s.170CE application for relief in respect of termination of employment

[1] In this matter the applicant, Mr Hughes, has lodged an application under s.170CE. The respondent contends that the application should be dismissed for want of jurisdiction in that there was no termination of employment at the initiative of the employer. Mr Hughes was represented by Mr Crampton (ALHMU) and the respondent by Mr Lunny, solicitor.

[2] Evidence was given by Mr Hughes and by Ms Shakes for the respondent.

[3] Mr Hughes was employed by the respondent in response to an advertisement for a "building attendant/union steward." The ad specified that the appointment was for one year at the Clayton campus. The applicant noted in his diary at the time "unsure from interview about if I become permanent after 12 months!" On 12 June 1998 he signed a letter of appointment which stated, "This offer is for an appointment from 2 June 1997 to 1 June 1998."

[4] Ms Shakes gave evidence that the applicant was employed to replace a Mr Munro who had been transferred to a position as a cleaner. There were two other stewards employed at the time both of whom were ongoing employees. The decision was made to offer the applicant a 12 month contract because of the uncertainty surrounding the creation of a new company, Monash Unicom, which was to take over the responsibility for management of union facilities.

[5] In September 1997 Mr Hughes suffered a work related injury which caused him to take some periods of time off work and eventually in March 1998 to have surgery which resulted in him being unable to work for almost three months. On 30 April Mr Hughes contacted Ms Shakes about renewing his contract. He was advised that a further contract would be offered but only for six months. On 12 May 1998 the applicant signed a document accepting the offer of appointment from 2 June 1998 to 2 December 1998.

[6] Mr Hughes returned to work on 1 June 1998 but was put off again due to his injury on 3 July 1998. He returned to work on 16 November 1998. On 18 November the applicant spoke to Ms Shakes about his contract being renewed. On 19 November he received a letter from the university advising him that his employment would cease on 2 December 1998. The reason given for not renewing the contract was that the position was not required as similar duties were being carried out by others.

[7] Ms Shakes agreed that a Mr White had been appointed to a casual position to fill the role held by Mr Hughes while he was off. She stated however that for most of the year because of Mr Hughes' absence and other stewards on holidays or long service leave she effectively had only two stewards.

[8] Just prior to Christmas 1998 Ms Shakes was informed by Mr Irby, one of the two stewards, that he intended to retire in June 1999. In late February 1999 this position was advertised and a letter was sent to Mr Hughes inviting him to apply. It was the applicant's evidence that he did not receive that letter.

[9] In cross examination, Ms Shakes stated that Mr White had been employed as a full-time employee to fill Mr Irby's position. She stated that she was not aware that Workcover legislation required an employer to hold open a position for a person on Workcover for twelve months. She stated that the fact that the applicant was on Workcover had not influenced the decision to extend his contract. She understood he was due to be able to return to work in June 1998. She agreed that in November 1998 the duties being performed by Mr Hughes were still there. The position advertised in February was advertised as a continuing position because it was to replace someone who held a continuing position.

[10] Mr Hughes stated that he presumed at the time of his appointment that at the end of the twelve months he would become a permanent employee like everyone else. He accepted the six month extension because at the time he was off work with a work related injury and was concerned about job security.

[11] In cross examination Mr Hughes agreed that it was clear from the advertisement that the job was for one year. He agreed that he signed a letter confirming this. He agreed that if he was uncertain about what would happen after twelve months he could have cleared it up with Ms Shakes. He agreed that had he done so she would have confirmed that it was a twelve month term. He agreed that he was concerned that if the contract was not renewed his employment would terminate.

[12] Mr Hughes further agreed that he did not accept the second, six month, contract as a result of duress by Ms Shakes or the union. He was given the choice and considered it to be in his best interest to take it. He raised the issue of contract renewal in November 1998. He agreed that the letter he received on 19 November 1998 confirmed his worst fears that his contract would not be renewed.

[13] In re-examination Mr Hughes stated that his only alternative to accepting the second contract was to go back on Workcover.

