Saeid Khayam v Navitas English Pty Ltd t/a Navitas English [2017] FWCFB 5162 – fixed term employment and dismissal at the initiative of the employer

Facts

The employee was employed as a casual teacher from 2005 to 2012.

In April 2012, the employer offered the employee employment as a ‘fixed-term teacher’ until 30 June 2013, with the letter of appointment stating that either party could terminate the employment by providing 4 weeks’ notice. After the completion of the first fixed appointment, the employer offered the employee another fixed term engagement on the same terms but for the period 1 July 2013 to 30 June 2014, which the employee accepted.

In June 2014, the employee was told that his work had not been satisfactory and his employment contract would not be renewed. Following discussions between the employer and the employee, the employer offered the employee a further fixed term of employment to 30 June 2016, which the employee accepted.

On 31 May 2016, the employer informed the employee that, because of his disciplinary record and poor performance, he would not be offered further employment. His employment ended on 30 June 2016.

The employee lodged an unfair dismissal application in the Fair Work Commission (FWC).

Decision

At first instance, the FWC held that the employee’s employment terminated at the expiry of his fixed term employment contract and, based on the decision of the Full Bench of the Australian Industrial Relations Commission in Department of Justice v Lunn,1 there had been no dismissal at the initiative of the employer for the purposes of section 386(1)(a) of the Fair Work Act 2009 (Cth) (FWA).

The employee appealed to the Full Bench of the FWC.

The Full Bench held that the employee was permitted to bring an unfair dismissal application under the FWA because the correct approach for determining whether the expiry of fixed employment is a ‘dismissal at the initiative of the employer’ is by reference to the employment relationship as a whole, rather than the termination of the fixed or outer limit employment contract.

The Full Bench held that the analysis of how a person is dismissed for the purposes of section 386 does not begin and end with the terms of the employment contract. What matters was whether the employer initiated the dismissal in line with the principles in Mohazab v Dick Smith Electronics Pty Ltd,2 and the focus of the inquiry should be whether an action on the part of the employer is the principal contributing factor in the dismissal.

The Full Bench consider that a number of circumstances may exist where a ‘fixed term employment contract’ does not represent the true nature of the employment relationship, including where:

  • the employer misrepresents the nature of the employment at engagement;
  • the employer applies duress or coercion to get the employee sign the contract;
  • the contract is a sham;
  • the employer engages in conduct or made representations about ongoing employment during the fixed term; or
  • the terms of the fixed term contract are inconsistent with an award or enterprise agreement.

Importantly, the Full Bench noted that:

the mere fact that an employer has decided not to offer a new contract of employment at the end of a time-limited contract which represents a genuine agreement by the parties that the employment relationship should come to an end no later than a specified date will not by itself constitute a termination at the initiative of the employer.3

Lessons for employers

There is now more uncertainty for employers concerning fixed term employment and when the expiry of a fixed term represents ‘dismissal at the initiative of the employer’.

Employers should:

  • be extremely careful in making representations to fixed term employees about ongoing employment or the renewal or extension of fixed term employment contracts;
  • have a clear and legitimate reason for engaging employees on a fixed term basis;
  • consider including no-representation clauses in fixed term employment contracts;
  • ensure fixed term employment contracts have a proper end date; and
  • ensure the actions of the business are consistent with the employee’s fixed term employment status.

Employers should also watch this space for potential flow-on effects with redundancies.

Under the FWA, the provisions excluding the payment of statutory redundancy pay to employees who are employed for a fixed term are similar in language to the provisions in the FWA excluding fixed term employees from the unfair dismissal protections.

Skene v Workpac Pty Ltd [2016] FCCA 3035 – when a casual employee is a permanent employee for the purposes of the NES

Facts

In 2010, the employee was employed by Workpac as a casual driver to work at the Clermont mine as a fly-in, fly-out worker under a labour hire arrangement between the mine and Workpac.

The employee alleged he was entitled to payment in lieu of annual leave when his employment at the mine ended amid allegations of misconduct in 2012.

Workpac submitted that they had engaged the employee as a ‘casual employee’ under the Workpac Pty Ltd Mining (Coal) Industry Workplace Agreement, which made the employee ineligible for annual leave, other entitlements available to permanent employees, and payments in lieu of annual leave.

  • The employee argued that his employment with Workpac was continuous, predictable, and determined in advance by rosters, for the following reasons:
  • He worked 12.5 hours each shift on a 7-days-on, 7-days-off continuous roster arrangement at the mine, rotating between day and night shifts.
  • He was assigned permanent camp-style accommodation at the mine, which he shared with another employee working the opposite roster.
  • He had regular and predictable working arrangements because his shifts were set 12 months in advance and followed a stable and organised rotating roster.
  • His employment was continuous, apart from taking seven days unpaid leave, arranged with approval from the mine.
  • The fly-in, fly-out arrangement with the mine, which included flights and accommodation, facilitated his employment.
  • He did not elect the days he worked, nor did he work for any other employer (other than Workpac).
  • He could not choose when and where to work because there was an expectation that he was available, on a continuing basis, to perform his duties in accordance with the roster at the mine.

Decision – Federal Circuit Court

In finding in favour of the employee, Federal Circuit Court Judge Michael Jarrett held that it did not matter how the employer or the employee described their relationship. Rather, that ‘It is their mutual intention that must be objectively ascertained from the words of their agreement and the other matters’.4

Judge Jarrett held that the offer of casual employment was sufficient to engage clause 5.5.6 of the Workplace Agreement and impress upon the employee the status of casual. This meant that the employee was not a permanent full-time employee under the Workplace Agreement.

However, his Honour held that, although the employee failed to establish an entitlement to annual leave under the Workplace Agreement, the employee was entitled to annual leave under National Employment Standards (NES) in the FWA given the totality of the relationship. His Honour held that the employee should be classified as other than a casual employee for the purposes of section 86 of the FWA.

Relevantly, his Honour said that:

The essence of casual employment, as described by the Full Federal Court in Hamzy v Tricon International Restaurants and applied in MacMahon, is missing. There is no absence of a firm advance commitment as to the duration of [the driver’s] employment or the days (or hours) he would work. Those matters were all clear and predictable. They were set 12 months in advance.5

Learnings

There is now significant uncertainty about casual and permanent employment.

The employer (Workpac) has appealed Judge Jarrett’s decision to the Full Federal Court of Australia. That appeal was heard in Brisbane in early November 2017 and the decision was reserved.

Watch this space.