Annual Leave for Fixed-Term and Contract Employees in Australia

Published: January 2026 | Reading time: 9 minutes

Fixed-term contracts are increasingly common in Australian workplaces, particularly in sectors like education, research, government, and project-based industries. If you're employed on a fixed-term basis, you might wonder whether your annual leave entitlements differ from permanent employees. The good news is that fixed-term employees generally receive the same leave entitlements as their ongoing counterparts, but there are important nuances to understand about how leave accrues and what happens when your contract ends.

This guide explains everything fixed-term and contract employees need to know about annual leave, helping you understand your rights and plan effectively for the duration of your employment.

Fixed-Term Employees Are Entitled to Annual Leave

Under the National Employment Standards in the Fair Work Act 2009, fixed-term employees who are engaged on a permanent basis for the duration of their contract are entitled to annual leave. Full-time fixed-term employees accrue four weeks of paid annual leave per year, while part-time fixed-term employees receive pro-rata entitlements based on their ordinary hours.

The key distinction is between fixed-term employees and casual employees. If you're engaged on a casual basis, even for a defined period, you don't accrue annual leave but receive a casual loading instead. Your employment contract should clearly specify whether you're engaged as a fixed-term permanent employee or as a casual worker. If you're unsure about your employment status, ask your employer or HR department for clarification.

Use our annual leave calculator to determine how much leave you'll accrue over the duration of your contract. Enter your employment type, start date, and contract end date to see your projected balance.

How Annual Leave Accrues During a Fixed-Term Contract

Annual leave accrues progressively throughout your employment, regardless of contract length. From your first day of work, you begin earning annual leave at the standard rate. For a full-time employee working 38 hours per week, this means accruing approximately 2.923 hours of leave per week, or about 0.077 hours for every hour worked.

Short contracts may not provide much opportunity to both accrue and use annual leave. A three-month contract, for example, would accrue about one week of annual leave. You may not have time to actually take this leave during the contract period, in which case it would be paid out when your contract ends.

Longer fixed-term contracts allow for more substantial leave accumulation and greater opportunity to take leave during the employment period. A two-year contract would accrue approximately eight weeks of annual leave, giving you ample opportunity to take regular holidays while still having leave paid out at the end if any remains unused.

Taking Annual Leave During Your Contract

Fixed-term employees can request annual leave in the same way as permanent employees. You submit a leave request to your employer, who will approve it subject to operational requirements. Employers cannot unreasonably refuse a leave request, though they can consider factors like workload, coverage, and project timelines when assessing requests.

Some fixed-term employees feel reluctant to take leave during their contract, particularly if they hope for contract renewal or permanent employment. While this is understandable, working continuously without breaks can lead to fatigue and reduced performance. Taking your accrued leave is both a right and an important part of maintaining your wellbeing and productivity.

Consider the timing of your leave requests relative to your contract. If you're on a one-year contract, planning leave toward the middle of the contract period ensures you have time to complete important work both before and after your holiday. Requesting leave immediately before your contract ends may be less practical if there are handover requirements.

What Happens When Your Contract Ends

When a fixed-term contract concludes, whether it's completed as planned, ended early, or not renewed, any accrued but untaken annual leave must be paid out in your final pay. This payment is calculated at your current rate of pay and forms part of your termination entitlements.

The leave payout includes all leave you've accrued up to your final day of employment. There's no minimum employment period required to receive this payment. Even if your contract was only a few weeks long, you're entitled to payment for the annual leave accrued during that time.

If your contract is renewed or you're offered a new contract with the same employer, your annual leave balance typically carries over to the new contract period. You don't lose accrued leave between contracts if there's no break in your employment. However, if there's a gap between contracts and you receive a final payout, a new contract would start your leave balance fresh at zero.

Consecutive Fixed-Term Contracts

Many workers find themselves on a series of consecutive fixed-term contracts with the same employer, sometimes for years. This practice is sometimes called "rolling contracts" and raises questions about job security and entitlements.

When contracts are renewed consecutively, your leave entitlements generally continue to accrue and carry over. Your total annual leave balance reflects your entire continuous period of employment, not just the current contract. This can mean significant leave balances for long-serving fixed-term employees.

Recent changes to employment law in Australia have introduced limitations on the use of consecutive fixed-term contracts in certain circumstances. If you've been employed on multiple consecutive contracts, you may have rights to permanent employment or protections against unfair termination. While this is separate from annual leave entitlements, it's worth understanding if you're in this situation.

Contractors vs Fixed-Term Employees

It's essential to distinguish between fixed-term employees and independent contractors. Employees, whether permanent or fixed-term, are entitled to annual leave. Independent contractors are not employees and therefore don't receive annual leave entitlements. They set their own rates and conditions and are responsible for managing their own time off.

Some workers are incorrectly classified as contractors when they're actually employees. This is called "sham contracting" and is illegal. If you work regular hours, follow your client's direction, use their equipment, and don't genuinely operate your own business, you may actually be an employee entitled to annual leave regardless of what your contract says.

If you're unsure whether you're an employee or a genuine contractor, the Fair Work Ombudsman provides guidance and assessment tools. Correct classification matters because it affects your entitlements to annual leave, superannuation, workers' compensation, and other benefits.

Planning Leave on a Fixed-Term Contract

Effective leave planning is particularly important for fixed-term employees because you have a defined timeframe in which to both accrue and potentially use your leave. Consider your contract length, workload patterns, and personal needs when planning.

At the start of your contract, calculate how much leave you'll accrue over its duration. Our annual leave calculator makes this easy. Then consider when you might want or need to take leave, factoring in busy periods at work, personal commitments, and holiday seasons.

If your contract is short, you might choose to accumulate your leave and take it as a payout at the end, effectively providing a financial buffer between contracts. If your contract is longer, taking regular leave during the contract helps maintain your wellbeing and prevents an overwhelming balance from building up.

Conclusion

Fixed-term contract employees in Australia have the same annual leave entitlements as permanent employees. You accrue four weeks of paid leave per year of full-time work, pro-rated for part-time arrangements. This leave can be taken during your contract with your employer's approval, and any unused balance is paid out when your contract ends.

Don't let the temporary nature of your contract discourage you from taking annual leave. Rest and recreation are important regardless of your employment status. Use our free annual leave calculator to understand your entitlements and plan your leave effectively.

Whether you're on a short project contract or a multi-year fixed-term engagement, knowing your annual leave rights helps you make informed decisions about your work-life balance. Your leave entitlements are a valuable part of your employment package that should be understood and utilised appropriately throughout your contract period.