In Warren George Francis v Volunteer Marine Rescue Assoc Qld Inc [2024] FWC 978, the Fair Work Commission (FWC) held that providing early notice of non-renewal for a fixed-term contract can constitute dismissal.
Facts of the case
Mr Francis commenced employment with the Volunteer Marine Rescue Association (the employer) on a fixed term, six-month contract, in January 2021, ahead of its anticipated merger with another volunteer organisation. In June 2021 he signed a one-year contract and then another in December 2022, retroactively effective from July 2022 and on the same terms set out in the June contract.
A month after signing the most recent contract, Mr Francis was suspended on full pay pending a misconduct investigation. On 14 June 2023, Mr Francis was advised in writing that the allegations were unsubstantiated and shortly after received another letter from his employer confirming his contract would not be extended beyond 30 June 2023.
Mr Francis made an application to the FWC under section 365 of the Fair Work Act 2009 (Cth) (FWA) that he had been dismissed within the meaning of section 386, contravening the general protections; that he expected to continue in his role until the merger eventuated.
The employer raised a jurisdictional objection, arguing cessation was due to effluxion of time; that Mr Francis was not dismissed, rather his employment ended when the contract concluded.
FWC Decision
The FWC had to decide whether the employer dismissed Mr Francis in accordance with section 386(1) of the FWA. If Mr Francis was not dismissed, he would be prevented from bringing proceedings alleging adverse action involving dismissal against his former employer.
Section 386 of the FWA provides that:
A person has been dismissed if:
– the person’s employment with his or her employer has been terminated on the employer’s initiative…
However, a person has not been dismissed if:
– the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period…
The FWC found that Mr Francis’ expectations that the contract would continue were reasonable; that neither party expected the employment relationship to end upon conclusion of the fixed term of the contract (provided finance was not an issue) “unless the Respondent did something otherwise to communicate that it wished to sever” it, namely:
- a clause in the employment contract that the employer and employee may elect to renew the contract, by negotiation.
- the fact that the employer continued to employ Mr Francis throughout July, August and September 2022 despite his
employment contract being expired.
The FWC distinguished these facts from Timothy Andrew Alouani-Roby v National Rugby League Limited, Bernard Sutton and Graham Annesley [2022] FWCFB 171. In the latter, the former employee’s general protections application was dismissed on a finding by the Full Bench that the employer acted passively by allowing the fixed term contract to expire; his employment was not terminated on his employer’s initiative. In this case, Mr Francis “took steps to sever the employment relationship when it communicated to Mr Francis on 16 June 2023 there would be no extension beyond 30 June 2023”.
The FWC also found unhelpful to the employer’s defence that it placed an advertisement to fill Mr Francis’ role, the FWC finding that the decision to not extend the contract was because they “did not wish for Mr Francis to continue performing the duties he had been performing for two and half years.” Mr Francis did not leave the employment relationship voluntarily, “rather, it was the action of the Respondent in deciding against offering a further employment contract, for which it was confident of the funding for the role, that resulted directly in the termination of the employment.”
The FWC dismissed the employer’s jurisdictional objection and found that since Mr Francis’ employment was terminated on the employer’s initiative, he could bring a general protections claim against the employer.
Lessons for employers
Before deciding whether to not renew fixed term contracts for their employees, employers should proceed cautiously, avoiding acts that could be construed as severing the employment relationship. Employers should review the terms of the particular employment contract carefully, consider all the risks, and seek legal advice.
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This update was written by Fran Keyes, Practice leader (Employment & Discrimination Law).
