Yes, you can end a fixed-term employment contract early in Australia — but it depends on what's written in the contract and the circumstances around the termination. Both employers and employees must follow any termination clauses, provide proper notice, and avoid breaching the agreement. Failing to meet legal obligations could lead to disputes or financial consequences. This article explains when and how early termination is allowed, what rights each party has, and what steps to take to stay compliant with employment laws.
What Is a Fixed-Term Employment Contract?
A fixed-term employment contract is a legally binding agreement where an employee is hired to work for a specific period or until a particular project is completed. Unlike ongoing contracts, which continue indefinitely until either party ends them, a fixed-term contract has a clearly defined start and end date.
These contracts are commonly used for seasonal roles, maternity leave coverage, or project-based work. Once the end date arrives, the employment relationship automatically finishes—unless both parties agree to renew or extend the contract.
It’s important that the contract clearly outlines the term, job responsibilities, termination clauses, and any conditions under which the agreement can be ended early. Without clear terms, disputes about entitlements and notice periods can arise.
Can an Employee Resign Early?
Yes, employees can resign early, but they must check the terms of the contract. If a notice period is specified, it must be followed. Walking away without proper notice or in breach of the agreement could expose the employee to legal risks — especially if the employer incurs financial losses as a result.
Can an Employer End a Fixed-Term Contract Early?
Yes — but only under specific conditions. An employer can end a fixed-term contract early if:
- The contract includes a termination clause allowing early exit
- The employee commits serious misconduct
- Both parties mutually agree to terminate
If none of these apply, ending the contract early could be seen as a breach, potentially triggering a legal claim.
What Are the Legal Risks of Ending a Fixed-Term Contract Early?
Ending a fixed-term employment contract before its agreed end date can carry significant legal risks for both employers and employees. The most common risk is a breach of contract claim. If one party ends the contract without a valid legal reason or without following the termination terms, the other party may seek compensation.
For employers, early termination could lead to liability for the wages the employee would have earned for the remainder of the contract. This is especially likely if the contract doesn’t include an early termination clause or if the clause wasn’t properly followed.
Employees who quit early may also be in breach of contract, which could impact final pay entitlements or future employment references. In some cases, the employer may even seek damages if the early departure causes business disruption or losses.
To reduce these risks, both parties should always review the termination clauses in the contract, seek legal advice if unsure, and aim for a mutual agreement where possible. In more complex cases, even matters unrelated to employment—such as finding a good family lawyer—may also require professional legal support to resolve interconnected legal issues.
How to End a Contract Legally and Smoothly
To end a fixed-term contract legally and with minimal conflict, both parties should first refer to the specific terms outlined in the employment agreement. Most fixed-term contracts will include a termination clause that explains under what conditions early termination is allowed—such as mutual agreement, serious misconduct, or redundancy.
The best way to end the contract is through mutual agreement. This means both the employer and employee consent to ending the relationship before the original end date, often with terms that are negotiated and recorded in writing.
Employers must ensure they provide appropriate notice or payment in lieu of notice if required. If the employee is being terminated for a valid reason—such as poor performance or misconduct—procedural fairness must be followed to avoid legal disputes.
Employees wishing to leave early should give as much notice as possible and communicate clearly with their employer. Leaving on good terms helps protect references and avoid legal issues.
Where uncertainty exists, both parties are strongly advised to seek legal advice before taking action to ensure compliance with employment laws and reduce the risk of claims.
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