The Commission has dismissed an application for payment of the balance of a contract after the applicant’s position was abolished in an operational restructure. The Commission found that the restructure was not in breach of the enterprise bargaining agreement or contract, and that the contract was not prematurely terminated, but rather was not renewed. 

Background

The applicant was employed as the Head of Music at Mandurah Catholic College (the respondent) from 1 January 2014.  The contract for the position offered the applicant an eight-year term, broken into three parts, being:

• Initial period2 years 1 January 2014 to 31 December 2015
• Renewal Period3 Years 1 January 2016 to 31 December 2018
• Renewal Period3 Years 1 January 2019 to 31 December 2021 

The contract outlined that the position would be reviewed during the year prior to the next renewal period commencing. 

In 2018 the respondent commenced a process of restructuring. The applicant was advised of the proposed restructure and the consequential abolition of their position.  The respondent offered the applicant to remain employed as a teacher, retaining his pay rate for 2019, after which the pay rate would reduce to that of a teacher.  Alternatively, the respondent offered a mutual separation arrangement comprised of pay in lieu of notice and an ex-gratia payment. The applicant did not respond to these offers. The applicant instead requested, and was granted, leave without pay from 1 January 2019 to 31 December 2019. 

Contentions

The applicant submitted that his contract was prematurely terminated because of the abolition of his position. The applicant submitted that he was employed under a fixed term contract for eight years and sought payment of the balance of the contract. 

The respondent contended that the applicant’s employment was subject to two renewal periods, and subject to a review in the preceding year of each renewal period.  The respondent submitted that the applicant’s contract was not renewed for the third period and was not prematurely terminated.  The respondent submitted that the abolition of the respondent’s position was permitted under the terms of the contract of employment. 

Findings

The Commission considered whether the applicant’s employment contract should be considered a fixed term contract for eight years, or a contract for fixed terms of lesser periods. The Commission determined that the applicant’s contract provided for three discrete periods which began again or were made anew.  The Commission determined that, due to the applicant taking leave without pay, the second period was extended by agreement by one year.  A review was required to renew that contract beyond that time, and, as a review did not occur, the contract was not renewed. 

The Commission also considered whether the terms of the EBA were incorporated into the terms of the contract employment, and if so, whether the EBA permitted the respondent to abolish the applicant’s position. The Commission found that the terms of the EBA were incorporated into the contract, and that the EBA outlined the obligations of the respondent in a restructuring. The Commission found that the respondent had fulfilled its obligations under the EBA and had offered the applicant two alternative proposals. As the applicant had not accepted the proposals and instead requested leave without pay, the respondent was not required to pay the applicant. 

The decision can be read here.