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Navigating fixed-term contract compliance in ANZ: Key legislative updates for 2025

CXC Global9 min read
CXC GlobalFebruary 03, 2025
CXC GlobalCXC Global

Fixed-term contracts are a common employment arrangement across Australia and New Zealand, since it offers flexibility for both employers and workers. However, with new legislative updates set to take effect in 2025, businesses must stay ahead of compliance requirements to avoid legal risks and ensure fair employment practices.

In this article, we’ll break down the latest changes, what they mean for employers, and how to navigate compliance effectively this 2025.

What are fixed-term contracts?

A fixed-term contract is an employment agreement with a defined start and end date. Unlike permanent employment, where the employment relationship is ongoing, fixed-term contracts have a specific termination date. This can be a calendar date, the completion of a specific project, or the occurrence of a particular event.

There are actually many limitations on the use of fixed-term contracts. For example, they can’t be used indefinitely to avoid offering permanent employment to employees who should be co+nsidered permanent.  

Australian law generally allows for fixed-term contracts when there is a genuine reason for the limited duration, which we will cover later. It’s important to note that though they’re on fixed-term contracts, employees are still entitled to the same basic rights as permanent employees—such as minimum wage, paid leave, and safe working conditions.

Key legislative updates affecting fixed-term contracts in ANZ as of 2025

Both countries have introduced significant changes to fixed-term contracts, primarily focused on the following:

  1. Limiting contract duration: Restrictions on the length and renewals of fixed-term contracts to prevent their indefinite use.
  2. Promoting permanent employment: Increased emphasis on converting fixed-term contracts to permanent roles after a certain period, unless a legitimate reason exists for continued temporary employment.
  3. Strengthening worker protections: Enhanced rights for workers on fixed-term contracts, including the right to contest unfair termination and access to clearer information about their employment conditions.
  4. Increased scrutiny: Greater scrutiny on using fixed-term contracts to ensure they’re used appropriately and not as a means to avoid offering permanent employment.

Overall, these updates aim to improve job security, reduce the use of fixed-term contracts to avoid permanent employment, and provide greater fairness and stability for workers in both countries.

Non-compliance with these legislative updates can have serious consequences for businesses. For example, legal penalties include fines, backpay for unpaid wages or entitlements, and orders to convert fixed-term contracts to permanent employment. Businesses’ reputation may also take a hit. Negative publicity may damage the employer’s brand which is not ideal especially when planning to scale globally. Along with reputational damage, employee morale and trust may decrease. Additionally, there are corresponding costs associated with defending legal challenges from employees or facing legal action from government agencies.

So how can businesses adapt to these legislative updates?

  • Regularly review and update employment contracts. Ensure all fixed-term contracts comply with the latest legal requirements, including clear start and end dates, legitimate reasons for the fixed term, and accurate information regarding employee rights.
  • Seek legal advice. Consult with employment lawyers to ensure compliance with all relevant legislation and to understand the implications of any changes to employment laws.
  • Develop clear internal policies. Establish clear internal policies and procedures for managing fixed-term contracts, including guidelines for hiring, managing, and terminating such contracts.
  • Provide employee training. Educate managers and HR personnel on the latest legislative updates and best practices for managing fixed-term contracts.
  • Monitor and adapt. Continuously monitor legislative changes and adapt employment practices accordingly to ensure ongoing compliance.

Keeping up with legislative changes is challenging and time-consuming. Ensuring your company remains compliant is yet another huge task. Here’s where working with an workforce management organisation like CXC comes in. Our experience spans decades and countries, with our compliance service helping multiple businesses remain compliant as they expand internationally.

Key challenges and pain points in fixed-term contract compliance

While fixed-term contracts offer a lot of benefits for both contractors and employers, they also come with compliance challenges that can create legal and operational headaches for businesses. Companies in the ANZ region or those planning to scale must tread carefully to avoid costly missteps.

Navigating regulatory complexity and compliance risks

A significant change in Australian legislation restricts the maximum duration of a fixed-term contract to two years—including any renewals or extensions.Consecutive fixed-term contracts for the same or substantially similar work are generally prohibited if they exceed the two-year limit. Employers must have a genuine reason for using a fixed-term contract, such as:

  • Project-based work with a defined end date
  • Seasonal work
  • Replacement for another employee on leave
  • Funding limitations
  • Special skills or expertise required for a specific task

Rolling contracts,” where fixed-term contracts are repeatedly renewed with short durations, are now significantly restricted. These restrictions help prevent the misuse of fixed-term contracts and ensure that employees are not unfairly kept on temporary arrangements indefinitely.

