LinkedIn Blog - Managing the risk of unfair dismissal - 3 factors to consider...
Managing the risk of unfair dismissal - 3 factors to consider when terminating a contract because an employee's 'specified task' has finished
An employee who is contracted to perform work through a fixed 'specified task' arrangement can't make an unfair dismissal claim if their employment ends when the 'specified task' is completed.
However, in the recent decision of Dale v Hatch the Full Bench of the Fair Work Commission made it clear that a consultancy or labour hire firm can't rely on this exception if the employee's employment contract is terminated because a third party client advises that they no longer require the employee to perform work.
To recap, an employee may bring an unfair dismissal claim if their employer terminates their employment. However, an employer terminating the employment relationship is not the only way an employment contract might end. A contract could finish because:
- the employee resigns;
- the term of the maximum term or fixed term contract has been reached; or
- the task specified in the contract has been completed.
In these circumstances, which are not regarded as being "termination at the employer's initiative" an employee cannot bring an unfair dismissal claim.
In Dale v Hatch, the employee was employed by Hatch (an engineering consultancy) to work as the Site and Facilities Administration Lead for a client project geared towards mobilisation of a new mine. After approximately 2 years work on the project, the employee's employment with Hatch ceased on the basis that the task she was required to perform had concluded. However, the employee argued that her contract was brought to an end in the context of allegations of inappropriate conduct made by her against the client's project manager. On this basis, she argued that Hatch had terminated her employment.
The case was heard first by a Deputy President of the Commission. The Deputy President determined that the employee could not bring an unfair dismissal application because her employment contract was for a specified task and the specified task for which she was employed had finished. The employee appealed against this decision.
The Full Bench of the Fair Work Commission found that the Deputy President had incorrectly determined that the specified task had concluded. The employment contract was stated to terminate on 'demobilisation' of the mine project, but this was was a reference to demobilisation of the broader project, not the completion of any particular task or piece of work by the employee.
In engaging an employee to perform a 'specified task', and seeking to manage the risk of an unfair dismissal claim, the following 3 points are relevant to consider:
- Does the employment contract provide that the employee has been engaged to perform a specific project or job that is distinct or identifiable in definite terms? For example, the employee has been engaged to develop a particular website for a particular client (specified task) v employee has been engaged to develop websites (ongoing task).
- A position or role etc is not the same thing as a task. As stated by the Full Bench - "A role as a matter of the ordinary meaning of the term, usually involves a collection of work duties and functions required to be performed on an ongoing basis for an indefinite period of time. It does not usually involve the completion of a discrete piece of work." A "job" or "project" could be a task, but not if the words are used in their broader meaning, rather than specific to the task required of the employee.
- If you are engaging an employee to perform work for a third party client, have you considered the matters detailed in 1 above? If not, similarly to this matter of Dale v Hatch, the employment contract may be found to simply require an employee to perform work of an ongoing and generic nature, not for the purpose of a 'specified task' - with the effect that an employee could bring an unfair dismissal claim.
Note: In Dale v Hatch, the Full Bench ultimately determined that the employee was not unfairly dismissed.
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