Note: An appeal pursuant to s.604 (C2010/3817) was lodged against this decision - refer to Full Bench decision dated 6 August 2010 [[2010] FWAFB 5455] for result of appeal.

[2010] FWA 3534

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FAIR WORK AUSTRALIA

DECISION



Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Mark Drummond
v
Canberra Institute of Technology
(U2009/12914)

COMMISSIONER DEEGAN

CANBERRA, 4 MAY 2010

Termination of Employment – jurisdiction

[1] This matter arises from an application for unfair dismissal remedy filed on 14 October 2009 pursuant to s.394 of the Fair Work Act 2009 (“the Act”) by Mark Drummond (“the applicant”) in relation to the termination of his employment by Canberra Institute of Technology (“the respondent”).

[2] The application was the subject of an unsuccessful conciliation conference on 6 November 2009 and on 23 November 2009 a directions conference was held with the parties to determine the manner in which the application would be dealt with further.

[3] On 17 November 2009 the respondent filed a notice of objection to the application asserting that Fair Work Australia had no jurisdiction to deal with the application as there was no dismissal within the meaning of s.386(1) of the Act. The respondent claimed that the applicant’s contract of employment ceased at the end of the period specified in the contract and in accordance with the provisions of s.386(2)(a) the termination of his employment was excluded from the operation of the unfair dismissal provisions of the Act.

[4] On 23 November 2009 directions were issued for the filing of submissions and witness statements in relation to both the jurisdictional objection and the substantive application. At the directions conference it had been agreed that the jurisdictional objection and the substantive matter would be dealt with at the same hearing.

[5] On 18 December the respondent filed submissions in relation to the jurisdictional objection.

[6] On 12 January 2010, the respondent wrote to Fair Work Australia requesting that the question of jurisdiction be dealt with in advance of the arbitration of the substantive matter. Following a further directions conference on 20 January 2010 I issued new directions requiring the applicant to respond to the respondent’s submissions on jurisdiction by 10 February 2010, and for any reply by the respondent to be filed by 17 February. The matter was listed for hearing of the jurisdictional objection alone on 22 February 2010.

[7] On 10 February 2010 the applicant filed by email various submissions and other documents, many of which were duplicates, on more than six different occasions. He then forwarded to FWA further documents (including amendments to submissions filed earlier) on 15, 16 18 and 19 February 2010.

[8] On 17 February 2010 the respondent filed a response to the applicant’s submissions which had been filed prior to that date.

Background to the termination

[9] The applicant was employed on a series of contracts between 2003 and 2009, with each contract commencing at or near the end of the previous contract.

[10] The applicant commenced employment with the respondent’s Faculty of Science and Technology as a part-time teacher on 13 June 2003 on a 2 year contract to 15 June 2005. During this initial contract, amendments were made to the contract to reflect that the applicant was working a full-time teaching load.

[11] On 23 May 2005, the applicant signed a second teaching contract that commenced on 16 June 2005 and finished on 15 June 2008.

[12] On 13 June 2008, the applicant signed a third teaching contract for the period 16 June 2008 to 16 June 2009 also with the Faculty of Science and Technology. This third contract was replaced by a contract (“the final contract”) which ran from 4 May 2009 to 30 September 2009, for the applicant to work in the respondent’s Centre for Education Excellence (“CEE”).

[13] On 30 September 2009, at the end of this final contract, the applicant was not offered another contract.

The respondent’s submissions

[14] By way of background the respondent noted that the applicant had been employed with the CIT from 1999 on a casual basis. He commenced a series of temporary employment contracts in 2003. The last contracted date of employment for the applicant was 30 September 2009.

[15] According to the respondent, early in 2009 the applicant was uncertain of his future with CIT and sought some certainty from his employer. It was put that the applicant made a request for permanency, which he now asserted as an entitlement. In addition, as he was uncertain of his future employment with CIT the applicant entered into discussions with the CEE. The last of his fixed-term contracts 1 was with CEE. It was not a teaching role, but a project role involving curriculum-setting, and quite different to the work the applicant had engaged in previously with the CIT.

[16] The respondent also noted that there was an overlap between the applicant’s last teaching contract 2, and the contract with the CEE. It was the submission of the respondent that the CEE contract effectively brought to an end the last teaching contract and became the contract, the expiration of which brought about the end of the applicant’s employment.

