F I X E D T E R M C O N T R A C T S

Transcription

1 FIXED TERM CONTRACTS

2 Historical Background of Fixed-Term Contracts Fixed-term employment has a long history in Australia. Prior to the formalisation of the arbitration system in the early 1900s, labour relations were based on the various versions of the Master Servant Acts. Under these Acts, all employees were effectively engaged for a fixed-term. Employment contracts were of yearly, weekly or daily duration. The Acts contained harsh penalties (a hefty fine and up to 3 months hard labour) for employees (or servants) who departed their employment with a particular master, before the expiry of their term of service.

3 Definition While there is no specific definition of a fixed-term contract in employment statutes, industrial tribunals and the courts have attempted to provide some clarification. A fixed-term contract of employment for a specified period of time has usually been defined by the courts as one where the start and end times are unambiguously identified by a term in the contract. Fixed term contracts of employment are some times referred to as Outer Limit Contracts.

4 Fair Work Ombudsman Fixed Term Contract Employees Fixed term employees are employed for a specific period of time or task. For example, a 6 months contract where employment ends after 6 months. Fixed term employees are different to permanent employees who are employed on an on-going basis until the employer or the employee ends the employment relationship. Fixed term contract employees are usually full-time or part-time. Full-time or part-time employees are generally entitled to the same wages, penalties and leave accruals as permanent employees. An award or registered agreement may provide extra terms and conditions for a fixed term employee.

5 Queensland Catholic Schools Agreement Clause: 3.6 Fixed Term Contracts

6 3.6.1 Use of fixed-term contracts Teachers (a) Fixed-term contracts identified as meeting an identifiable short term need (b) Employees whose positions are identified as continuing positions will be appointed to continuing status (c) It is recognised that in some exceptional situations, a teacher may accept appointment to a series of fixed-term appointments for a series of identifiable short term needs. (d) An employer will employ an employee on a fixed-term contract of employment only where the employee is appointed to cover an identifiable short term need.

7 3.6.1 Use of fixed-term contracts Teachers (e) An identifiable short term need could include: (i) Special projects (ii) Proposed closure of a school (iii) Short term funding (iv) Filling the position of a specified employee who is on nominated leave from the school (e.g. Maternity leave.) (v) Filling the position of an employee arising from a resignation, where such position is declared vacant an not suitable permanent employee is available (vi) Accommodating temporary enrolment fluctuations in a school resulting from a specific short term factor such a population influx during the construction period of an industrial development.

8 3.6.1 Use of fixed-term contracts Teachers (e) An identifiable short term need could include: (vii) Providing release time for senior administration staff in a school where the relevant arrangements vary for a specific short term arrangement and consistent with clause (f) (viii) Employing part-time teachers to address class size issues and/ or enhance curriculum offerings on a short-term basis (f) Part-time teachers, specialist teachers, graduate teachers and those providing release for senior administration will not as a matter of course be employed on a fixed-term basis (g) A fixed-term contract of employment will not be used as a probationary period.

9 3.6.1 Use of fixed-term contracts Teachers (h) Where an employer employs an employee on a fixed-term contract, the employer will indicate in the employee s letter of appointment the identifiable short term need which the employee is appointed to fill. The letter of appointment will also contain the terms, conditions and specific duration (commencement and cessation dates) of the appointment (i) Except as provided in clause (e) a fixed-term employee will not be employed for a period in excess of twelve (12) months. However, if the identifiable short-term need exists after the twelve (12) month period, a further fixed-term appointment (no longer than twelve months) may be agreed between the parties. Any agreement reached between an employer and an employee as prescribed by this clause shall be in writing and signed by both parties:

10 3.6.1 Use of fixed-term contracts Teachers (i) (i) Where and employer receives short-term funding for a specific purpose/ project and that funding covers a specified period which is excess of twelve (12) months then an employee may be appointed for that specific period of time; or (ii) Where an employee is provided with a period of parental leave in accordance with clause 6.7 of the Agreement which is in excess of twelve (12) months then an employee may be appointed on fixedterm contract for that specified period of time; or (iii) Where an employee commences on a specified period of approved leave paid and/or unpaid) which is in excess of twelve (12) months then an employee may be appointed on a fixed-term contract for that specified period of time (j) conversion from fixed-term to Continuing Status The employer will provide information to any teacher on a fixed-term appointment of the procedures to be followed and the criteria to be used if the teacher wishes to apply for continuing status.

11 3.6.2 Use of fixed-term contracts School Officers In relation to School Officers and the use of Fixed Term Contracts, similar provisions to those applying to teachers apply. Specific reference should be made to Clause in the current agreement.

12 Effluxion of time Where a contract provides for employment for a fixed term, the contract will automatically end when the term expires unless it is lawfully terminated, by either party, in some other way in the interim. However, if, without expressly extending the term of the contract, the employment continues beyond the expiry of the fixed term, a court may conclude that a new contract period has commenced. The employer could not then rely on the expiration of the fixed term contract to justify termination. A failure by the employer to renew a contract that is part of a series of contracts may, for the purposes of unfair dismissal legislation, amount to termination by the employer rather than a termination by the effluxion of time (Source Law of Employment, 1997, J Macken (et al). Lawbook Co)

13 Creation of a New Contract At the conclusion of the fixed-term, if an employee continues to work for the employer without a formal extension of the fixed term contact, even by one day, then the law will treat such as a creation of a new on-going employment agreement that has the same terms of the previous agreement, without the fixed-term. Given this, employers should always do one of three things when a fixed-term contract is nearing the end of their contract period: 1. Notify the employee that upon expiration of the fixed-term, their services will no longer be required and the employment will come to an end; or 2. Notify the employee that the employer wishes to extend the fixed-term agreement for a further period; or 3. Enter into a new on-going employment agreement with the employee.

14 Termination and Unfair Dismissal Where an employee has been employed for a specified period of time, and the employment is terminated at the end of that period, then the employee will NOT be able to make an application for unfair dismissal. However, if a fixed-term agreement is terminated prior to its expiration date (for any reason other than for misconduct, then two issues arise: 1. Is the employer obliged to pay out the employee until the expiration date? 2. Can the employee make an application for unfair dismissal? Firstly, the employer should ensure that the fixed-term agreement contains clear words that allow the employer to prematurely terminate the agreement for any reason. This will ensure that the employer s obligation to pay the employee remuneration ends at the termination date (other than notice of termination and leave entitlements). Secondly, the employee cannot make an application for unfair dismissal unless the minimum period of employment has been worked.

15 Notice Period No notice period is required provided: fixed-term contract for a specified period terminates by the passing of time at the end of the period, and not by termination at the initiative of the employer.

16 Redundancy Pay Under the FWA s123(a), an employee is not entitled to redundancy pay if they are employed for a specified period of time, a specified task, or for the duration of a specified season. This means an employee whose position no longer exists because the specified period of the contract has lapsed is not entitled to redundancy pay. However, if an employee becomes redundant prior to the specified period of time, and the employee has completed at least 12 months continuous service with the employer, (and provided the employer employs 15 or more), then there would be an entitlement to redundancy pay. (see FWA S121 (1) (a) under the NES) (Source: Workplaceinfo Fixed-term contracts and periods of notice)

17 Description The description of a fixed-term contract of employment has evolved over the years primarily. This may have occurred because of a number of judicial decisions that attempt to clarify matters relating to this kind of employment. s386 Meaning of dismissed (2) However, a person has not been dismissed if (a) the person was employed under a contact 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 or the completion of the task.

18 Cases Department of Justice V Lunn (2006) 158 IR 410 [10] The act appears to retain the common law position that when a contract for a specified period reaches the nominated end date, the contract terminates through the effluxion of time and there is no further employment at the initiative of the employer. In this case there was no termination of employment.

