Unfair: contract terminated before end of project


Unfair: contract terminated before end of project

A road worker whose fixed-project contract was terminated before the project was completed has been awarded nominal compensation for unfair dismissal.

A road worker whose fixed-project contract was terminated before the project was completed has been awarded nominal compensation for unfair dismissal.

The Fair Work Commission rejected the employer’s argument that the project was “substantially completed” (about 85%) and it no longer needed the employee.

Facts of case

Michael Newton was employed for about seven months on a road-building project. The employer (Lendlease) claimed that he was employed on a contract for a specified task, and his employment ended upon completion of the task.

One issue in this case was the distinction between a “task” and a “role”. A specified task may be described as an identifiable project or job by which a specific result is achieved. A role may include also performing other work outside the scope of the specified task. 

Mr Newton’s contract specified the following:
  • He was employed as a labourer, with a position classification under an enterprise agreement.
  • The “project” was building an upgrade of a major highway.
  • He was employed until either the project was completed or the work he was to perform on the project was completed.
  • Employment could be terminated by either party earlier than the above if in accordance with the enterprise agreement.
  • The duties he would perform could be outside the scope of his job description.
Mr Newton’s actual work was partly as a labourer and partly as a roller operator. The contract did not specify either a distinct piece of work or a specific result to be achieved by him. Therefore, the Fair Work Commission (FWC) found that he was not employed on a specific-task contract.
Lendlease decided to end his contract when overall work on the project was about 85% complete. It did not require as many employees to finish the project, so it abolished several roles, including Mr Newton’s.  At the time, there was no specific task that he had completed and the work he had originally been employed to do had not concluded. 
Lendlease terminated the contract by giving Mr Newton a letter with a finishing date and by paying one week’s pay in lieu of notice. 

Dismissal was unfair

The FWC found the dismissal to be unfair for the following reasons:
  • The contract was vague as to how long Mr Newton would be employed. Lendlease could unilaterally and without notice decide that the project was completed. In this case, there was still some labourer and roller operator work remaining to be done.
  • He was dismissed because Lendlease no longer required his role to be performed by anyone, but did not consult with him about abolishing it, did not take his personal circumstances (including dependent children) into account and did not assist him to find other work (although he did so soon afterwards). 
  • He was aware of how work on the project was progressing, but the possibility of retrenchment was never mentioned to him. 
The FWC estimated that he would otherwise have remained employed for a further two weeks, so it awarded him compensation of two weeks’ wages ($728.62).

The bottom line: The employer lost this case because the contract was worded too vaguely, with the FWC finding it was not a contract for a specified project. When the employer dismissed the employee while there was still work of his type to be completed, it did so without notice or consultation, which made it unfair.

Read the judgment

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