In this week’s blog post, we look at a recent employment law case heard by Commissioner Allison of the Fair Work Commision. The central issue in this case was whether an employee was considered to be “dismissed” under the Fair Work Act 2009 (Cth) (Fair Work Act) and therefore entitled to bring a general protections claim against her former employer.
This matter involved a jurisdictional objection to a general protections application made under the Fair Work Act in which the Respondent, Alcoa Portland Aluminum Pty Ltd (Alcoa) sought to argue that the Applicant, Ms Kerri Anne Hughes (Ms Hughes) was not dismissed as she was engaged on a ‘fixed-term’ or ‘time-limited contract and that period had come to a conclusion. The employer argued that it was the end of the fixed-term contract that caused the employment to end, and therefore there had been no dismissal by the employer.
For some general information about fixed term contracts and how they have been affected by recent legislative changes, please see our earlier blog post here.
On 22 August 2022 Ms Hughes commenced employment with Alcoa as a ‘fixed-term’ or ‘time-limited’ employee in the role of Operator pursuant to a written contract of employment. The terms and conditions of this contract where also governed by the The Portland Aluminium (Operators) Enterprise Agreement 2021 which relevantly provided that “A fixed term employee is an employee who is formally engaged for a designated period or work project for a maximum period of 6 months, or longer by agreement with the AWU”.
On 7 March 2023 Alcoa offered an extension to Ms Hughes for her time limited contract to continue until 3 September 2023, which was accepted by written acknowledgment on 24 March 2023. Near the conclusion of this period, Mr Lester, Alcoa’s Human Resources Manager met with Ms Hughes and other employees of the company. During this meeting Mr Lester informed Ms Hughes that she would not be offered a further extension on her employment contract and that her employment would come to an end at the end of the extended period on 3 September 2023.
Ms Hughes’ case
It was Ms Hughes’ position that she was terminated at the initiative of Alcoa and therefore dismissed for the purposes of the Fair Work Act. She argued that the use of fixed term contracts were an attempt to circumvent the employer’s obligations under unfair dismissal laws, relying on evidence that the Operator role in the Enterprise Agreement required 24 months of training in all areas to be able to progress and that Alcoa had an ongoing operational need for operators.
Ms Hughes also sought to argue that the termination was at the initiative of Alcoa, rather than the expiry of a fixed term, as Alcoa wanted to terminate Ms Hughes as a result of her exercising a workplace right to defend herself against allegations of serious misconduct. In support of this Ms Hughes referred to Alcoa’s F8A Employer Response which stated she was not offered a further contract as she had not “satisfactorily demonstrated suitability for ongoing employment in her role as a result of her performance and training completion not being to the standard that could be reasonably expected.”
It was Alcoa’s position that it did not terminate Ms Hughes, but her employment ended on 3 September 2023 by a previous agreement between the parties (i.e. the date they had agreed to end the employment relationship in the contract extension).
Alcoa also relied on a decision in Isaac Howard v Falls Creek Ski Lift Pty Ltd T/A Falls Creek Ski Lift Group (Falls Creek) in which there was a finding that an Applicant had not been dismissed when his time-limited contract came to an end and he was not offered a new contract for the following ski season.
The Commission analysed previous caselaw, in particular the decision in Saeid Khayam v Navitas English Pty Ltd t/a Navitas English (‘Navitas’).
It found that Navitas established the position that time-limited contracts which contain an unqualified right on the part of either party to terminate the contract at any time on notice, cannot be considered contracts for a “specified period of time” for the purpose of section 386(2)(a) of the Fair Work Act. In other words, such contracts do not provide a shield from the employer being able to say that no dismissal had occurred at the end of the contract.
However, the Commission also interpreted Navitas to mean that, even in time-limited contracts which contain an unrestricted right to terminate early, there will be no dismissal on the part of the employer where there has been a genuine agreement between the parties to terminate employment on a specific date unless certain special circumstances apply (in Navitas it referred to these circumstances as “vitiating or other mitigating factors”).
Examples of such circumstances include:
- Previously recognised categories that the law excuses a party from complying with a contract such as unconscionability, duress or legal capacity;
- Whether the contract may be illegal or contrary to public policy;
- Whether the contract has been varied, replaced or abandoned such that the time limit no longer applies;
- Whether the contract does not represent the reality or the totality of the terms of the employment relationship;
- Conduct or representation which prevents the employer relying on the contract
- Whether the time limited contract is inconsistent with an applicable award or enterprise agreement
The majority in Navitas also found that in some instances where an employee has been engaged under successive time-limited contracts, employment that ends at the expiry of a time-limited contract, may still constitute a dismissal for the purposes of the Fair Work Act. The reasoning behind this, as explained in Navitas, is that although the expiry of the employment contract ends that particular contract it does not necessarily end the employment relationship between the parties and an analysis of the totality of the employment relationship will be necessary not just an analysis of the terms of the final employment contract. Commissioner Allison clearly distinguished Ms Hughes’ case from the case in Navitas which involved an employee who was employed casually for 7 years before being employed on successive fixed term contracts between 2012 and 2016. In this case, Ms Hughes was engaged on one 6 month contract that was extended once and the contract clearly established that the employment relationship would expire on 3 September 2023.
Commissioner Allison also found that there was a genuine agreement as to the end date given that it was very clearly and explicitly stated in the contract that the agreement was entered into with a fixed time limit and that the employer had given no other warranties of an alternative arrangement applying.
Commissioner Allison finally considered whether there were any vitiating or other factors in line with Navitas which would mean that there would be a dismissal on the part of the employer, but found that there was no evidence or submissions that could be substantiated. In particular it rejected the employee’s argument that Alcoa had breached the terms of the enterprise agreement which related to fixed term contracts. Ultimately Commissioner Allison found that Ms Hughes was not dismissed and that the employment relationship was terminated in accordance with the terms of the time limited contract that she entered into.
Lessons for employers
In the concluding remarks of the Judgment, Commissioner Allison highlights that the decision deals exclusively with the narrow issue of whether the termination of Ms Hughes’ employment with Alcoa was a ‘dismissal’ for the purpose of the Fair Work Act.
Employers should note that although the Commissioner found there was no dismissal in this matter, that the Fair Work Act envisages other circumstances, outside of dismissal, in which a person may seek a remedy against alleged adverse action in regard to other work-related activities such as against prospective employers. In other words, had Ms Hughes brought a different claim of adverse action, such as Alcoa refusing to offer her work for a protected reason then there very well may have been a different result.
This case serves as a reminder of the importance of having a well drafted employment contract which clearly sets out the terms and conditions of employment and that adverse action has a broader meaning than just dismissal and can include matters such as denying a prospective employee a job or refusing to extend their fixed term contract.
Need further help?
If you require any assistance in dealing with a general protections claim or understanding the rules around fixed term contracts please contact EI Legal at: firstname.lastname@example.org.