| [2018] FWC 5777 |
| FAIR WORK COMMISSION |
REASONS FOR DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Magdalini Nesci
v
The Playford Hotel T/A The Playford Hotel Pty Ltd
(U2018/5809)
COMMISSIONER PLATT |
ADELAIDE, 14 SEPTEMBER 2018 |
Application for an unfair dismissal remedy – jurisdictional objection – employment ceased as a result of expiration of fixed term contract – contract contained term permitting termination before expiry – not a fixed term contract within meaning of s.386(2)(a) – jurisdictional objection dismissed.
[1] On 5 June 2018 Ms Magdalini Nesci 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 The Playford Hotel T/A The Playford Hotel Pty Ltd (the Playford Hotel) which she advised took effect on 21 May 2018.
[2] On 20 June 2018 the Playford Hotel lodged its Form F3 Employer Response and raised the jurisdictional objection that Ms Nesci had not been dismissed.
[3] A Directions Hearing was conducted on 8 August 2018 and the parties were directed to file material as to the jurisdictional objection by 23 August 2018.
[4] A Hearing was listed for 7 September 2018, but upon review of the material filed by the parties, my Associate corresponded with the parties who agreed that there were no factual disputes and consented to the jurisdictional issue being determined on the papers.
[5] The Playford Hotel was also given a further opportunity to address a concern raised about the correct characterisation of the employment contract taking into account the decision in Andersen v Umbakumba Community Council 1.
[6] The Playford Hotel provided a copy of Ms Nesci’s contract of employment dated 3 July 2017. The contract offered employment to Ms Nesci as a full-time Salaried Food and Beverage Supervisor Level 4. Ms Nesci’s employment commenced on 3 July 2017 and was to be read in conjunction with the Hospitality Industry (General) Award 2010.
[7] Ms Nesci accepted the offer by signature on 5 July 2017.
[8] The most relevant provisions of the contract to the jurisdictional question are reproduced below:
COMMENCEMENT DATE
Your new employment conditions will commence on July 3, 2017. An automatic unprotected “minimum employment period” of six months applies to your employment at The Playford (Fair Work Act – Chapter 3, Part 3-2, Division 2, Section 382, 383 and 384). Included in the “minimum employment period” of six months if a probationary period of three months which also applies to your employment at The Playford. Throughout this period of time, either party may terminate this contract of employment with one week’s notice. After which, and subject to reviews of your performance scheduled to occur on October 3, 2017 and January 3, 2018, your employment with us will then be considered as confirmed, a Salary review will also be conducted as this time. If this employment contract is terminated by either party after the completion of the probationary period, notice must be provided in accordance with the termination provisions within the Hospitality Industry (General) Award 2010 and the National Employment Standards (NES).
CONTRACT OF EMPLOYMENT
This contract of employment is for a fixed period of twelve months and is due to expire on July 2, 2018. Upon the completion of this period, either party may choose to terminate the contract of employment with one weeks’ notice prior to completion date. If the contract of employment is not renegotiated at this time, no severance payments will be paid to the employee.
[9] Section 386 of the Fair Work Act provides as follows
386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
…
(2) However, a person has not been dismissed if:
(a) 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, on completion of the task, or at the end of the season; or
…
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.
[10] By virtue of section 386(2)(a) of the Act, an Applicant will not be found to have been dismissed if they were employed under a contract for a specified period of time and they were terminated at the end of that period.
[11] In this matter, the Playford Hotel assert that Ms Nesci’s contract was for a specified term as defined by von Doussa J in the decision of Andersen2, Ms Nesci was not dismissed, and that the Commission has no jurisdiction to determine the unfair dismissal application. Ms Nesci did not address this issue in her submissions, instead focussing on the merits of her case.
[12] Whilst the employment contract, under the paragraph heading “Contract of Employment” makes it clear that the employment was for a fixed period ending on 2 July 2018, the issue here is whether the reference in the preceding paragraph which provides “Throughout this period of time, either party may terminate this contract of employment with one week’s notice” has the effect of preventing the characterisation of the contract as a fixed term.
