Fixed Term Contracts: An Explainer

Table of Contents

Share at:

You may be wanting to hire someone due to a busy period for your business. Or you may be needing to replace someone who is on maternity leave. A fixed term contract is a great solution as you can hire someone for a specific amount of time. But what are they? What rights do they give employees? And how many contracts in a row can you have with the same employee? Read on for all you need to know.

What are Fixed Term Contracts?

They are contracts with an agreed upon end date. This can be a calendar date or the completion of a specific task or role. The end date of employment is usually inserted into the contract and may include criteria for early termination of the contract. The main feature of this type of employment contract is besides breaches or grounds of termination, both parties forfeit their rights for early termination of employment.

What is the difference between Fixed Term and Casual?

They are separate and distinct from casual contracts. Firstly, fixed term employees are either full-time or part-time employees as opposed to casual employees who work irregular hours. Furthermore, besides being employed for a fixed amount of time, these employees have the same rights for work conditions as permanent employees. It is thus essential to know what type of employee each of your employees are, so you know whether conditions such as the National Employment Standards (NES) apply to them. Just like casual employees, fixed term employees are not always exempt from unfair dismissal laws.

How many Fixed Term Contracts before an employee is Permanent?

The short answer is that it depends on the circumstances. Be careful when engaging an employee in consecutive fixed term contracts, as the Fair Work Commission (FWC) may explore what the real employment relationship is. Moreover, due to a recent FWC decision in 2017, it is vital you be wary of terminating an employee with successive contracts as the FWC may say that the employment relationship hasn’t been fairly ended.

Essential Features of Fixed Term Contracts

Make sure you include the following things in your fixed term contract with your employee:

  • Clearly state the start date of employment
  • Indicate clearly when employment finishes, either by date or criteria.
  • Identify the duration of employment.

Conclusion

It is therefore important that you consider the nature of fixed term contracts before deciding in signing on a potential employee. Furthermore, it is vital that you know your duties towards them and whether they should be considered a permanent employee. Need a fixed-term contract? Compare all employment contract types to find the right template. If you have any doubt, get in touch with an employment lawyer for further advice.

Don’t know where to start? Contact a LawPath consultant on 1800 529 728 to learn more about establishing a partnership, customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Share at:

Simplify creating legal documents today

Browse through Lawpath's AI tools which can be used to draft, review and refine legal documents today!

Related Articles

Company Setup Costs and Tasks in Australia for 2026-2027: A Simple Guide to Business Registration

Are you wondering how much it costs to start a company in Australia? Check out our detailed guide with pro tips inside!

When Are Employees Entitled to Paid Breaks?

Know your rights to paid breaks in Australia. This guide explains Fair Work rules for rest breaks (paid) vs. meal breaks (unpaid) to ensure compliance.

Do I Have to Pay Tax on Distributions From an Irrevocable Trust?

Understand how to pay tax on trust distributions. Ensure compliance and maximise your tax benefits today.

How to Lodge Your Individual Tax Return (2026 Update)

Not sure how to get your taxes sorted? Read this article for everything you need to know about filing your individual tax return.

What Can You Claim on Tax? (2026 Update)

Wondering what can you claim on tax? Our 2026 guide covers Australian tax deductions, ATO requirements, and record-keeping tips for a smoother tax time.

How Do Probationary Periods Work?

Unsure whether your new employee is the correct fit? Why not try a probationary period? Learn what you need to know here.