[14] Mr Lunny submitted that the employment relationship in this matter was at all times subject to a fixed term contract. Termination occurred as a consequence of the effluxion of time of a fixed term contract. He referred the Commission to Roos v. Monash University [Print Q2529] a decision of Watson SDP which also refers to Victoria v. the Commonwealth [1996] 187 CLR 416 and Fetz v. Qantas Airways [Print Q1482]. Mr Lunny summarised the facts in Roos and referred to His Honour's conclusions:

"The terms of the applicant's final contract made it clear that, whilst in exceptional circumstances it might be terminated early at the initiative of either party and with due notice, the contract would not extend beyond the period in the letter of offer. It is clear that whilst early termination was possible, the contract would not extend beyond the agreed period. That period was accepted by the applicant. As a matter of law, having regard to Victoria v the Commonwealth and Qantas Airways Ltd_, the termination occurred as a result of the effluxion of time in accordance with the parties' agreement and not at the initiative of the employer."_

[15] In the circumstances of this case it could hardly be described as a pattern of such continuous regularity that the contracts became a matter of form rather than substance. The same reasoning as in Roos should apply here. Each of the contracts had unambiguous end dates and were accepted in writing by the applicant. There was nothing unreal, unconscientious or oppressive in the use of fixed term contracts. Their use could not be described as an artifice. This distinguishes this case from the line of cases exampled by D'Lima v. Board of Management Princess Margaret Hospital for Children (1995) 64 IR 19.

[16] Mr Lunny also referred to a decision of the Federal Court in D'Ortenzio v. Telstra Corporation [1998] 877 FCA (22 July 1998). Both at first instance and on appeal the Court found that an unequivocal fixed term contract being manifest, in the absence of termination at the initiative of the employer, no jurisdiction could be sustained.

[17] Mr Lunny further referred to two of the cases relied upon by the applicant both of which related to regulation 30B(1)(a). In Parks v. John Bertram and Associates [Print P6363] the applicant's employment was terminated after the expiry date of her contract had been reached and passed. If you play on it is not self terminating anymore. In Swan v. Ballarat & District Division of General Practice Inc. [Print Q5915] the Commissioner had doubts about the clearly ambiguous and uncertain manner in which the contract was set up. This is quite different from the unequivocal, one might say, inexorable provisions, in this case. If deciding not to renew the contract was in some way in breach of the Accident Compensation Act, which is denied, Mr Hughes' remedy is under that legislation.

[18] Mr Crampton submitted that the contracts of employment provided to the applicant were not fixed term contracts as such. In the alternative they were a sham to avoid the obligations or any consequences of not employing someone in accordance with the requirements of the Workcover legislation, or to avoid their obligations under the Act in respect of applications for unfair dismissal. He submitted that there was no difference between a contract for a specified period of time and a fixed term contract. If the contract was not for a specified period of time it was not for a fixed term.

[19] For a contract to be for a fixed term, there needs to be a clear and unambiguous end date, and the contract cannot have terms allowing for its termination by the giving of notice. Mr Crampton referred the Commission to Cooper v. Darwin Rugby League Incorporated 57 IR 238. In particular he referred to the following paragraph:

"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." per Northrop J. (p.241)

He drew the Commission's attention to the fact that in this case the contract had a notice period for termination.

[20] Mr Crampton further referred to the decision of von Doussa J in Andersen v. Umbakumba Community Council 56 IR 102 at 105 and 106 and to his honour's conclusion that the contract was indeterminate because of the ability to terminate:

"In the present case cl. 3 and Schedule 1 of the Employment Agreement clearly state both a commencement date for the employment and a cessation date, but in light of the right on either party to the contract arising under cl. 21(c) to bring the employment to an end on two weeks 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 Schedule 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."

[21] In Mr Crampton's submission, although in this case there was an ending period of the contract, there was still a termination at the initiative of the employer because, the contract was not a fixed term contract in the true sense and meaning of a contract for a fixed period of time.

[22] Further he submitted that the arrangement for employing the applicant under the contract was primarily constructed to avoid the obligations under the terms of the Act. He referred the Commission to Parks v. John Bartram and Associates and to Swan v. Ballarat & District Division of General Practice Inc..

[23] Mr Crampton made further reference to the applicant's contract and to the terms of the applicable award both of which indicate that the contract could be terminated by the giving of notice or payment in lieu thereof.

[24] Mr Crampton further sought to distinguish the cases cited by Mr Lunny on their facts. He submitted that each of those decisions related to fixed term contracts that are unambiguously identified in respect of end dates (e.g. Fisher v. Edith Cowan University (1997 IRCA 98, 2 April 1997) and Roos v. Monash University). He submitted that in D'Ortenzio v. Telstra the distinguishing factor was that the contracts were clearly known to be for a specified period of time to cover a particular need which was not ongoing. The evidence in this case clearly identifies that there were three ongoing positions for union stewards. The applicant filled one of these. When he was unavailable for work because of his injuries his position was filled by a casual. The work being done by the applicant continued to be done in his absence and is continuing to be done. The work is ongoing. On that basis the issue of whether the contracts of employment were designed to avoid the employer's obligations under the Act becomes evident.

[25] The authorities clearly show that a contract which is not clearly identified as having an end date, cannot truly be characterised as a fixed term contract. In the alternative the offering of the second contract was deliberately designed to avoid any tension or conflict in respect of the employer's obligation to provide ongoing employment under the terms of the Workcover Act.

[26] In reply Mr Lunny submitted that the cases concerning exclusion by virtue of the regulations have no application in this case. This case involved what might be called an "outer limit contract." The outer limit was understood with great clarity by all of the parties. There was no ambiguity about the dates and the pivotal importance of those dates. It is a contract whose outer limit was reached. The assertions of the applicant that the contracts were designed to defeat a claim under the Act are unsupported by any evidence and were never put to the witness.

[27] Section 170CE(1) provides for an employee whose employment has been terminated by the employer to seek relief by way of application to the Commission. Section 170CD defines "termination of employment" as "termination of employment at the initiative of the employer." Relief under the provisions of the Act therefore requires that the employment came to an end and the termination was one in which the action of the employer was the principal contributing factor leading to the termination of the relationship (see Mohazab v. Dick Smith Electronics Pty Ltd 62 IR 200). The termination of an employment relationship may occur because one or other of the parties initiates its termination; it may terminate because it is no longer possible for it to be performed; it can terminate by agreement of the parties; or by virtue of a statutory requirement; or it can terminate because it has reached its end date. Whether the termination of employment was at the initiative of the employer is a matter of fact. Unless that fact is established the Commission has no jurisdiction to grant relief under Division 3 of Part VIA.

[28] Even where it is established that the termination was at the initiative of the employer an employee may be excluded from bringing proceedings under Division 3 of Part VIA because of the operation of s.170CC. That section provides for the exclusion of certain classes of employers from the operations of specified parts of Division 3 by way of regulation. Regulation 30B(1)(a) excludes from the operation of the Division "an employee engaged under a contract of employment for a specified period of time" unless regulation 30B(2) applies i.e. "if a substantial purpose of the engagement under a contract of their kind is, or was at the time of the employee's engagement, to avoid the employer's obligations under subdivision B, C, D or E of Division 3 of Part VIA of the Act."

[29] It is not contended in this case that the applicant is excluded from the operation of Division 3 of Part VIA because he was "an employee engaged under a contract of employment for a specified period of time." Therefore neither Regulation 30B(1)(a) or 30B(2) apply. It is contended that Mr Hughes was employed under a contract of employment which specified an end date of 2 December 1998. That date having been reached the contract expired. The termination was therefore not at the initiative of the employer but as a result of the effluxion of time.

[30] As the High Court found in Victoria v. the Commonwealth 133 ALR 129 at 173:

"It is also necessary to consider whether, in terms, the prohibitions in ss 170DB, 170DC, 170DE(1) and 170DF impair the right of the States to determine `the term of appointment [of those whom they wish to employ]' [290]. The relevant words of each prohibition are that `[a]n employer must not terminate an employee's employment'. In the case of s 170DC, the prohibition is elaborated by reference to a specific reason and, in the case of ss 170DE(1) and 170DF, by reference to specific reasons. As a matter of ordinary language, an employer does not terminate an employee's employment when his or her term of employment expires. Rather, employment comes to an end by agreement, or, where the term is fixed by award or statute, by operation of law. There is nothing in the Act to suggest that the words `[a]n employer must not terminate an employee's employment' are to be construed other than in accordance with their ordinary meaning. So construed, they do not apply to the situation where employment comes to an end because its term has expired. To put the matter another way, the prohibitions are concerned with termination for reasons unconnected with the term of employment. And that is manifestly clear when regard is had to ss 170DC, 170DE(1) and 170DF. The prohibitions effected by those sections are directed, respectively, to termination for a specified reason and termination for one or more specified reasons, none of which includes the expiry of the employee's term of appointment."

[31] Mr Crampton sought to argue, in this case, that if the contract did not meet the description of being "for a specified period of time" then its term could not be fixed in such a way as to provide for its expiry once the end date had been reached.

[32] I am not of the view that either Cooper v. Darwin Rugby League Inc. or Andersen v. Umbakumba Community Council lend support to that contention. In Cooper's case Northrop J specifically refers to the fact that the contract was terminated prior to its expiry date (p241):

"One thing is clear. The employment of the applicant was terminated by the unilateral act of the respondent. The employment was not terminated by agreement of the employer and employee. It was not terminated by effluxion of the period of time specified in the contract of employment."

[33] In the description of the contract in Andersen's case, where again the contract was terminated prior to its expiry date, von Doussa J referred to the "cessation date" as merely recording the outer limit of a period "beyond which the contract of employment will not run."

[34] While the fact that a contract may be terminated prior to its expiry date may disqualify it from being considered to be for a "specified period of time" as defined by Regulation 30B(1)(a) it does not mean that the contract can be regarded as having no valid outer limit. It is clear from Cooper's case that had the contract reached the date specified as the outer limit, in Northrop J's view, the applicant would have been excluded from bringing his claim. The contract would have been terminated by the effluxion of time.

[35] Mr Lunny acknowledged that there were cases where failure to renew a temporary or fixed term contract could be found to be a termination of employment at the initiative of the employer. In D'Lima's case cited by him, Marshall J found:

"The practice of signing of further contracts for alleged periods of temporary employment appears to have been one of mere administrative convenience and cannot compel the Court to ignore the weight of strong countervailing factors indicating a continuous employment relationship."

[36] I am satisfied that the evidence in this case does not establish any "strong countervailing factors" favouring a finding of a continuous employment relationship. On the contrary the applicant was only too aware of the limitation on his employment expressed in the contracts he signed.

[37] In D'Ortenzio v. Telstra Corp, the Full Court of the Federal Court stated:

"We are satisfied that there was substantial evidence before the primary judge on which he could make the findings which he made. We are satisfied that he made no errors of law in the findings of fact he made or in the conclusions which he based on those findings. The nature of the applicant's employment was such that, in our opinion, not only was it open to him to find, but that he was bound to find_, that there was no termination of the applicant's employment at the initiative of Telstra but rather that her employment was terminated by effluxion of time as the result of the coming to an end of a fixed term contract."_

[38] Having formed the same view in this case, and having been satisfied that the exception to such a finding which might arise from the principles in D'Lima do not apply, I am of the view that the Commission lacks jurisdiction to entertain the applicant's claim. If the employment was not terminated at the initiative of the employer, then the merits or otherwise of the failure of the employer to offer the applicant further work are not matters with which this Commission can deal.

Termination of employment - unfair dismissal - jurisdiction - whether applicant on fixed term contract - whether termination at initiative of employer - case law on 2 issues extensively discussed - found contract unequivocally fixed term - termination not at initiative of employer: result of effluxion of time - Commission lacks jurisdiction - application dismissed.

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