New Fair Work guidance, updated funding exceptions and what employers need to check.
Fixed-term contracts can be a practical way to manage temporary projects, grant-funded positions and changing workforce needs.
But just because a position is temporary, or its funding has an expiry date, doesn't automatically mean a fixed-term contract is the right arrangement.
From 1 November 2026, changes to Australia's fixed-term employment rules have introduced updated requirements for certain employers, particularly charities, not-for-profits and organisations relying on external funding.
The Fair Work Ombudsman has also released an updated Fixed Term Contract Information Statement (FTCIS).
Here's what employers need to know.
First, a quick reminder about fixed-term contracts
Since December 2023, the Fair Work Act has placed limitations on how employers can use fixed-term contracts.
Generally, unless an exception applies, employers cannot:
Engage an employee on a fixed-term contract exceeding two years, including extensions.
Include more than one option to extend or renew the contract.
Enter into certain consecutive fixed-term contracts for the same or similar work.
There are exceptions, but they depend on the circumstances of the employment arrangement.
The important distinction? A fixed-term contract isn't automatically compliant just because both parties agree to an end date.
What's changed from 1 November 2026?
The latest changes primarily affect additional exceptions available to employers in the charity, not-for-profit and medical or health research sectors.
Previously, these additional exceptions were due to expire on 31 October 2026.
They have now been made ongoing, providing greater certainty for eligible organisations that rely on project-based employment arrangements.
However, the funding requirements have also changed.
1. Charities and not-for-profits: A stricter funding test
For fixed-term contracts entered into on or after 1 November 2026, the charity and not-for-profit exception requires more than 50% of the position's funding to come from specified sources, including eligible government funding, other philanthropic entities or certain charitable contributions.
There are also other eligibility requirements, including:
The employer must be an eligible registered charity with total annual revenue of less than $10 million, subject to specific group-reporting rules.
The work must relate to a specific funded program or project.
The program or project must run for no more than five years.
The contract must substantially align with the program's duration or remaining duration.
The arrangement must meet requirements concerning the employee's previous and continuous employment, including a seven-year limit.
This means that being a charity, or receiving government funding, doesn't automatically make an organisation exempt from the usual fixed-term contract limitations.
It's the funding arrangements, nature of the work and eligibility conditions that matter.
2. Government-funded positions: A separate exception worth understanding
There is also an existing exception for positions dependent on government funding.
This may be particularly relevant to community organisations, service providers and businesses delivering government-funded programs.
The exception can apply where:
The position is wholly or partly funded by government funding.
The funding is payable for more than two years.
There are no reasonable prospects of the funding being renewed.
Importantly, this exception does not have the same $10 million annual revenue threshold as the charity-specific exception.
Here's an example.
A community organisation receives a three-year government grant to deliver a specific project. The funding is not expected to continue beyond that period.
A three-year fixed-term employment contract supporting the project may qualify for the government-funding exception.
However, if the organisation delivers an ongoing service funded through successive government grants, the position requires closer consideration.
The fact that a funding agreement expires doesn't necessarily mean there's no reasonable prospect of renewal.
And that's where employers can get caught out.
3. Medical and health research organisations
Eligible organisations undertaking certain medical or health research activities also benefit from an ongoing additional exception.
For contracts entered into on or after 1 November 2026, more than 50% of the position's funding must come from specified sources, alongside other requirements relating to revenue, the research activity, project duration and employment history.
A separate annual revenue threshold of less than $100 million generally applies, subject to specific group-reporting rules.
Don't forget the updated information statement
Alongside these changes, the Fair Work Ombudsman published an updated Fixed Term Contract Information Statement in November 2026.
Employers must provide the current version of the FTCIS when an employee enters into a new fixed-term contract, or as soon as possible afterwards.
This requirement applies even where the employment arrangement qualifies for an exception.
New employees must also receive the separate Fair Work Information Statement.
If your business uses contract templates or standard onboarding packs, now is a good time to check you're providing the latest documents.
Download the latest FTCIS from Fair Work
What should employers be doing now?
You don't necessarily need to overhaul every employment contract in your business.
But if fixed-term arrangements are part of your workforce planning, a few practical checks can help avoid unnecessary complications.
Sunday HR's practical checklist:
Review upcoming contract renewals. Check the employee's previous fixed-term contracts, including extensions and periods of continuous employment.
Understand your funding arrangements. If a position is externally funded, confirm the funding source, duration and reasonable prospects of renewal.
Check which exception applies. Different exceptions have different eligibility requirements. Don't assume one applies simply because the position is project-based or grant-funded.
Keep supporting documentation. Funding agreements, project plans and relevant financial records can help demonstrate why an exception applies.
Update your onboarding documents. Make sure the current FTCIS is provided whenever required.
What happens if a fixed-term contract doesn't comply?
If a fixed-term contract breaches the limitations and no exception applies, its specified end date will no longer operate as intended.
That means the employment won't automatically end simply because the date in the contract has passed.
Civil penalties may also apply.
This doesn't mean employers should avoid fixed-term contracts altogether. They're still a legitimate and useful employment arrangement when used appropriately.
The key is understanding why you're using one, which rules apply and whether the arrangement can be supported.
Need help reviewing your fixed-term contracts?
Whether you're managing a growing business, delivering government-funded programs or employing staff for specific projects, your employment arrangements need to work for your business while meeting your obligations.
Sunday HR supports Australian employers with employment contracts, HR compliance and practical workplace advice.
If you're unsure whether your fixed-term contracts meet the current requirements, we can help you review your arrangements and work out the next steps.
Making Mondays Better.
Further reading
Fair Work Ombudsman – Additional Fixed-Term Contract Exceptions
Fair Work Ombudsman – Fixed Term Contract Information Statement
Information current as at November 2026. This article provides general information only. The application of fixed-term contract exceptions depends on individual circumstances, and specific legal advice may be required.