Fixed term or maximum term contracts

Authored by the LexisNexis Legal Writer team.

Before engaging an employee, a person may consider whether they wish to engage the individual for an identifiable period of time or as a permanent and ongoing employee.

If the employer decides to offer employment for an identifiable period of time, and the individual accepts an offer on this basis, then a fixed term or maximum term contract may be the most appropriate form of employment contract for the parties. However, prior to entering into a fixed term contract of employment, the employer should consider whether such an arrangement is permissible given the various limitations (and exceptions to those limitations) on the use of fixed term contracts, contained in the Fair Work Act 2009 (Cth) (FW Act).

What is a fixed term contract?

A “fixed term contract” is a contract of employment that terminates on or after a specific date, at the end of an identifiable period or at the end of a season. A true fixed term contract does not contain a clause that permits the termination of the contract on the provision of notice. Instead, the contract terminates at the expiration of the fixed term (unless terminated before the end of the term for a serious — ie repudiatory — breach.

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