My Employer Has Funding for Two More Years—So Why Have I Only Been Offered a One-Year Contract?
- Brian AJ Newman, LLB
- 4 hours ago
- 4 min read
Across Australia, thousands of employees work in roles funded by government grants, service agreements, research funding, community programs and other external funding arrangements.
When funding is renewed, many employees naturally expect that their employment will continue for the same period as the funding.
However, this is not always what happens.
Sometimes an employer secures funding for several years but only offers employees a much shorter contract extension. This can leave workers wondering whether there is a legitimate operational reason—or whether they should be asking more questions.
If this sounds familiar, here are some important considerations.
Funding and Employment Are Not Always the Same Thing
One of the biggest misconceptions is that an employment contract must match the duration of external funding.
That isn't necessarily the case.
An employer may have legitimate operational reasons for offering contracts shorter than the funding period, including:
organisational restructuring;
future program reviews;
anticipated changes in service delivery;
workforce planning;
staged recruitment; or
uncertainty about future staffing requirements.
The existence of longer-term funding does not automatically entitle an employee to a contract of the same length.
However, equally, simply stating that a position is "funding dependent" may not fully explain why a shorter contract has been offered when funding has already been secured.
Fixed-Term Contracts Are Subject to Fair Work Laws
The Fair Work Act 2009 (Cth) contains important provisions regulating fixed-term and maximum-term employment contracts.
Since the introduction of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, significant restrictions now apply to many fixed-term contracts.
Broadly speaking, employers cannot repeatedly use fixed-term contracts in circumstances where the legislation prohibits it, although there are important exceptions, including some roles genuinely linked to identifiable government funding or time-limited projects.
Whether an exception applies depends on the specific facts of each case.
Ask Questions—Don't Make Assumptions
If your employer offers a shorter contract than expected, the first step should usually be to seek clarification rather than assume the worst.
Reasonable questions might include:
Is the role funded beyond the proposed contract period?
Why has the contract been limited to its current duration?
Are all employees in similar positions being offered the same arrangement?
Are there organisational changes anticipated?
Is there a policy governing contract lengths?
Many concerns can be resolved simply by obtaining a clear explanation.
Performance May Not Be the Issue
Employees sometimes worry that a shorter contract reflects dissatisfaction with their work.
That is not necessarily the case.
Many organisations separate workforce planning decisions from employee performance.
If your recent performance discussions have been positive and no concerns have been raised, there may be entirely unrelated reasons for the employer's decision.
Rather than speculate, ask for clarification.
Consistency Matters
Employers should generally apply their employment practices consistently.
If employees performing substantially similar work under the same funding arrangement receive materially different contract terms, it may be reasonable to ask why.
Differences do not automatically indicate unfair treatment.
However, employers should generally be able to explain the basis for different decisions.
Keep Everything in Writing
Whenever employment terms are discussed, it is sensible to communicate in writing.
Written correspondence helps:
clarify misunderstandings;
confirm what has been discussed;
provide an accurate record; and
avoid disputes about conversations later.
Professional, respectful communication is usually the most effective approach.
Read Your Employment Contract Carefully
Before raising concerns, review your existing employment documents.
In particular, consider:
how your position is described;
whether employment is expressly linked to funding;
any clauses dealing with renewal;
termination provisions;
references to project completion or external funding.
Understanding your contractual position is an important starting point.
Could This Raise Other Workplace Issues?
Sometimes a shorter contract is simply a legitimate business decision.
In other situations, it may form part of broader workplace concerns.
For example, if an employee believes they have been treated differently after exercising workplace rights, making complaints, taking parental leave, requesting flexible work arrangements or raising safety concerns, additional protections under the Fair Work Act 2009 (Cth) may become relevant.
Every case depends on its own facts, and no conclusions should be drawn without carefully considering the surrounding circumstances.
Practical Steps If You Receive a Shorter Contract Than Expected
If you find yourself in this situation:
Read your current contract carefully.
Review any announcements regarding funding.
Ask your employer for written clarification.
Keep copies of all correspondence.
Avoid making assumptions about the reasons.
Compare your situation with any published organisational policies.
Obtain independent advice if the explanation remains unclear.
Communication Often Resolves the Issue
Many contract renewal concerns arise because employers provide only brief or generic explanations.
A simple statement that a position is "subject to funding" may not answer the employee's genuine questions where funding has already been secured for a longer period.
Open communication benefits both employers and employees.
Where employers explain the operational reasons for their decisions clearly and transparently, misunderstandings can often be avoided altogether.
How MYUNION Can Help
If you have questions about a fixed-term contract, contract renewal, workplace rights or the fairness of your employment arrangements, MYUNION's Employment and Human Rights Advocates can help you understand your options and navigate the relevant workplace processes.
MYUNION – Employment & Human Rights Advocacy
🌐 www.myunion.au📧 gethelp@myunion.au📞 1300 MYUNION
This article provides general information only. It is not legal advice. Every employment matter depends on its own facts, the applicable legislation and the terms of the relevant employment contract.