Watertight contracts are crucial to preventing workplace disputes; “clumsy wording” leads to employer defeat in contracts matter in Commission

Watertight contracts are crucial to preventing workplace disputes; “clumsy wording” leads to employer defeat in contracts matter in Commission

Drawing up an employment contract that accurately reflects an employee’s remuneration and entitlements, as well as reflecting current awards and legislation, can strengthen an employer’s position in the event of a workplace dispute.

A recent case before the Fair Work Commission highlights the importance of employers ensuring that an employment contracts reflects the employer’s intent, with “clumsy wording” leading to the employer’s defeat.

The employee, who worked as a house parent at a national charity as part of a government-funded project, commenced employment in March 2015. The project was based in Cairns, where Aboriginal and Torres Strait Islander siblings were housed and cared for together, with a view to later reuniting them with family.

The employee disputed the employer’s claim that her employment contract was for a fixed 12 month period.

According to the employer, the employment contract set out the terms of the house parent’s employment, specifying that her employment commenced on the 30th March 2015 and ended on the 1st of April 2016, adding that this was reinforced during the interview process.

The employer also states that the employee’s letter of engagement clearly stated that her employment would be “full-time from 30 March 2015 to 1 April 2016”, and that this meant the employment period was for a fixed period of time.

The charity said that because the program the employee was employed under was a pilot project subject to government funding, employment contracts were only offered for 12 months.

The employee’s position is that the employer did not make it clear that it was a 12 month position.

The letter of engagement advised “Your employment will be full-time from 30 March 2015 to 1 April 2016”. The employee inferred from this that her employment would be full-time and that, beyond this date, her employment may be part-time or casual.

As her contract did not specify that her employment with the charity organisation would end on a certain date, the employee argued that she had been unfairly dismissed.

The employee contended that she had been discriminated against because she was pregnant and, that had known that the employment would end all-together on 1 April 2016, she would have sought employment elsewhere. It was viewed as impossible to seek alternative employment when 27 weeks pregnant with twins.

The Commissioner dismissed the employer’s jurisdictional objection after finding the employee had demonstrated that a reasonable person in her circumstances, having read the letter of engagement, would not have considered they were entering into a fixed-term contract, noting that the letter of engagement included some terms unsuitable for a fixed term contract. Thus the applicant is entitled to proceed with an unfair dismissal claim.

The letter of engagement provided to the employee advised that the employee’s remuneration would be reviewed annually, and may be increased at the employer’s discretion. The Commissioner noted that this was more suitable for an open ended contract.

The letter of engagement also noted that the termination clause provided was inappropriate. Noting that if the contract was to be for a fixed period of 12 months (or just slightly more than 12 months) then the termination clause should be specific to the circumstances.

The above discrepancies could have been avoided had the employer sought the assistance of a specialised HR consultancy. A specialist HR practitioner could have ensure that the contract accurately reflected the employer’s intent to offer a fixed term contract. Had the contract been correctly executed this could have avoided an embarrassing and time-consuming legal dispute. Such matters damage an employer’s brand and effect their employer of choice status.

iHR believes prevention is the best cure. iHR Australia offers services that include the review of existing contracts or development of new contracts for your organisation. This includes ensuring that employment contracts reflect current legislation and awards.