The Full Bench of the Commission handed down its decision in the matter of Khayam v Navitas English Pty Ltd [2017] FWCFB 5162 on 8 December 2017, and this decision will have a significant impact on any employer which makes use of fixed term employment agreements.
FACTS
The employee in this matter had been employed from 2005 until 2016 under numerous fixed term employment agreements with the same employer.
Between 2014 and 2016, performance issues were raised by the employer in connection with the employee’s performance (and despite this, the employee’s fixed term agreement was still renewed). Shortly prior to the expiration of the very last fixed term agreement, the employer notified the employee that his employment agreement would not be renewed, presumably due to his recent performance.
The employee then filed an unfair dismissal claim, and the employer argued that it was entitled to end the employee’s employment at the expiration of the fixed term without any unfair dismissal ramifications arising. At the initial hearing, the Commission dismissed the employee’s unfair dismissal application.
The employee then appealed the decision to the Full Bench of the Commission.
THE LAW
Under the law:
1. an employee can only bring an unfair dismissal if their employment has been terminated ‘at the initiative of the employer’ – that is, the employer has made a decision to cut short the employee’s continuing employment;
2. an employee has not been dismissed if the employee was employed under a contract of employment for a specified period of time, and the employment has terminated at the end of that period;
3. point 2 above does not apply to an employee employed under a contract of employment for a specified period of time if a substantial purpose of the employment of the employee under a contract of that kind is, or was at the time of the employee’s employment, to avoid the employer’s obligations in relation to unfair dismissal.
In the past, an employee employed under a fixed-term employment agreement was not considered to have been dismissed ‘at the initiative of the employer’, but rather by the simple passage of time. If the fixed-term employment agreement specified a date on which employment ended, the employer did not have to do anything to bring the employment to an end. It just ended on that date.
This has largely been the position for at least the last two decades, until now.
The Full Bench of the Commission in this matter held that the employee’s employment had been terminated ‘at the initiative of the employer’, and that the employee was entitled to pursue an unfair dismissal claim against his former employer. The Commission is now in the process of determining the compensation that the employer will be ordered to pay the employee.
The decision also set various principles that will now be used to determine if the termination of an employee’s employment at the expiration of their fixed term is considered unfair dismissal. The mere fact that an employment contract has an ‘end date’ will no longer protect an employer from unfair dismissal claims.
Contact us to find out more about how this decision may affect your business and how we can help you to prepare appropriate employment contracts and take steps to protect your business from unfair dismissal claims.