Employers can comply with the updated rules by providing a fixed-term contract information statement (FTCIS). Employers must provide all employees engaged under a new fixed-term contract with an FTCIS. The FTCIS outlines key information about the fixed-term contract, including:

  • The start and end dates of the contract.
  • The reason for using a fixed-term contract.
  • The employee’s rights and obligations.
  • Information about relevant awards or agreements.

As to the ‘when,’ employers must provide an FTCIS to the employee before they’re employed or as soon as practicable after commencement. 

Mitigating workforce planning challenges and legal disputes

The recent legislative changes in Australia significantly impact workforce flexibility and operational planning for businesses. Here’s how:

  • Reduced reliance on fixed-term contracts: The two-year limit and restrictions on consecutive contracts reduce the flexibility to engage employees on short-term contracts. This may require businesses to re-evaluate their staffing models and consider alternative solutions—such as increasing permanent hires, utilising contractors or freelancers, investing in upskilling and reskilling existing employees and implementing more flexible work arrangements.
  • Impact on project-based work: The restrictions on fixed-term contracts may pose challenges for businesses that rely heavily on project-based work or require flexibility in staffing levels.  
  • Increased administrative burden: Complying with the new regulations, including providing FTCIS and documenting legitimate reasons for fixed-term contracts, can increase administrative burdens on HR departments.

Employers can consider certain strategies for transitioning fixed-term employees to permanent roles. One strategy is to implement regular performance reviews and identify high-performing fixed-term employees who are valuable assets to the organisation. Businesses can also offer opportunities for professional development and growth to enhance the skills and value of fixed-term employees. 

It’s also recommended to maintain open and transparent communication with fixed-term employees about their career prospects and opportunities for permanent employment. Finally, implement a structured process for transitioning high-performing fixed-term employees to permanent roles, such as a probationary period or a trial period.

Increased documentation and communication requirements strain administrative operations

The FTCIS must be comprehensive and should clearly outline the terms of the contract. Employers must also maintain accurate records of all fixed-term contracts, including copies of the FTCIS, documentation of the genuine reason for using a fixed-term contract, and performance reviews or any discussions regarding potential conversion to permanent employment

Regular reviews of all fixed-term contracts are necessary to ensure compliance with the two-year limit and to assess the ongoing need for the fixed-term arrangement. Here are some best practices for communicating changes in employment status:

  • When the end of a fixed-term contract approaches, employers should proactively communicate with the employee regarding the upcoming termination date.
  • If there’s a possibility of extending the contract, clearly communicate the criteria and process for any potential extension.
  • If appropriate, discuss the possibility of transitioning the employee to a permanent role and outline the criteria and process for consideration.
  • Maintain open and honest communication with employees throughout the fixed-term contract. Address any concerns or questions promptly and professionally.
  • All communication regarding contract extensions, terminations, or potential conversion to permanent employment should be documented in writing.

Strategies for achieving fixed-term contract compliance

Staying compliant with fixed-term contract regulations isn’t simply about avoiding penalties—it’s about building a fair, transparent, and legally sound employment framework. With the 2025 legislative updates in ANZ, businesses need proactive strategies to manage contracts effectively while minimising risks.

Leverage technology for compliance and efficiency

Managing fixed-term contracts manually can be time-consuming and prone to errors, especially with evolving compliance requirements. When businesses are able to leveraging technology, they can streamline contract management, track key dates, and ensure adherence to legal obligations with minimal effort. 

Technology offers a lot of solutions to support compliance. Here are some examples:

Automated contract tracking
Software can automatically track contract start and end dates, generating alerts and reminders for upcoming contract renewals or expirations. The system can also monitor the duration of fixed-term contracts, ensuring they comply with the two-year limit and preventing unintended extensions.

Centralised record keeping
Securely store electronic copies of FTCIS for all employees to ensure easy access and audit trails. You can also centralise documentation related to each fixed-term contract—including job descriptions, performance reviews, and justifications for contract extensions.

