Australia: Maximum term employees may be entitled to make unfair dismissal claims and be paid redundancy

Last Updated: 1 March 2018
Article by Mark Cox and Lauren Wright

A maximum term contract is a contract which automatically ends at the expiry of a specified period while giving either party the right to terminate prior to the specified expiry by giving notice. This can be contrasted with a fixed term contract, which is also for a specified period but which does not make provision for early termination.

It has commonly been thought that employees on specified term contracts, whether maximum term or fixed term, fall within the exception under in section 386(2)(a) of the Fair Work Act 2009 (Cth) (FW Act) and therefore cannot make an unfair dismissal claim upon expiry of the contract. The rationale behind this was that the end of employment was due to the effluxion of time rather than at the initiative of the employer: Department of Justice v Lunn (2006) 168 IR 410 (Lunn).

However, this has been put into doubt in the recent decision by the Full Bench of the Fair Work Commission in Saeid Khayam v Navitas English Pty Ltd t/as Navitas English (Navitas) [2017] FWCFB 5162.

The background

Mr Khayam had been on a series of maximum term contracts with Navitas English Pty Ltd. Towards the end of the last of these contracts, Mr Khayam was informed that Navitas had decided not to offer him a further contract after concerns about the unsatisfactory performance of his administrative duties. Mr Khayam's employment ended on the nominated end date set out in his maximum term contract. Mr Khayam alleged that this constituted termination at the initiative of the employer within the meaning of section 386(1)(a) of the FW Act.

The decision

In a 2-1 majority, the Full Bench of the Fair Work Commission held that an employer is not necessarily exempted from an unfair dismissal claim by allowing a maximum term contract to expire. The majority, comprised of Vice President Hatcher and Commissioner Saunders, outlined a five-point assessment to determine whether "termination on the employer's initiative" is likely to have occurred in circumstances where an employee's maximum term contract has expired. This is significant because it means that, even where the parties have agreed to a specified end date, this does not exclude the possibility that termination was at the initiative of the employer and thus can still give rise to an unfair dismissal claim.

The majority of the Full Bench stated that it may be necessary to go further than just examining the terms of a specified term contract because these may not in truth represent an agreement that the employment relationship will end at a particular time, for example:

  1. the contract itself may have been entered into as the result of misleading conduct, a serious mistake, unconscionable conduct, duress or coercion, lack of legal capacity or sham contracting;
  2. the contract may be illegal or contrary to public policy;
  3. the contract may have been varied, replaced or abandoned such that the ostensible time-limit no longer applies;
  4. the contract may not represent the reality of the employment relationship and may be part of a series of contracts;
  5. the conduct or representations of the employer may provide a legal foundation to prevent the employer relying on the terms of the contract (presumably an estoppel);
  6. the terms of contract may be inconsistent with the award or enterprise agreement which will prevail over the contract.

However, the Full Bench made it clear that, absent any vitiating factors such as those listed above, merely not offering an employee a new contract at the end of a specified period contract will not result in a successful unfair dismissal claim.

What are the implications?

In the wake of this decision, there is uncertainty around the status of specified term contracts and the potential ability of those employees to access other entitlements, such as redundancy. There may be a shift towards looking more closely at the reality of an employment contract and inquiring whether it is in truth a mechanism being used to avoid employer obligations in relation to terminating employment.

Further, the rationale applied in decision may have broader application to casual employees who are employed on a long-term basis.

Future cases will no doubt shine a light on the implications of the Navitas decision more broadly for maximum term employees and possibly casuals. In the meantime, it would be prudent to consider your own contracts and employment practices in light of this decision.

Next Steps

As an employer, you should consider reviewing your current employment contracts and practices particularly with reference to employees on maximum term contracts. To best manage your risk:

  • implement a protocol from managing and ending maximum term contracts by tracking when your maximum term contracts are due to expire;
  • it may be worth expressly stating, for example in recitals to the contract, the legitimate reasons for the use of a specified term contract, which may relate to the nature and seniority of the role or the dependency on external funding;
  • do not enter maximum term contracts to simply to avoid unfair dismissal claims;
  • assess whether a maximum term contract is the most appropriate agreement for your business' needs; and
  • consider whether a true fixed term contract without the right to terminate the employment on notice would be a better option – noting the risk that if you want to end a fixed term contract early, other than for serious misconduct, you may have to pay out the whole balance of the specified term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Mark Cox
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions