Failure to renew fixed-term contract was not dismissal

Cases

Failure to renew fixed-term contract was not dismissal

A teacher who had been on a series of three fixed-term employment contracts was not dismissed when the employer chose not to renew his contract for a third time.

A teacher who had been on a series of three fixed-term employment contracts was not dismissed when the employer chose not to renew his contract for a third time.

The employer claimed that lower projected student numbers influenced its decision. A relevant issue in this case was that employees who had been on fixed-term contracts for four years were entitled under their enterprise agreement to request conversion to permanent employment. Had this employee’s contract been renewed for a third time, he would have become eligible when it expired.

Facts of case


The teacher was employed at an education college on a fixed-term contract in 2015. It was renewed in 2016 and 2017. 

The contracts stated there was no guarantee they would be renewed the following year. However, the relevant enterprise agreement stated that employees who had been employed under consecutive fixed-term contracts for at least four years must be offered the option to convert to permanent employees. Had the teacher's contract been renewed again, he would have qualified the next time it expired in 2018, but the college decided not to renew it and his employment ended. 

There was no evidence of unsatisfactory job performance. The college claimed that a projected decline in student enrolments meant the position was no longer required. 

The teacher presented evidence that other employees’ contracts had not been renewed in similar circumstances. He claimed it was a strategy of the employer to avoid its obligation to offer permanent employment after four years. He claimed that he was given no other reason to contradict an expectation of ongoing employment (via contract renewal). He also claimed that employees who did not willingly agree to participate in a particular program did not have their contracts renewed, again citing other employees. 

The college claimed that fewer enrolments meant it had to reduce staff numbers and it chose to retain its most valuable employees. The teacher was simply not one of them. It claimed that it had made it clear to him that there was no ongoing expectation of continued employment. To counter his claim, it said it had offered permanent employment to 15 fixed-term employees and 14 had accepted it.

For the above reasons, the college claimed that the teacher's contract had simply expired, and it had legitimate business reasons not to renew it. 

Decision


The Fair Work Commission dismissed the teacher's claim. The fact that the college had converted 14 fixed-term employees to permanent status refuted the claim that it refused to renew contracts to avoid its obligations under the enterprise agreement. Nor had it misrepresented the situation to the teacher by stating or implying that his contract would be renewed. 

The college had not terminated his employment contract, it had simply expired in accordance with its provisions.

The bottom line: Expiry of a fixed-term contract is not equivalent to termination at the initiative of an employer. Therefore, it does not amount to dismissal.

Whether an employee will legitimately have a reasonable expectation of continuing employment because his/her contract has been renewed more than once will depend on the individual circumstances of the case. Employers are advised to make it clear to employees there is no guarantee that a contract will be renewed or extended.

Read the judgment


M v International Education Services Limited t/a IES Senior College, [2018] FWC 7402, 6 December 2018 
 
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