Fixed Term Contracts: what changed from 1 November 2026

A quick recap: the fixed term contract rules

Since 6 December 2023, the Fair Work Act 2009 (Act) has limited how employers can use fixed term contracts. In general, a fixed term contract can’t:

• run for more than 2 years, including any extensions;
• be extended or renewed more than once; or
• be followed by a new fixed term contract for substantially the same work, if that contract would breach these limits.

If a contract contravenes these rules, the end date has no effect, so the employee is treated as a permanent employee. The employer also risks penalties for contravening these rules.

The Act has some built-in exceptions, such as for high income earners and small business employers. The Fair Work Regulations 2009 (regulation 2.15) adds other exceptions for particular sectors. This article covers those other exceptions.

What changed on 1 November 2026

The Fair Work Amendment (Fixed Term Contracts) Regulations 2026 started on 1 November 2026. They made two changes to the exceptions for charities and not-for-profits and for employers in the medical and health research sector.

Change 1: The exceptions no longer have an end date

The charity, not-for-profit, and medical research exceptions were temporary. They covered only contracts entered into after 1 November 2024 and before 1 November 2026.

From 1 November 2026, that end date has been removed. Contracts entered into on or after 1 November 2024 can use these exceptions, with no cut-off.

Change 2: The role must be more than 50% funded

Until 1 November 2026, it was enough for a role to be funded “in whole or in part” by an eligible source. Even a small contribution could qualify.

For contracts entered into on or after 1 November 2026, the work must be more than 50% funded by eligible sources. Funding from more than one eligible source can be combined together to meet the 50% threshold.

Charities: eligible funding sources are:

• government grants or procurement (not individual entitlement payments, such as NDIS-style payments to a person, or Commonwealth Home Support Programme payments);
• funding from another registered charity (not the employer or an associated entity); and
• gifts left in a will (testamentary gifts) for a charitable purpose.

Medical and health research: eligible funding sources are:

• government funding;
• funding from a philanthropic entity other than the employer; and
• where the employer is a philanthropic entity, funding given to it for a charitable purpose, including gifts left in a will.

Example: A charity runs a 4-year youth program. Government grants cover 40% of a coordinator’s salary and a philanthropic foundation covers another 20%, so 60% in total comes from eligible sources. A 4-year fixed term contract can qualify. If the charity’s own fundraising covered most of the salary instead, the exception wouldn’t apply. Similarly, a research institute could hire a 3-year clinical trial coordinator under the medical research exception, but only if the trial is more than 50% funded by government or charitable sources.

What hasn’t changed

The other conditions still apply. For charities, all of these must be met:

• the employer is a charity registered with the ACNC;
• the charity’s annual revenue (or its ACNC reporting group’s) is less than $10 million;
• the work is for a specific funded program or project;
• the program or project runs for no more than 5 years in total;
• the contract length is substantially for the same period as the length of the program or project;
• the employee’s total continuous employment with the charity won’t exceed 7 years;
• the funding arrangement started on or after 1 November 2024; and
• the employee isn’t covered by the Higher Education Industry Academic Staff Award or the Higher Education Industry – General Staff Award.

The medical and health research exception has the same conditions as above, save for the following differences:

• the revenue threshold is less than $100 million;
• it is also available to entities controlled by a philanthropic entity, and to government-established bodies (such as statutory authorities) and entities they control; and
• the work must primarily involve basic, pre-clinical, clinical or translational research.

The exceptions for organised sport and high performance sport events were made permanent on 1 November 2025, and they aren’t affected by the 2026 changes.

What about existing contracts?

The 50% funding test applies only to contracts entered into on or after 1 November 2026.

• Contracts entered into before 1 November 2026: the old “in whole or in part” funding test still applies. These contracts don’t need to be reviewed against the new 50% test.
• New contracts, extensions and renewals from 1 November 2026: check them against the 50% test. A new contract for an existing employee, including a renewal, is likely to be treated as entered into on the date it’s signed. Take care before relying on an extension of a current contract.

What employers should do now

• Check eligibility before offering a contract. Confirm which exception you’re relying on and that your organisation meets the relevant criteria:
  • Charities: you must be a registered charity with annual revenue under $10 million.
  • Medical and health research: you must be a charity, a government-established body (such as a statutory authority), or an entity controlled by either, with annual revenue under $100 million. The role must also primarily involve medical or health research.
• Work out the funding mix for each role. For each fixed term role, calculate how much of the cost is covered by eligible sources. If it isn’t more than 50%, the exception won’t apply.
• Keep evidence. Keep the grant agreements, funding letters and budget allocations that show how each role is funded. You may need them if a contract is challenged.
• Match the contract to the project. The contract’s end date should line up with the end of the funded program or project, which can’t run for more than 5 years.
• Track total service. For employees on repeat contracts, check that the new contract won’t take their continuous employment past 7 years.
• Give the information statement. Every fixed term employee must receive the Fixed Term Contract Information Statement when they start, or as soon as possible after, even where an exception applies.
• Have a fallback. If a role doesn’t meet the exception, consider whether a contract of 2 years or less, a general exception under the Act, or ongoing employment is more appropriate.

Need help?

If you’re unsure whether a fixed term contract qualifies for an exception, contact Citation HR before you issue it.