[17] According to the respondent, the applicant’s last working day was 20 July 2009. From that date until the expiration of the final contract he was on sick leave (stress-related). The applicant had been invited to apply for either a band 1 or a band 2 teaching position but did not take up the opportunity, despite being advised that he would not be made permanent in the absence of a merit selection process. The respondent believed that the applicant was claiming that he had an expectation that he would be made permanent on the basis several things; discussions he had had with staff at the CIT, the terms of the CIT Union Collective Agreement for Teaching Staff 2006-2009 (“collective agreement”) and the provisions of the Public Sector Management Act 1994 (ACT) (“Public Sector Act”). It was the respondent’s submission that there was no evidence arising from any of the matters raised by the applicant that could justify an expectation of permanency.

[18] It was submitted by the respondent that the final contract between the applicant and respondent ended on 30 September 2009 and the applicant’s employment ceased due to the effluxion of time, thus there was no dismissal, or termination, at the initiative of the employer as required by s.386(1) of the Act.

[19] The respondent submitted further that, despite the applicant’s claims relating to discussions of longer-term employment prior to the commencement of the final contract, and his contention that the final contract should not have been entered into, ultimately the contract had been signed by both the applicant and respondent and reflected the finalised agreement between the parties.

[20] According to the respondent the use of short term contracts was in line with the nature of the business of the respondent, which was “the provision of educational programs in response to student demand…” 3 It was argued that while section 108(1) of the Public Sector Act provided that a fixed term contract may not exceed 5 years, that section was not a bar to a series of contracts which might cumulatively exceed 5 years.

[21] It was the respondent’s submission that as the applicant was employed under a fixed term contract which had expired with the effluxion of time, his application could only fall within the jurisdiction of Fair Work Australia (“FWA”) if it could be shown that a substantial purpose of the employment of the applicant under a contract of that type was to avoid the employer’s obligations under the unfair dismissal obligations of the Act. It was put that it was for the applicant to satisfy FWA that his application fell within the exception in s.386(3) of the Act.

The applicant’s submissions

[22] The applicant had prepared his response to the jurisdictional objection largely on the premise that the respondent was arguing that he had been employed under a “contract for a specified period of time”, noting that the term had a very specific meaning under the legislation. As the contract under which he had been employed had been capable of termination other than by effluxion of time or for fundamental breach, he considered he would be able to dispose of the respondent’s argument. When, at the commencement of the hearing, counsel for the respondent made it clear that the respondent’s argument did not rest a claim that the applicant was employed under a “contract for a specified period of time” much of the applicant’s prepared submissions were no longer relevant.

[23] The applicant acknowledged that his research had alerted him that there was more to the “effluxion of time” argument than that which relied on the existence of a contract for a specified term. 4 Consequently he submitted that it was his intention to rely upon the authority of D’Lima v Board of Management, Princess Margaret Hospital for Children (1995-1996) 64 IR 19 (“D’Lima”) in order to assert a claim to jurisdiction based on the fact that he had been employed on a series of contracts and had a legitimate expectation of ongoing employment. The applicant alleged that his employment on a series of non-ongoing contracts in itself constituted breaches (albeit of a careless or negligent type) of the collective agreement which governed his employment by the respondent, and the Public Sector Act.

[24] Essentially the applicant argued that he believed that he had effectively been promised ongoing employment; the contact ending on 30 September 2009 being the first of two he had been promised. He noted that “in the second period I would be indeed required to undergo a merit process for subsequent employment”. 5 According to the applicant he had emails which showed that he had been promised ongoing employment in the CEE well beyond the terms of the 30 September contract. Although he had been unhappy with some aspects of the contract with the CEE (particularly relating to a limitation on teaching duties he was able to perform concurrently with the contract), he had refused the offer made by the CIT to have that contract set aside and to return to his previous teaching contract as he was reluctant to “relinquish my meagre rights to that contract and fall back on a contract ending on 16 June.”6

[25] In relation to the claim that he was urged to apply for other positions during the term of his final contract the applicant claimed that he had refused to make an application as “the CIT …were kind of trying to force me to apply for what turned out to be a two-year temporary contract.” According to the applicant, “When it was advertised there were all manner of problems, I felt, with the ad. It didn't mention teaching at degree level, it didn't mention teaching at graduate diploma level, it didn't mention teaching forensics, it didn't mention even teaching statistics… and because I had a permanency application in I didn't think I needed to be applying for a temporary contract, and because I had also been promised ongoing employment in the Centre for Education Excellence I again felt reluctant to - I felt I was being sort of press ganged or coerced into applying for something that I felt I didn't need to, for various reasons.” 7