19 Cases Fraser v ACT for Kids [2016] FWC 5052 (27 July 2016) Here the FWC was asked to consider a jurisdictional objection by the employer to an application for unfair dismissal remedy lodge by the applicant who was employed between 30 March 2015 and 1 April Summary The applicant claimed that she was not aware that he employment was for a fixed term. The Commission, on that occasion, was not satisfied that the terms entered into by the parties provided a clear and unambiguous fixed period of time. The original advertisement lodged by Act for Kids made no mention of the employment being for a fixed term period At interview, it was stated that it was a fixed term contract of 12 months and The applicant was informed in writing of the employment period

20 Cases Kids (cont d) The Commission noted the contradiction of what was said at interview and the letter of engagement specifically: The terms and conditions referred to in the letter constitute all of the term and conditions of your employment and replace any prior understanding or agreement between you and the employer. The letter of engagement contained a termination clause replicating the table of notice required by the NES. The remuneration clause in the letter of engagement was deemed to be more suitable for an open-ended employment agreement because it stated: Your remuneration will be reviewed annually, and may be increased at the employer s discretion.

21 Cases Kids (cont d) The letter of engagement contained a paragraph commencing, Your on-going employment is subject to prior to the expected end date of 31 December, 2017 Provides further ambiguity and uncertainty as to whether the term is a fixed term ending on 1 April A recent case study involving a fixed term contract

22 Recent example of a letter of appointment Letter dated 23 November with actual wording I extend the offer of a contract teaching position to now finish on Friday, 2 December 2016

23 QCEC template letter for Fixed Term Contracts Catholic Schooling Authority identified confirm the offer of a e.g. full-time teaching position Commencing on dd/mm/yr and finishing (contract) dd/mm/yr. The identifiable short term need for this contract position is due to a current staff member on < insert reason for leave e.g. LSL or maternity leave>. The provisions of the Fair Work Act 2009, relating to the minimum period of employment applies to this fixed term contract. Your employment with the <insert name of employer> will cease at the conclusion of this fixed term contract, unless, otherwise extended in writing by <inset name of employer>. Your employment may be terminated prior to the end of this fixed tern contract as a result of a breach of the Code of Conduct.

24 QCEC template letter for Fixed Term Contracts Should circumstances exist at the end of this fixed term contract, whereby a position becomes vacant, the <insert name of employer> reserves the right to advertise the position externally and conduct a merit-based recruitment and selection process. In order to be considered for appointment to the vacant positon, you need to participate in recruitment and selection process. Remuneration and general conditions of employment are determined by the Catholic Employing Authorities Single Enterprise Collective Agreement <insert RI or diocesan

25 General comments There is a perception among some employers (generally) that a fixed-term arrangement is designed to circumvent a restriction on employing additional permanent staff. This can create problems for employers because, in certain circumstances, an employee s employment status does not accurately reflect the nature of the employment relationship with the employer. Consequently there can be a perception that a person on a fixed-term contract is different to a permanent employee and, subsequently, their entitlements under the industrial instrument or employment legislation are in some way different.

26 General comments Another common misconception is that a fixed-term employee is actually a Casual employee with monetary compensation of entitlements foregone. This has also created problems for employers regarding breaches of industrial instruments and / or employment legislation. Generally, the longer the period of a fixed-term contract the more likely the employee is entitled to an increasing number of employment conditions. The greater the number of end-to-end fixed-term contracts, the more likely it could be perceived as being a sham. A fixed-term contract employee whose employment is covered by an industrial agreement is entitled to the minimum benefits under that instrument.

27 Key take away points for employers To mitigate the risk of inadvertently creating a permanent and ongoing employment relationship, we recommend that your organisation: Maintains a register including all fixed term contracts of employment to easily identify when contracts are due to expire and whether any employees have been engaged on a series of fixed term contracts of employment. Carefully draft fixed term contracts of employment to ensure that they are legally compliant with the legislation, include relevant terms and conditions, clearly specify the end date, and are tailored to the specific circumstances of each employee. Implements a formal procedure for the review and renewal of fixed term contracts. Manage the expectations of its employees if an employee has a reasonable expectation that the fixed term contract will be extended or renewed (for instance, because it has been renewed on several occasions in the past), your failure to renew the contract may amount to you initiating termination of employment. If your organisation is not seeking to extend or renew an employee s fixed term contract of employment, consider whether there are any risks that the employee may feel discriminated against or unfairly treated and seek advice to mitigate those risks.

28 Phil Whitehouse Manager Workplace Relations Queensland Catholic Education Commission Telephone: or mobile Ian Naylor Executive Officer Workplace Relations Queensland Education Commission Telephone: or mobile