Successive short-term contracts – Is it continuous employment?
Employers and employees alike must understand the terms of an applicable employment contract or agreement, which is binding over and provides guidance in relation to an employment relationship.
In a recent Fair Work Commission (the Commission) case, successive short-term contracts over a period of 2.5 years were found not to amount to continuous employment. Therefore, the applicant did not meet the minimum employment period to pursue an unfair dismissal claim.
Michael Nasr v Mondelez Australia Pty Ltd  FWC 2802
Mr Nasr, the employee, was employed with Mondelez from 2 July 2018 to 31 December 2020. Mr Nasr’s employment was subject to eight fixed-term contracts over this period. Six of these contracts had a maximum term of 3 months including the last maximum-term contract, a 12-month maximum term contract and a one-month maximum term contract.
Each contract provided to Mr Nasr stated an expiry date. After the first and second contracts, which terminated upon their completion date, the third contract onwards demonstrated an ‘extension’ of Mr Nasr’s temporary employment. This ‘extension’ to the previous contract specifically mentioned that upon expiry, there was no guarantee of further employment.
Mr Nasr’s employment then ended upon the expiry of his final maximum term contract.
Mr Nasr believed that his contracts of employment secured his future employment with Mondelez. In addition, he claimed that verbal assurances were made to him that he would be staying with the employer. In evidence, Mr Nasr claimed that in effect, the successive short-term contracts rolled “seamlessly” over the 2.5-year period in a “perfunctory way”.
Mr Nasr further claimed that his contractual engagements contravened the applicable Enterprise Agreement which contained a provision that only permitted fixed-term engagements for "a period, project, season or job". Mr Nasr said he was not engaged as such.
Conversely, Mondelez argued that Mr Nasr was not terminated but rather his employment came to its natural end at the expiry date of the final maximum-term contract. They claimed that even if it was found that Mr Nasr was terminated, the dismissal was not harsh, unjust or unreasonable.
Mondelez further denied that any representations were made to Mr Nasr that he would have ongoing employment. Rather, Mondelez claimed that an explanation was provided to Mr Nasr that each contract had a fixed duration and therefore there was no guarantee of employment beyond each expiry date.
The Commission found that the terms of the last contract were unambiguous and clear, providing that Mr Nasr’s employment would end on 31 December 2020. It determined that Mr Nasr read and understood each of the contracts and therefore understood that each of his contracts was for a fixed period and expired on the date specified in each contract.
Finding that Mr Nasr understood that there was no guarantee of further employment after each of the Contracts expired, the Commission confirmed that Mr Nasr was not dismissed. Rather, his employment came to an end in accordance with the final maximum-term contract due to the “effluxion of time”.
In relation to the claim that Mondelez’ Enterprise Agreement had been contravened, the Commission confirmed that the Agreement did not limit contractors to a “singular engagement”. Therefore, as permitted by the Agreement, Mr Nasr was employed for “a period” under each Contract. The evidence of Mondelez further reflected the genuine operational requirements of the company by each contract, and at the end of Mr Nasr’s employment, where it was determined that the work Mr Nasr had been performing was no longer required.
The unfair dismissal claim was therefore dismissed.
You can read the full decision here.
- Employers engaging workers on short-term fixed contracts must clearly specify in the terms of an applicable employment contract that the engagement has a termination date after which there is no guarantee of future employment.
- Employers should discuss each employment contract with the relevant employee to ensure that the employee has read the terms of their contract and understands the nature of their employment.
- Best practice dictates that employers keep file notes of any discussions they have with employees about their employment.
If you require assistance with drafting new employment contracts, amending current contracts or need employment advice, please don’t hesitate to contact a member of Coleman Greig’s Employment Law team, who would be more than happy to assist you.