Australia’s Employment Rules Enter A New Phase
Fixed-term contracts play an important role in industries where employment depends on project funding, government grants and research programs. However, changing employment requirements have made it increasingly important for employers to understand when these arrangements can be used. On 1 November 2026, new changes to Australia’s fixed-term contract regulations took effect. The changes make additional exceptions ongoing for eligible charities, not-for-profit organisations and medical or health research organisations.
However, the updated rules also introduce stricter funding requirements for new contracts. For employers, understanding these changes is essential. They affect how qualifying organisations structure employment, manage recruitment and plan for future projects.
Why Are Australia’s Fixed-Term Contract Rules Changing?
Australia introduced significant fixed-term employment restrictions on 6 December 2023 under the Fair Work Act 2009. The changes were designed to reduce the inappropriate use of repeated short-term contracts instead of permanent employment. Under the general rules, employers face three main restrictions.
Contract Duration: Fixed-term contracts generally cannot exceed two years, including extensions.
Contract Renewals: Employers generally cannot renew or extend a fixed-term contract more than once.
Consecutive Contracts: Employers face restrictions on using repeated contracts for the same or substantially similar work.
There are exceptions for certain industries and employment arrangements. However, organisations must meet specific requirements before relying on them. These restrictions created particular challenges for charities and research organisations that depend on temporary funding to deliver long-term projects.
Charities And Research Organisations Receive Ongoing Exceptions
Before November 2026, additional fixed-term contract exceptions for eligible charities and medical or health research organisations were scheduled to expire on 31 October 2026. The Australian Government has now made these exceptions ongoing. This means qualifying organisations can continue using certain fixed-term contracts outside the usual limitations. For charities, this can support employment linked to specific government-funded or philanthropic projects.
For medical and health research organisations, it can provide greater flexibility when employing researchers for funded programs. However, the changes do not create a blanket exemption for every organisation in these sectors. Employers must still satisfy the relevant revenue, funding, project and employment-duration requirements.
The New 50% Funding Requirement
One of the biggest changes concerns how individual positions are funded. From 1 November 2026, more than 50% of the funding for an eligible position must come from approved funding sources.
For qualifying charities, these sources include:
- Government grants and procurement funding.
- Funding from another philanthropic entity.
- Certain testamentary gifts and charitable contributions.
Medical and health research organisations have similar requirements, although the eligible funding sources depend on the type of employer. This is an important distinction because the new requirement applies to contracts entered into on or after 1 November 2026. Previously, eligible contracts entered into between 1 November 2025 and 31 October 2026 only needed to receive some funding from qualifying sources.
What Does This Mean In Practice?
Consider a charity employing a project coordinator for a three-year community program. The position receives:
40% Government Funding
25% Philanthropic Funding
35% Internal Funding
In this example, 65% of the position is supported by qualifying external funding sources. The position could satisfy the new funding threshold, provided the organisation and project also meet the other requirements.
However, a position receiving only 40% from eligible sources would not meet the new 50% requirement This means charities will need to review how individual roles are funded before entering new employment agreements.
New Revenue Requirements Still Apply
The updated exceptions also include financial eligibility requirements. For qualifying charities, the philanthropic entity must generally have annual revenue below $10 million. For eligible medical and health research organisations, the relevant revenue threshold is generally $100 million. These requirements apply to contracts entered into on or after 1 November 2025.
Where an organisation reports revenue as part of a group, group revenue must also generally fall below the relevant threshold. Limited provisions apply where an entity can establish that its individual revenue is below the threshold despite its group reporting arrangements. These requirements mean that larger organisations cannot automatically rely on the additional exceptions. Employers must assess their organisational structure and financial position before using these arrangements.
Project Duration And Employment Limits Matter
The updated exceptions also place limits on the projects supporting fixed-term employment. For both eligible charities and research organisations, the relevant program or project must run for no more than five years, including any period already completed. The employment contract must substantially match the project’s duration or remaining duration.
There is also a longer-term employment restriction. Where an employee has previously worked for the organisation, the exception cannot result in more than seven years of continuous or substantially continuous employment under the relevant arrangements. These requirements are designed to connect employment directly to genuine project funding. As a result, employers cannot simply use repeated project contracts to avoid the general fixed-term employment rules.
Medical And Health Research Has Specific Requirements
The new exceptions also recognise the funding structures of Australia’s medical and health research sector. Eligible organisations include certain philanthropic entities, organisations controlled by philanthropic entities and public Commonwealth, state and territory bodies. However, the employee’s primary work must involve an eligible type of medical or health research.
The four recognised categories are:
Basic Research: Investigating fundamental scientific principles and developing new knowledge.
Pre-Clinical Research: Testing potential treatments or interventions before they progress to human clinical trials.
Clinical Research: Investigating healthcare interventions and treatments involving people.
Translational Research: Applying scientific discoveries to practical healthcare outcomes.
The work must also relate to a specific funded project and satisfy the applicable funding and duration requirements. This provides additional employment flexibility while recognising the project-based nature of medical research.
What Employers Need To Do Differently
The November changes give qualifying organisations more certainty when planning project-based employment. However, they also make it important to review recruitment and contract management procedures. There are three areas employers should prioritise.
1. Review Funding Arrangements
Check where the funding for each position comes from. New contracts must satisfy the updated 50% funding requirement, so employers should maintain clear financial records.
2. Check Contract Eligibility
Review organisational revenue, project duration and employee service history before relying on an additional exception. Not every project-funded position will qualify.
3. Update Recruitment And HR Processes
Ensure recruitment and HR teams understand the eligibility requirements. Fixed-term employment documentation must also remain accurate and consistent with applicable workplace obligations. These steps can help organisations avoid compliance issues while managing project-based recruitment more effectively.
Fixed-Term Contract Information Statements Still Apply
The November changes do not remove existing employer obligations. Employers must continue providing eligible employees with the Fixed Term Contract Information Statement (FTCIS) when they enter a fixed-term contract or as soon as possible afterwards. This requirement also applies when an employee qualifies for one of the additional exceptions.
The statement explains the employee’s rights and the general restrictions surrounding fixed-term employment. Other workplace entitlements also remain in place, including applicable award conditions, minimum wages and leave entitlements. Employers should therefore review more than just contract duration when updating their employment processes.
What Does This Mean For Australia’s Recruitment Market?
The changes highlight the relationship between funding, recruitment and long-term workforce planning. For charities, ongoing exceptions can provide greater certainty when recruiting employees for funded community programs. For research organisations, they can support the employment of specialists whose work depends on grants and temporary research funding.
However, employers must balance this flexibility with appropriate employment conditions and compliance requirements. The changes also reinforce the importance of understanding the difference between permanent positions, temporary project requirements and genuinely fixed-term employment arrangements. For recruitment teams, this means considering the funding structure and duration of a position before beginning the hiring process.
A More Flexible Approach To Project-Based Employment?
Australia’s latest fixed-term contract changes provide greater certainty for eligible charities and medical or health research organisations. By making the additional exceptions ongoing, the government has recognised that some industries depend on project funding and temporary employment arrangements.
However, the updated 50% funding requirement, revenue thresholds and project-duration limits introduce important conditions. For employers, the priority is understanding when these exceptions apply and ensuring employment arrangements meet the relevant requirements. The key is not simply having more flexibility. It is knowing how to use it responsibly while protecting the people behind every position.