[13] The case law on this issue is well established. In the decision of Andersen, von Doussa J held:
“A contract of employment for a specified period of time would be one where the time of commencement and the time of completion are unambiguously identified by a term of the contract, either by the contract stating definite dates, or by stating the time or criterion by which one or other end of the period of time is fixed, and by stating the duration of the contract of employment. As the period of time is defined in this way, it is apt to refer to a contract of employment for a specified period of time as a contract of employment for a fixed term, although this is not the description used in the regulation. A contract of employment to run throughout a nominated number of days, weeks, or years would be a contract of employment for a specified period of time. If the terms of the contract of employment, instead of identifying in this manner the period of time during which it is to run, provides that it is to run until some future event, the timing of the happening of which is uncertain when the contract is made, the contract will be for an indeterminate period of time.
…
In the present case cl 3 and Sch 1 of the Employment Agreement clearly state both a commencement date for the employment and a cessation date, but in light of the right of either party to the contract arising under cl 21(c) to bring the employment to an end on two week’s notice, and the right of the employer under cl 21(d) to bring the employment to end without notice on payment of two weeks salary, 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 pursuant to cl 29). Within the period stated in Sch 1 the period of the contract of employment is indeterminate. At any point during the two year period identified by the commencement and cessation dates neither side could know with any certainty when the period of the contract of employment might come to an end.”
[14] Similarly in Cooper v Darwin Rugby League Inc 3, Northrop J held:
“The clause headed "Notice of Termination" appears to give either party the right to terminate the employment on notice at any time during the three year period. This conclusion follows from the fact that the clause excludes termination in the case of misconduct where the employer terminates the employment "in accordance with the clause relating to the Employment Period in" the contract, but provides for termination of either party by notice. In the context, this must relate to notice given within the three year period. There is no reason to suggest that this clause is limited by implication to apply to any extension of the employment period after 10 December 1995. In my opinion, the contract of employment is for a specified time but can be terminated before the expiration of that period by either party on notice or by the respondent, as employer, for the misconduct of the applicant, as employee. On this construction of the contract of employment, the applicant is not a worker engaged under a contract of employment for a specified period of time within the meaning of par 2 of Art 2 of the Termination of Employment Convention and thus is not excluded, for the purpose of s 170CC of the Act, from the operation of Subdivs B, C, D and E of Div 3 of Pt VIA of the Act.”
[15] A Full Bench also considered this issue in the case of Dale v Hatch Pty Ltd 4, where it was held:
“[22] There is one other aspect of the Contract which requires comment. Clause 27 of the Contract provided, among other things, that Ms Dale’s employment could be terminated by Hatch without cause on one week’s notice during the probation or minimum employment period and on four weeks’ notice thereafter. In relation to employment contracts for a specified time, it was held in Andersen v Umbakumba Community Council 14 (in the context of the termination of employment provisions of the Industrial Relations Act 1988) that an employment contract will not be one for a specified period of time if it gives either party an unqualified right to terminate the contract on notice or with payment in lieu of notice within any specified term.15 The basis for this proposition is that a specified period of time is a period of employment that has certainty as to its commencement and time of completion, and where a contract provides a broad or unconditional right of termination during its term, the period of the contract is indeterminate and thus not for a specific period of time.16”
[16] 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.
[17] A considered reading of the termination term in Ms Nesci’s contract dated 3 July 2017 (in accordance with the approach contained in AMWU v Berri Pty Ltd 5) reveals that the period of time in which the contract allows for the employment to be terminated by one week’s notice is unclear. The period of time could be a reference to the probationary period of three months, or the minimum employment period or indeed the entirety of the contract. Regardless of which of these propositions is correct the effect of the provision is that the employment contract is not for a fixed term but for an “outer limit” with the potential for it to be terminated earlier with one week’s notice. That the contract permitted either party to terminate the contract with one week’s notice results in the contract not being correctly characterised as a fixed term contract within the meaning of s.386(2)(a) of the Act.
[18] I therefore find that Ms Nesci’s employment was dismissed and the matter will be listed for Directions as to the merits of the application. I have an issued an Order 6 to this effect.
[19] The Playford Hotel also submits that the application was made prior to the dismissal taking effect. This appears to be the case. However, I draw the parties’ attention to my powers under s.586 of the Act and I will address this issue with the parties at the next Hearing.
COMMISSIONER
Final written submissions
Ms Nesci the Applicant.
Mr O. Webb, AHA on behalf of the Respondent.
Printed by authority of the Commonwealth Government Printer
<PR700384>
1 (1994) 126 ALR 121 at 125-126 (‘Andersen’).
2 (1994) 126 ALR 121 at 125-126.
3 (1994) 57 IR 238 at 241.
4 [2016] FWCFB 922 at [22].