FWC finds early notice of end to fixed-term contract amounts to dismissal

In the recent decision of Warren George Francis v. Volunteer Marine Rescue Assoc Qld Inc [2024] FWC 978, the Fair Work Commission (FWC) has held that providing early notice of non-renewal for a fixed-term contract can constitute dismissal.

Warren Francis commenced employment with the Volunteer Marine Rescue Association (the Respondent) as a State Training Officer in January 2021 on a six-month contract. Francis was one of five workers engaged by the Respondent on fixed-term contracts ahead of its anticipated merger with another volunteer organisation. He later signed a one-year contract in June 2021 and 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, Francis was suspended on full pay pending an investigation of an allegation that he had threatened violence against one of his colleagues.

On 14 June 2023, Francis received an outcome letter for the investigation advising that the allegation could not be substantiated. The letter also stated that the investigation had revealed a “highly undesirable” level of tension between Francis and the complainant.

Two days after this, Francis was informed in writing that the Respondent had decided not to extend his contract beyond 30 June, when the terms were set to expire.

Termination claim

Francis made an application to the FWC under s. 365 of the Fair Work Act 2009 (Qld) (FWA) that he had been dismissed in contravention of the general protections. He claimed that, having regard to the two letters dated 14 and 16 June 2023, it was clear that he had been dismissed within the meaning of s. 386 of the FWA.

Francis also told the FWC that he expected to continue in his role until the merger eventuated.

The Respondent objected to the application on the basis that Francis was not dismissed, rather his employment ended with the contract's conclusion.

The question before the FWC was whether the Respondent dismissed Francis in accordance with s. 386(1) of the FWA. If 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…"

Expectation of continued employment

The FWC found that Francis’ expectations that the contract would continue were reasonable. It was considered that after signing the third employment contract in December 2022, neither Francis or the Respondent expected the employment relationship to end upon conclusion of the fixed term of the contract, barring funding issues.

The FWC agreed with Francis’ expectation that the employment relationship “would likely continue, 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 Respondent continued to employ Francis throughout July, August and September 2022 despite his employment contract being expired.

The FWC distinguished the current matter from Timothy Andrew Alouani-Roby v. National Rugby League Limited, Bernard Sutton and Graham Annesley [2022] FWCFB 171. In the latter, the former referee’s general protections application was dismissed on the basis that his employment was not terminated on his employer’s initiative. Instead, the Full Bench found his employer acted passively by letting the fixed term contract expire.

In contrast to Alouani-Roby, the FWC in the current matter found that the Respondent actively “took steps to sever the employment relationship when it communicated to Francis on 16 June 2023 there would be no extension beyond 30 June 2023.”

Pointing to the advertisement the Respondent placed on seek.com.au to fill Francis’ role, the FWC further found that the Respondent’s decision not to provide a fourth employment contract “had nothing to do with” a lack of confidence in funding for the 2023-2024 period.

The FWC found that the reason the Respondent did not issue Francis a fourth contract was because they “did not wish for Mr Francis to continue performing the duties he had been performing for two and half years”.

On this basis, the FWC was satisfied that 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.”

Having found that Francis’ employment was terminated on the Respondent’s initiative, he is now able to proceed by way of an adverse action claim against his former employer.

Key takeaways for employers

Employers should avoid “jumping the gun” when deciding on the non-renewal of fixed-term contracts that could sever the employment relationship. It is recommended to:

• Avoid impulsive decision-making that may sever the employment relationship and/or result in unnecessary litigation.
• Conduct a detailed review of the employment contract terms and conditions.
• Evaluate risks on a case-by-case basis relevant to the terms and conditions of the employment contract.
• Seek expert advice where required.

Rachel Drew is a State Managing Partner at Holding Redlich in Brisbane, specialising in workplace relations and safety. David Chambers is a Special Counsel at Holding Redlich in Brisbane, specialising in workplace relations and safety. Maud Beach is a lawyer at Holding Redlich in Brisbane, also specialising in workplace relations and safety.