Kim Morris v Palcove Pty Ltd T/A Cheap as Chips [2015] FWC 7890 (U2015/11521). O’CALLAGHAN, SDP, 18 NOVEMBER 2015

This is a jurisdictional issue, where Ms Morris’s employment was terminated and she subsequently made application for an unfair dismissal. Cheap as Chips objected to the application on the basis that Ms Morris was working under a contract of employment which specified an “outer limit” for the continuation of Ms Morris’s employment.

What is of real interest in this decision is the detail provided that should assist readers in considering drafting common law contracts of employment.

By way of background, Ms Morris:

  • Commenced part-time employment with Cheap as Chips as a Shop Assistant, on 24 March 2014.
  • Employment was agreed in a written contract, confirming that she was a permanent part-time employee.
  • In June 2015 hours of work were increased by agreement.
  • 8 September 2014 was appointed in writing to the position of Assistant Store Manager. This was to be a “salaried” (ie inclusive of all penalties, etc) position.
  • In late April 2015 “asked if I could step down from my role as Assistant Store Manager of the Broken Hill store”.
  • Was appointed to the position of Shop Assistant/Shift Runner, effective from 11 May 2015 and until 16 August 2015. This correspondence confirmed that her employment status was that of a “Permanent Part Time Employee”.
  • Was advised on 1 August 2015 that her employment would end on the expiry of her fixed term contract. She was not required to work until 16 August 2015 and was paid up to that date.

The SDP found:

  • The Full Bench decision in Searle v Moly Mines Limited confirms the requirement that any conclusion about matters of this nature are based on an objective assessment rather than on a subjective assessment of the reasonableness of the actions of the parties.
  • The phrase “permanent” appears numerous times throughout the contracts.
  • Cheap-as-Chips submitted that word “permanent” is used to denote a “non-casual” employee, without regard to whether an engagement is for a defined or indefinite period of time.
  • The 7 May 2015 letter confirmed her appointment to the Shop Assistant/Shift Runner position and also acknowledged she was a weekly hire employee. In this regard the reference to Permanent Part Time employment and does not purport to confirm the termination of her earlier employment with Cheap as Chips or the commencement of a new employment contract. It does establish a new position for her the basis that position operated from 11 May 2015 until 16 August 2015.
  • Changes to positions held by an employee or to position requirements do not mean that there is a cessation of employment as distinct from a cessation of particular duties or functions so that a new or different function or position can be undertaken.
  • Simply put, Ms Morris moved from one position to another. While these positions may have been for prescribed periods, as an on-going employee, she was not “employed under a contract of employment for a specified period of time”.

The SDP also cited Department of Justice v Lunn the Full Bench stated (which I have dot-pointed):

  • Whatever may have been the position in the past, under the modern law; there can be no employment relationship without there also being a contract of employment in existence between the parties to the employment relationship.
  • However, as the Full Court of the Federal Court in Brackenridge v Toyota Motor Corporation Australia Ltd made clear, the termination of a contract of employment does not necessarily result in the termination of the employment relationship between the parties to that contract of employment:
    • If the parties enter, or are taken to have entered, a new contract of employment of employment, the employment relationship continues notwithstanding the termination of the prior contract of employment.
    • Thus, a “continuous employment relationship” is not inconsistent with a series of back-to-back fixed term or “outer limit” contracts, each of which takes effect according to its terms.
    • On the other hand, as noted by Dixon J in Automatic Fire Sprinklers Pty Ltd v Watson, it is possible for a contract of employment, and thus an entitlement to wages, to survive a termination of the employment relationship.”
  • Further, I have noted the Cheap as Chips position that Forrest v Cosmetic Co Pty Ltd & Anor establishes that clear written contractual requirements establish obligations irrespective of the extent to which a party has read these documented provisions. As I have indicated, Ms Morris was an on-going employee, to whom the probationary arrangements could not be applied.

In citing Anderson v Umbakumba Community Council and Cooper v Darling Rugby League Inc to support this decision, the SDP found Ms Morris was not an employee employed under a contract of employment for a specified period of time.

Commentary

The following is not “new” but is worthy of mention:

  • “Fixed term” or “temporary” employment contracts become null and void if the employ works beyond the contracted “end” date.
  • A “fixed term” or “temporary” employment contract cannot contain any reference to termination (except for misconduct) – including probationary periods.
  • Say what you mean: just because it is local language or corporate-speak within an organisation don’t make it so.
  • When contemplating the temporary hire, consider a casual arrangement instead.

In this matter Cheap-as-Chips was let down by having in place documents that would stand-up to scrutiny. Do yours?

Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:

 

  • General HR and IR advisory service.
  • Fair Work Commission representation (eg unfair dismissals, adverse actions, etc.).
  • Workplace investigations and mediations.
  • Policies and procedures.
  • Discipline & Termination.
  • People Audits (are you at risk of prosecution?).
  • Enterprise Agreements, Contracts of Employment, Individual Flexibility Agreements.
  • On-site HR services.

Contact Greg on 0438 906 050 or mailto: greg@gregreiffelconsulting.com.au.