19/02/2025
The Full Federal Court has confirmed that a fixed or maximum term contract that ends at the conclusion of its term is not necessarily a termination at the initiate of an employer. Where a fixed or maximum term contract ends in this way an employee cannot bring a claim for unfair dismissal or general protections on the grounds of dismissal, because they have not been dismissed.
Background
In summary, the background to this matter is that:
- Mr Timothy Alouani-Roby was employed by NRL as an NRL referee on a series of separate fixed term contracts between 2015 and 2020
- Mr Alouani-Roby’s final fixed term contract ended in November 2020 and was not renewed or extended by NRL
- Mr Alouani-Roby claimed the decision not to renew his contract amounted to dismissal and that dismissal was unlawful adverse action against him
- Unlawful adverse action resulting in dismissal can give rise to a claim to the Federal Court for damages – but only if the Fair Work Commission provides a certificate permitting a party to file a claim in the Federal Court
- In the first instance, the Fair Work Commission refused to issue the required certificate, because they did not consider Mr Alouani-Roby had been dismissed because his employment ended at the end of the fixed term contract
- Mr Alouani-Roby appealed this decision – first to the Full Bench of the Fair Work Commission which agreed with the initial decision, and then to the Federal Court.
Federal Court Decision
The Federal Court dismissed Mr Alouani-Roby’s appeal.
The key question before the Court was whether “maximum term” or “outer-limit” contracts, being those with a fixed end date but which have other grounds for termination (for example, termination with notice) are captured by the exception at section 386(2)(a) of Fair Work Act 2009 (Cth) (Fair Work Act).
Section 386(2)(a) provides that a person is not “dismissed” from their employment if “the person was employed under a contract of employment for a specified period of time… and the employment has terminated at the end of the period.”
The Federal Court confirmed that maximum term contracts fall within this exception and therefore Mr Alouani-Roby had not been dismissed by the NRL.
Previously Courts had found that “maximum term” contracts may not meet this exception because they are not for a “specified period”. However, the Federal Court considered this section in light of the recent amendments to the fixed term contract provisions and Fair Work Act generally and found that maximum term contracts are now captured by this exception.
The Federal Court also made it clear that the employment relationship in most instances is not entirely separate to an employment agreement – that is, there cannot be an expectation of an ongoing employment relationship without an ongoing employment contract.
Key takeaways
This decision clarifies that a where a properly drafted maximum term contract reaches the end of its term, if it is not renewed this it not taken to be dismissal by an employer. Despite this decision, fixed term or maximum term contracts may still be considered ongoing if they do not clearly provide for an end date so it is critical your fixed term and maximum term contracts are carefully drafted.
Our experienced employment law team is available to assist in review of your fixed or maximum term contracts in light of this decision.