Fixed-Term Contract Terminations - Fair Work Commission View

A recent Fair Work Commission (FWC) determination (Nesci v The Playford Hotel - [2018] FWC 5777) should have many employers scurrying to review the fixed term contract of all employees.

On 5 July 2017 Ms Nesci accepted a 12 month fixed term contract of employment which gave the start and end date of the contract as 3 July 2017 and 5 July 2018 respectively. This contract included an automatic unprotected “minimum employment period” of six months (which included a three month probationary period) during which time either party would be able to terminate the contract with one week’s notice.

When Is A Fixed Term Contract Of Employment Not A Fixed Term Contract

If her employment was confirmed following the outcome of a performance review at the expiry of six months, either party was then able to terminate the contract of employment with a notice period given in accordance with the termination provisions within the Hospitality Industry (General) Award 2010 and the National Employment Standards (NES).

Ms  Nesci alleges she was unfairly dismissed from that contract on 21 May 2018. On 5 June 2018 she lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for an alleged unfair dismissal by her former employer.

Her employer raised a jurisdictional objection that Ms Nesci had not been dismissed.

Commissioner Platt referred to three cases[1], stating,”Fixed term contracts, by their very nature, are intended to give both parties certainty in relation to the date of commencement, duration of the employment relationship and the completion date. The inclusion of a termination provision within a fixed term employment contract destabilises this certainty, which explains why the Courts and the Commission have found that the inclusion of such provisions prevents the contract being properly described as a fixed term contract.”

In the decision of Andersen, von Doussa J held:

“the Employment Agreement clearly states both a commencement date for the employment and a cessation date, but in light of the right of either party to the contract… to bring the employment to an end…the cessation date merely records the outer limit of a period beyond which the contract of employment will not run (unless a new Agreement is entered into)”.

So perhaps it is time to review all fixed term contracts of employment to ensure they contain a start and finish date without provision for termination, except for matters of misconduct (including poor performance).

[1] (1994) 126 ALR 121 at 125-126
(1994) 57 IR 238 at 241
[2016] FWCFB 922 at [22]

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