FWC decision highlights importance of clear terms in employment contracts
The Fair Work Commission (FWC) has decided on the claim of an employee who charged unfair dismissal against an employer who argued that her contract was conditional.
The case deals with the significance of clear and unequivocal terms if there is a condition in an employment contract, especially since such situations can be misinterpreted and cause a dispute between parties.
Background of the case
The employer is a business that provides internet services. It was owned by the employee’s parents until December 2020 when another enterprise acquired it.
The employee and her parents remained employed, with the former continuing to work as a part-time administrative assistant. Her role included the administration and management of newsletters and article content for websites and social media management. During her tenure, she reported to her mother.
Around January 2022, the employee was surprised when she was locked out of the company email and IT system. She then received an email saying she was “terminated immediately.” Her parents were also terminated on the same day.
The employee was not notified of her employment termination before receiving the email. She only became aware of the reason for her dismissal when she received a Form F3 Employer Response filed by the company before the FWC, which stated that “it was implicit that the employee’s employment would cease if the employment of her parents ceased.”
The FWC recently dealt with an unfair dismissal application of a worker who claims their employer wrongly blocked her from accessing their work roster, which allegedly “brought the employment relationship to an end.”
The parties’ arguments
The employee argued that there was no valid reason for dismissal and that procedural fairness was not afforded to her. She added that the evidence does not support the company’s claim that “her employment was conditional on the continued employment of her parents,” calling it “absurd.”
She then filed for unfair dismissal which the company rejected. The latter said that “her employment was terminated when her parent’s employment ceased as per their agreement,” arguing that it was a “side agreement” between the company and her parents.
“Its perhaps unfortunate that a side agreement… wasn’t properly documented but… there was an arrangement. It was clearly communicated to [her] parents,” the company said.
The FWC recently looked at a case examining the difference between an employee and contractor.
The FWC’s decision
The FWC noted that the company was a small business employer. It assessed her dismissal under the Small Business Fair Dismissal Code. It enumerated the “crucial considerations” to be taken by the employer, including:
- whether it gave the employee a valid reason why they were at risk of being dismissed
- whether it warned the employee of the risk of being dismissed if there is no improvement, and gave the employee an opportunity to respond to the warning
- whether it gave the employee a reasonable chance to rectify the problem.
The FWC found that the employer did not consider any of the following grounds. First, there is no evidence to support the employer’s position. The height of the company’s evidence is that a company representative asked about “the value of the employee’s role to the business, but ultimately decided to employ her.”
Second, “irrespective of any agreement reached between the employee’s parents and the company,” it was not shown that her parents “were acting as her agents, or that they held themselves out as authorised to contract on her behalf,” the FWC added.
Third, the employee’s contract “makes no reference to any such agreement or condition.” Thus, the FWC ruled that the company did not demonstrate any proof of conditional employment,” stating that the dismissal was harsh, unjust and unreasonable. The employee was then awarded compensation.
