If a worker expects contract renewal, is it ‘unfair dismissal’ when it expires?

Commission balances worker's expectations and employer's alleged 'promise'

If a worker expects contract renewal, is it ‘unfair dismissal’ when it expires?

Employees need to know the contract terms and expiration date to determine if a dismissal was done legally or not.

Knowing the terms of the contract and its expiration date is key to determining if the employee has not been given enough warning or opportunity to answer the allegations on time.

In this case, a worker argued that he was unfairly dismissed after he “expected” that his contract would be renewed, but the employer denied it, saying that their agreement would expire on a fixed term.

Did the worker have any right to assume a “guaranteed” contract renewal?

Background of the case

Monash University employed the worker from 18 November 2021 until 17 November 2022 as a buildings and grounds assistant for its indigenous traineeship program. The employment was subject to a contract dated 26 October 2021.

During his employment, the employer received several complaints about his conduct. The employer presented the allegations to the worker, and on 2 November 2022, the employer advised the worker by letter that it considered the allegations to be substantiated.

The letter stated that the employer had grounds to terminate the worker’s employment without notice “but that it would not do so” since the fixed term of the job would shortly expire.

The letter further stated that considering the worker’s conduct, the employer would not renew the employment when it ended on 17 November 2022.

The worker then filed an unfair dismissal claim.

The parties’ arguments

The Fair Work Act provides that a person has been “dismissed” if the person’s employment has been terminated “on the employer’s initiative.”

The employer rejected the claim and argued that the Fair Work Commission (FWC) had no power to deal with the application because when it was made, the worker did not meet the specified precondition. 

It said that under the Fair Work Act, the FWC could hear the dispute “if a person has been dismissed,” but the employer said that the worker was not fired because his contract had ended under the terms of the agreement.

The Fair Work noted that the worker “expected that the employment would continue beyond the 12-month period because the engagement was intended to provide ongoing or further opportunities.”

“Instead, the employer had decided not to renew his contract, thereby bringing the employment to an end,” the decision said.

HRD recently reported an unfair dismissal claim where the worker said he was terminated when the employer reduced his work hours

In another HRD report, a worker argued that he was dismissed from employment because the company gave him a lesser workload, causing him “financial difficulty.”

The FWC’s decision

“The worker’s contract was limited to one year. There is no indication that this limitation did not reflect a genuine agreement. The employment ended on the expiry date specified in the contract,” it added.

The Commission said there is “simply nothing” to suggest the employer terminated the worker’s employment.

“The worker was clearly told that, although there were grounds to terminate his employment, the employer would not dismiss him but instead allow his contract to end on its expiry date. The employer’s decision not to offer a further contract was not an act of dismissal,” it concluded.

Thus, it said the employment did not end “on the employer’s initiative.”

“It ended precisely in the manner that the parties had agreed. If the worker had any expectation of continuing employment, it was misplaced,” the FWC said.

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