[26] The applicant stated that he did not apply for the mathematics teacher position which had been advertised during the period of his final contract as it only had a two-year time span. He explained to the relevant CIT staff member that he did not feel he needed to apply as he had “already put in a perfectly good application for permanency in May that wasn't acted on”. 8

[27] The applicant was concerned that only a small number of the positions advertised at the CIT were advertised as permanent positions. He believed that the rule was that teaching positions were advertised on a non-permanent basis. 9

[28] The applicant acknowledged that in 2008 and 2009 he had drawn to the attention of relevant staff at the CIT that his contract would end on 16 June 2009 and suggested that they “talk about it”. 10

[29] In relation to his claim that he believed that he had an expectation of ongoing employment at the CEE, the applicant stated that the person he was dealing with at the time “did use the word "permanent" when we were over at Centre for Education Excellence. She said, in the context of the position being advertised - she used, it would be advertised on a permanent basis.” 11 The applicant also acknowledged that a one year extension of his contract had been mooted but that it was necessary for him to put his name on the “temporary register” to allow that to happen and he was asked to do that. He refused to put his name on the temporary register as he considered any further temporary contract would be a “breach”.

The respondent’s reply

[30] The respondent submitted that the applicant’s claim for permanency pursuant to ss.106 and 108 of the Public Sector Act and clause 26 of the collective agreement was unfounded as both provisions were there “to try and put people into permanent positions after a certain point in time, depending on the operational requirements of the CIT...” 12

Request for further submissions

[31] At the conclusion of the hearing on 23 February 2010 the attention of both parties was drawn to the recent alteration to the relevant provisions of the legislation. It was noted that under the previous legislation an employee employed under a contract for a “specified period” had been barred from accessing the unfair dismissal jurisdiction of the Australian Industrial Relations Commission (“AIRC”), irrespective of whether the contract had ended with the effluxion of time or otherwise. A body of case law had developed over time concerning the meaning of the terms “contract for a specified period”. Additionally, other authorities had dealt with employment subject to contracts for fixed terms or “outer limit contracts”, which did not meet the strict requirements of being “contracts for a specified period” but where the employment had terminated upon the contract reaching the expiration date. Employment under a fixed term contract which had terminated at the end date of the contract had been held to have terminated with the effluxion of time and not at the initiative of the employer. Unless there was a termination at the initiative of the employer the AIRC did not have the jurisdiction to deal with the application.

[32] As neither party had addressed the differences between the provisions of the Workplace Relations Act 1996 and the Fair Work Act 2009 in relation to the set of circumstances before me I requested that each provide me with further submissions on the point. In order to clarify the question the following question was put to the parties:

[33] On 2 March 2010 I received a submission from the respondent. The respondent reiterated that its position was not that the applicant was employed under a contract for a specified period but on a series of fixed term contracts each subject to broad mutual rights of early termination. The applicant’s employment had terminated at the expiration of the final fixed term contract, a termination which occurred with the effluxion of time and not at the initiative of the employer within the meaning of s.386(1)(a).

[34] The respondent dealt with the question posed as follows:

“The statutory interpretation issue

The Commissioner's question goes to what function s386(2) serves if s386(1) has the broad interpretation contended for by the respondent. This question appears to assume that unless the work of s386(2) is different from that of s386(1), s386(1) must be read down to exclude fixed term contracts.

The respondent submits that s386(1) should not be read down by operation of s386(2) as the latter is directed to a specific type of contract which the legislature deemed necessary to identify apart from the generality of the overarching definition of 'dismissal' in s386(1).

Background to s386

Previously, the Workplace Relations Act 1996 (C'th) (WRA) provided at s17OCE:

The common law was such that mere effluxion of time was not treated as termination by the employer3.

The Fair Work Bill 2008 Explanatory Memorandum (the EM) in addressing s386 FWA notes that s386(1) is directed to the circumstances in which a person is taken to be dismissed, that is this sub-section provides a positive definition of 'dismissal'.

