Early Termination of a Fixed term Contract

[MissMay2004]

Hi, myself and coworker have been informed by our non for profit employer (NSW) with more than 15 employees, that due to a drop in clients numbers (10-20 varying) over the last 12 months that the company is reducing staff in our section from 2 full time employees down to 1 full time employee only.
Myself and coworker are the only full time staff members in this section and we are both employed under a fixed term contract. The contract period is specific stipulating exact start and end date of contract. Contract end date is **/**/18. We have been advised this is not a performance based decision, but purely due to client numbers reducing.
Myself and coworker have been advised that we have to submit an expression of interest for the 1 position and is to be submitted within 2 weeks, our expression of interest will be viewed by a panel, an interview will take place and ultimately 1 will retain employment and the other will be given 4 weeks notice and paid any accrued leave entitlements. Our employer has an enterprise employment agreement registered with Fair Work, in the agreement is states that fixed term contracts are exempt from the redundancy clauses in the enterprise agreement, no other mention of Fixed Term Contract is within the agreement.
Can our employer end fixed term contracts with only 4 weeks notice and pay nothing other than our accrued holiday leave? Can our employer force us to reapply for a position we already hold and are still under contract for? Please help me as I am desperate for some advice.

[Greg Schmidt]

Hi MissMay,

Without knowing the details of either your contract or the Agreement under which you are employed, please accept the following observations as general advice only.

First, a fixed term contract does not give you a guarantee of employment. Business circumstances change from time to time, and your employer probably has genuine and valid reasons for reducing its workforce. In these circumstances, a "fixed term" employee does not have any greater right to continued employment than a "permanent" employee. Provided that your employer follows a valid process, and delivers on the entitlements of the terminated employee, it is likely that the termination of employee(s) in response to changing financial circumstances would not be deemed to be an unfair dismissal.

However, I think that your question (rightly) focuses on the issue of your financial payments in the event that your employment is terminated.

There has been a range of decisions (with different outcomes) from the Fair Work Commission about unfair dismissal applications in circumstances somewhat similar to yours. In cases where a person's employment ended on the end date specified in the contract, it is generally accepted that the departing employee will be entitled to be paid for their accrued leave, but no other compensation for the loss of their job (because the ending on a particular date was agreed months or years earlier when the contract was made).

HOWEVER, if your employer believes that it has the right to terminate your employment earlier than **/**/18 (your contracted end date) then it's highly arguable that your employer is not treating your contract as a fixed term contract. Even though there may be a perfectly sound reason for the dismissal, the mere fact that the employer thinks that it has the right to terminate early means that the employment period is not being treated as a fixed term.

In the event that your employment is terminated early, I would suggest that it would be worth pressing your employer for

• A payment equal to wages for the unexpired portion of your fixed employment term (note: unlikely to be paid!), or
• Redundancy benefits under the Agreement for a "non fixed term" employee.

Again, I point out that this is general advice only. It would probably be worthwhile getting specific advice (and maybe representation) from your union (if a member) or an employment lawyer.

Greg