employers

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

• identify all current fixed term 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.

Need help?

If these changes raise concerns or you need legal advice please get in touch at info@ablawyers.com.au or call 1300 565 856.