That clause was said to reflect case law relating to the meaning of termination at the initiative of the employer; the EM gave the example of Mohazeb v Dick Smith Electronics Pty Ltd (1995) 62 IR 200.

This case is provided within the explanatory memorandum in order to demonstrate where the action of the employer amounts to a constructive dismissal. This is particularly relevant to s386(1)(b). It is a clear indication, though, of the legislature's approval of the state of the common law in relation to the issue of dismissal.

By contrast, s386(2) provides for a particular situation in which a person is taken NOT to have been dismissed. Interestingly, contracts for a specified term are given particular attention at various places throughout the FWA highlighting the legislature's perceived need to deal specifically with contracts of this type4.

The EM states that s386(2) reflects the common law position.

The inclusion of s386(2) to deal with an area of employment contracts known to have created difficulty in the past is merely a recognition of the need for particular clarity in relation to contracts of this type.

If the operation of s386(2) was interpreted to read down s386(1) such that it was considered not applicable to fixed term or outer limit contracts which terminated by effluxion of time, these terminations which on the face of them fall outside the definition of dismissal would be incorporated within that definition by default, contrary to both established common law principles, the intention of the Act and the clear words of s386(1).

To take this approach would be to fly in the face of the legislature's clear approval of the existing common law approach to the meaning of dismissal enunciated in the EM relative to this provision.

Conclusion

The Respondent submits that the meanings of the sub-sections of s386 are clear. Further there is no inherent conflict between the s386(1) which defines what IS a dismissal and s386(2) which specifies what is NOT a dismissal in relation to a particular type of contract, notably a type which is not under consideration in this application.”

[35] The applicant also filed submissions on 2 March 2010 which he summarised as follows:

[36] On 5 March 2010 the applicant lodged a further submission in response to that filed by the respondent. He reiterated his view that given that his contract was not a contract for a specified period then there was no bar to jurisdiction. He argued that the legislature could have included fixed terms or outer limit contracts had it been the intention that those contracts, where they terminated with the effluxion of time, were outside the jurisdiction.

Legislation

[37] Section 385 of the Act states:

[38] Section 386 defines “dismissed”:

Consideration and conclusion

[39] The applicant was employed by the respondent on a casual basis from 1999 until 2003. He was then employed under a series of contracts which operated so as to maintain him in continuous employment from June 2003 until September 2009. His final contract, which was entered into in April 2009, was expressed to operate from 4 May 2009 until 30 September 2009.

[40] There is no disagreement between the parties that the contracts, including the final contract, were fixed term or outer limit contracts and not “contracts for a specified period” within the meaning of that term in s.386(2) of the Act.

[41] The respondent objects to the jurisdiction of this tribunal on the basis that there has been no dismissal at the initiative of the employer, and therefore no dismissal for the purposes of s.386(1) of the Act. The only question for determination is whether there has been a “termination at the initiative of the employer”.

[42] On the basis of the Full Bench decision in Department of Justice v Lunn 13 (relying on the High Court decision in Victoria v the Commonwealth14) it is clear that under the legislative scheme in existence at the time of that decision, when a contract for a specified period or an ‘outer limit’ contract reaches the nominated end date, the contract terminates through the effluxion of time and there is no termination of employment at the initiative of the employer15.

[43] The decision in Lunn also drew support from an earlier decision of a Full Bench with very similar facts, Marsh v Macquarie University16 In all relevant respects the facts in both cases are very similar to those of this matter. The applicant was employed under a series of temporary contracts and the employment ended with the expiration of the final contract. In each case the employer made extensive use of employment under temporary contracts. In each of Lunn and Marsh the relevant Full Bench found that there had been no termination of employment at the initiative of the employer as the contract of employment had ceased with the effluxion of time.

[44] According to the Full Bench in Lunn:

[45] In addition it was the view of the Full Bench that:

[46] In the matter before me there was no argument put that the relevant contract was a “sham” entered into to avoid the unfair dismissal jurisdiction.

[47] As was apparent from the question raised with the parties at the adjournment of the hearing of this matter, I considered an important issue for determination in this matter was whether the legislative changes that occurred to the unfair dismissal provisions of the legislation on 1 July 2009 had altered the operation of the relevant provisions so that the decision in Lunn was no longer applicable.

