The Fair Work Commission (FWC) recently issued a pivotal ruling that early notice of non-renewal for a fixed-term contract can indeed be regarded as dismissal. This landmark decision, in the case of Warren George Francis v. Volunteer Marine Rescue Assoc Qld Inc [2024] FWC 978, highlights the critical need for employers to handle contract terminations with heightened diligence and care.
Background of the Case
Warren Francis embarked on his journey with the Volunteer Marine Rescue Association (VMRA) as a State Training Officer in January 2021. His initial engagement was on a six-month contract. Subsequently, he signed a one-year contract in June 2021, followed by another contract in December 2022, which was retroactively effective from July 2022. This contract carried forward the terms of the previous one.
However, in January 2023, Francis found himself suspended with full pay pending an investigation into an allegation of threatening violence against a colleague. By June 14, 2023, the investigation concluded that the allegation could not be substantiated. Nevertheless, it revealed a high level of tension between Francis and the complainant. Just two days after this outcome, Francis was informed in writing that his contract would not be extended beyond its expiration on June 30, 2023.
The Claim and FWC’s Findings
Following this notification, Francis lodged a claim with the FWC, asserting that he had been dismissed in violation of the general protections under the Fair Work Act 2009 (Qld) (FWA). The crux of the issue was whether the VMRA’s decision not to renew Francis’s contract amounted to a dismissal under section 386(1) of the FWA.
Section 386(1) defines dismissal as termination initiated by the employer, but it also states that the expiration of a fixed-term contract does not constitute dismissal if the employment ends at the contract’s specified end date.
The Reasonableness of Expectation
The FWC determined that Francis’s expectation of continued employment was reasonable. This conclusion was based on several factors:
Historical Renewals: Francis’s employment had been extended beyond contract expiration dates in the past, suggesting a pattern of renewal.
Contract Clauses: There was a specific clause in the employment contract stating that the employer and employee could elect to renew the contract by negotiation.
Employment Continuity: The VMRA continued to employ Francis beyond the expiration of his previous contract, specifically through July, August, and September 2022, despite the formal contract having expired.
Deliberate Severance
Contrary to the precedent set in Timothy Andrew Alouani-Roby v. National Rugby League Limited, Bernard Sutton, and Graham Annesley [2022] FWCFB 171, where the FWC found the employer acted passively by allowing the contract to lapse, the VMRA in this case actively took steps to sever the employment relationship. The FWC noted that the VMRA’s action on June 16, 2023, communicating the decision not to extend the contract, was a deliberate move to end the employment relationship.
The FWC also pointed out that the VMRA’s decision was not influenced by funding concerns, as they were confident in securing funds for the role for the 2023-2024 period. Instead, the decision was motivated by a desire to cease Francis’s employment.
Implications for Employers
This ruling carries several crucial implications for employers managing fixed-term contracts:
Avoid Premature Decisions: Employers must refrain from making hasty decisions regarding the non-renewal of contracts. Premature decisions can lead to claims of dismissal and potential litigation.
Thorough Contract Review: It is essential to meticulously review the terms and conditions of employment contracts. Understanding the obligations and implications of non-renewal can prevent unintended legal consequences.
Individual Risk Assessment: Each contract situation should be evaluated individually. Employers should consider the specific terms of the contract and the expectations of the employee.
Seek Legal Counsel: When uncertain, employers should seek expert legal advice. Navigating the complexities of employment law requires careful consideration to avoid unnecessary disputes.
Conclusion
The FWC’s decision in this case serves as a significant reminder for employers to approach the non-renewal of fixed-term contracts with care. Decisions should be made thoughtfully and with a clear understanding of the potential legal ramifications. By adopting a cautious and informed approach, employers can avoid costly disputes and ensure fair employment practices.
About the Authors
Rachel Drew is a Managing Partner at Holding Redlich in Brisbane, specialising in workplace relations and safety. David Chambers is a Special Counsel at Holding Redlich in Brisbane, with a focus on workplace relations and safety. Maud Beach is a lawyer at Holding Redlich in Brisbane, also specialising in workplace relations and safety.
