Differentiating between ‘genuine fixed-term contracts’ and ‘maximum-term contracts’
A genuine fixed-term contract is a contract which is specified to last for a defined period of time. The contract automatically comes to an end upon the expiry of that time frame unless both the employee and the employer agree to renew or extend the contract.
A maximum-term contract is one that contains a fixed end date but which gives either party a right to terminate the contract by giving notice, or payment in lieu of notice, before the fixed end date.
Am I entitled to lodge an unfair dismissal claim?
In order to lodge an unfair dismissal claim, you must show that you were dismissed at the initiative of your employer.
Previously, it had been widely accepted that where a fixed-term employment contract came to an end simply because the set time period had expired, and the employer decided not to renew or extend the contract, the employee was not entitled to lodge an unfair dismissal claim. The rationale being the employment had not ended at the initiative of the employer but rather it had expired according to the agreed terms. This principle remains applicable in the context of genuine fixed-term contracts.
However, the recent decision of Saied Khayman v Navitas English Pty Ltd t/a Navitas English  FWCFB 5162, potentially opens the doors for an employee to pursue an unfair dismissal claim in circumstances where an employer has decided not to renew a maximum-term contract. There, the employee had been employed by the employer on a series of maximum-term contracts across the span of 4 years. At the expiration of the last contract, the employer decided not to offer the employee a further contract because of concerns about his performance. The Fair Work Commission found the employee’s employment to have been terminated at the initiative of the employer. As a consequence, the employee was able to pursue an unfair dismissal claim.
Thus, in light of this decision, it may be open for a court, taking into consideration the entire employment relationship – including a sequence of rolling maximum-term contracts and any representations made to an employee by their employer that the employment would continue subject to conduct and performance despite a contractual time limit on the employment – to conclude that a continuing employment relationship exists and that the principal contributing factor that led to the termination of the employment relationship was the employer’s actions.
Please contact our lawyers at McDonald Murholme if you have any further questions regarding this issue.