[48] Despite a slight alteration to the wording, the legislation is unchanged in respect of the requirement that for there to have been a dismissal within the meaning of the relevant provisions there must be a termination at the initiative of the employer. In that respect the legislation is unchanged. What has changed in substance is the manner in which the legislation deals with contracts for a specified period of time. Under the previous legislation, where there was a termination of the employment of an employee employed for a specified period, that termination could not be the subject of an unfair dismissal application irrespective of whether the contract terminated with the effluxion of time or otherwise. Under the current legislation the jurisdictional bar operates only where a contract for a specified period terminates with the effluxion of time.

[49] The respondent has argued that the changes to the treatment of contracts for a specified period under the current legislation does not alter the position of a contract for a fixed period which terminates at the end of that period, i.e. the decision in Lunn remains good law. The applicant disputes this, arguing that if the legislature intended there to be a jurisdictional bar in relation to all contracts which have terminated with the effluxion of time, the position would have been clearly stated in the same way it is in s.386(2)(a) in relation to contracts for a specified term.

[50] In these circumstances it is appropriate to refer to the Explanatory Memorandum which accompanied the Fair Work Bill 2009 for guidance 19. The Explanatory Memorandum relevantly provides the following explanation of that clause of the Bill which became s.386 of the Act:

[51] In my view the intention of the legislature is clear. Paragraph 1532 of the Explanatory Memorandum, in dealing with the new provisions relating to contracts for a specified term, notes that “(t)he fact that an employment contract may allow for earlier termination would not alter the application of this provision as the employment has terminated at the end of the period, task or season”. An employment contract which allowed for an earlier termination would encompass a contract for a fixed term. The intention of the legislature appears to be to retain the common law position that a contract which ends with the effluxion of time does not terminate at the initiative of the employer. The only change to the operation of the relevant provisions that is intended is to provide that an employee employed under a contract for a specified period of time, whose employment is terminated other than at the expiration of that contract, may make an application under the unfair dismissal provisions of the legislation.

[52] The applicant was employed under a fixed term contract which expired on 30 September 2009. The applicant’s employment terminated with the expiration of that contract. In these circumstances there is no jurisdiction for an application to be made pursuant to s.386 of the Act as there is no termination of employment at the initiative of the employer.

[53] The applicant’s argument in this matter relied heavily on the decision in D’Lima. If necessary, the decision in D’Lima can be distinguished given that for the entire period of the applicant’s employment with the respondent from 2003 to 2009 there was always a written employment contract which governed that employment. In D’Lima the applicant had been employed by the respondent for periods when no written contract governed her employment. Clearly the applicant in the D’Lima case may have had a legitimate expectation of ongoing employment at the cessation of each contract. The applicant in the matter before me was well aware that his employment could end with the expiration of each contract. A number of statements made by the applicant during submissions by the applicant clearly indicated that he was aware his employment could end at the expiry of his contracts. 20 Clearly in this case there is an absence of “strong countervailing factors”.21 However, in my view, given the decision in Lunn it is unnecessary to distinguish D’Lima.22

[54] The application is dismissed. An order to this effect is published separately.

COMMISSIONER



Appearances:

M. Drummond, applicant, unrepresented.

L. Walker of Counsel for the respondent.

Hearing details:

22 February 2010, Canberra

 1   Annexure D to the respondent’s written submissions, 18 December 2009.

 2   Annexure C to the respondent’s written submissions, 18 December 2009.

 3   Outline of Submissions, 17 February 2010, paragraph 3.

 4   Transcript PN31.

 5   Transcript PN36.

 6   Transcript PN103.

 7   Transcript PN121.

 8   Transcript PN153.

 9   Transcript PN158.

 10   Transcript PN647.

 11   Transcript PN456.

 12   Transcript PN989.

 13   Department of Justice v Lunn (2006), PR974185.

 14   (1996) 187 CLR 416.

 15   Department of Justice v Lunn (2006), PR974185 at paragraph [10].

 16   PR963299.

 17   Department of Justice v Lunn (2006), PR974185 at paragraph [29].

 18   Department of Justice v Lunn (2006), PR974185 at paragraph [42].

 19   Acts Interpretation Act 1901, s.15AB.

 20   Transcript PN103, PN647.

 21   D’Lima v Board of Management, Princess Margaret Hospital for Children (1995-1996) 64 IR 19 at pages 25-26.

 22   Department of Justice v Lunn (2006) PR974185 at paragraph [39].



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