Automated reminders and notifications
Automatically generate reminders for upcoming contract renewals, performance reviews, and any required actions (e.g., providing updated FTCIS).

Compliance checks
Some advanced systems may even include built-in compliance checks that flag potential issues, such as exceeding the two-year limit or missing required documentation.

Reporting and analytics
Generate reports on the number of fixed-term contracts, their duration, and employee turnover rates. Software can also assist you with analysing data to identify trends and areas for improvement in contract management.  

Here are some examples of tools that enhance efficiency in managing fixed-term contracts:

  • Human Resources Information Systems (HRIS) offer modules for managing employee contracts, including fixed-term contracts. They often include features for contract tracking, document storage, and reporting.  
  • Contractor management systems are designed specifically for managing contractors and contingent workers. They often include features for contract management, compliance tracking, and payment processing.  
  • Project management software can be used to track project timelines and employee assignments, which can be helpful for managing project-based fixed-term contracts.

MyExchange, CXC’s tech platform, provides much-needed assistance and relief for contractors and hiring managers. It automates workflows to help manage the contractor lifecycle from offer, to onboarding, and even to offboarding and extensions. It also seamlessly integrates with any existing HR, payroll, or recruitment systems businesses currently have—it’s an add-on and not an additional burden.

Partner with experts for contractor compliance

Managing fixed-term employees, often referred to as contractors in some contexts, can be complex, especially with the recent legislative changes in Australia. Partnering with a Professional Employer Organisation (PEO) like CXC can offer significant benefits in terms of compliance, payroll, and HR processes:

  • Compliance expertise: PEOs stay up-to-date on the latest legal requirements for fixed-term contracts, including the two-year limit, genuine reason justifications, and FTCIS obligations. They can ensure your fixed-term workforce is managed compliantly, mitigating risks of penalties and legal disputes.  
  • Streamlined payroll and tax administration: PEOs handle payroll processing, tax withholding, and deductions for fixed-term employees, reducing your administrative burden and ensuring accurate and timely payments.  
  • HR support: Some PEOs offer additional HR services such as onboarding, benefits administration, and risk management, which can be valuable for managing fixed-term employees, even if for a shorter duration.  
  • Technology and automation: PEOs often utilise advanced HR technology platforms that automate tasks like contract tracking, document management, and compliance checks, further streamlining fixed-term contract management.

Benefits of outsourcing to mitigate risks and reduce workload include reduced administrative burden, mitigated compliance risks, improved efficiency, optimisation of costs, and access to expertise. 

Outsourcing fixed-term contract management frees up your internal HR team to focus on core employee relations and strategic initiatives. Since PEOs have the expertise and resources to stay compliant with complex regulations, we minimise the risk of penalties and legal issues for your business. While there are associated fees with PEO services, they can potentially offset costs associated with in-house HR staff and software. Finally, PEOs offer access to a team of HR and legal professionals who can provide guidance and support on managing fixed-term employees effectively.

Ensure compliance and workforce resilience in 2025 with expert guidance

Understanding fixed-term contracts, legislative updates, and compliance is essential to avoiding legal risks. It ensures employers follow the latest laws, protect worker rights, and prevent costly penalties. Overall, staying compliant safeguards both the company and its workforce.

Additionally, practical strategies are essential to mitigate risks, improve workforce planning, and maintain operational flexibility. Expert guidance is available for you to ensure that such strategies are implemented correctly and effectively. 

At CXC, we work closely with legal experts, HR specialists, and tax lawyers to ensure we are always on top of any changes to international and local regulations related to hiring and workforce management. These frequently change, and we understand the energy and time needed to focus on this. We also know how difficult it can be to keep up with these regulations across different countries. The solutions we’ve built, such as MyExchange and CXC Comply, stand on the foundation of our decades of expertise and passion to support global businesses. 

Contact us today and start optimising your workforce management in ANZ.


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About CXC


At CXC, we want to help you grow your business with flexible, contingent talent. But we also understand that managing a contingent workforce can be complicated, costly and time-consuming. Through our MSP solution, we can help you to fulfil all of your contingent hiring needs, including temp employees, independent contractors and SOW workers. And if your needs change? No problem. Our flexible solution is designed to scale up and down to match our clients’ requirements.

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