The rights, responsibilities and duties of the employers and employees are set out by the employment contract. All contractual terms in relation to an employment contract has to be carefully analyzed before the contract is entered into by the parties to it. The legal rights of the employees include right to minimum wages, right to leave and right to healthy and fair working conditions. The rights and liabilities of employer are determined through analyzing the terms of an employment contract. The purpose of this part of the paper is to identify the types of terms in an employment contract and analyze how the terms are given meaning by the courts and what are their effects on the rights and obligation of the employees and employers.

The terms of an employment contract can be divided into expressed terms, incorporated or implied terms. Express terms of those terms which have been expressly incorporated into the employment contract. These are the terms which have been agreed upon by the employer and employee in writing or orally. These are those elements of the employment contract which have been mentioned specifically in the contract. Some of the examples of an Express terms in an employment contract may include redundancy pay, sick pay, hours of work including overtime hours, how much will be the wages, what is the minimum amount of notice period which has to be served in order to end the contract and leave entitlements. Express terms in a contract are not only found in the employment contract itself but also in job adverts, employee or staff manual, any letter received from the employer or any document signed by the employee.

On the other hand implied terms in an employment contract are those terms which are not written or discussed orally however these terms are present and can be applicable to almost all employment contracts. For instance the employee not stealing from the employer or not leaking out the confidential information of the employee is an implied term of the employment contract. Indeed and it is also the duty of the employee to provide the Employees with the safe working condition and not direct the employees to do anything which is not legally allowed such as driving a vehicle which is not insured. Another implied term in the contract of employment is that of a fiduciary relationship and the idea of mutual confidence and trust between the employee and the employer. Implied terms can be incorporated into the employment contract even through practices and Customs in the industry. This means that the terms which have never been expressly agreed by the parties to the contract but overtime such terms have become a part of the contract. This may include terms like letting the employee leave early on Friday or providing them with a Christmas Bonus. In order to be incorporated into the contract to practice and Customs and implied term has to be long standing, automatically received, uninterrupted and expected or well known.

Terms which have been incorporated into the employment contract through collective agreements and work rules are known as incorporated terms. Thus Incorporated terms may be the rules and regulations which have been provided in employee policy or the code of conduct of the employer.

On occasions expressed or incorporated term may look quite simple however they provide Complex issue of construction. Construction is the process through which properly meaning and scope is provided to the terms of a contract by the courts. An interesting example of interpretation difficulties with respect to express terms have been provided by the The Sarfaty case (1992) 28 NSWLR 68. In order to ascertain whether an incorporated terms or a Express term form a part of  the contract, various circumstances have to be considered such as the situation in which the document have been brought to the attention of the employees and other provisions provided in the policy and procedures of the employer. The court analysis whether the language of such terms are merely aspirational or descriptive or actually promissory in nature to give rise to a contractual obligation. The court also analyzes whether the terms can be said to have an objective intention of creating a legal relationship between the parties. The issue have been discussed by various cases including the Romero case [2014] FCAFC 177; 247 IR 315 as well as the case of Westpac Banking Corp’n v Wittenberg [2016] FCAFC 33 (esp by Buchanan J at [69] to [115]). If it is found that a contractual term has been incorporated they are provided the status of an ordinary Express term of the contract by the court.

Express terms can be incorporated into the contract through reference of other documents as being the part of the original contract of employment. For instance these documents may deal with code of conduct, disciplinary procedure, bonus schemes or leave entitlements. Even if such reference is not made these documents they are usually interpreted by courts as the part of the original contract of employment. In case where procedures and policy of the employers are considered as a part of the employment contract such policy may allow the employee to modify or alter the terms of the contract periodically. Primary focus is placed by the courts on the precise language used and the circumstances in which the original employment contract has been entered upon in order to determine the rights and duties of employers and employees to employment contract. Express terms can be understood differently by different parties to the contract and therefore poses a problem for the parties as well as the courts for interpreting them. However Express terms in a contract are most of the times interpreted by the court in and objective sense and not subjectively. This means that meaning is provided to the express terms based on what a reasonable person things about the terms to be and not what the parties to the contract think about the term as discussed in the Sarfaty case.

Broadly speaking implied terms are of mainly two types firstly implied by law and secondly implied by fact. As discussed above contrary to the express or incorporated terms, whether implied terms are present in a contract or not is determined by the courts. One of the primary cases which discussed about an implied term in the contract is the case of dash dash dash. In this case it was ruled by the court that a term would be an implied term if it is obvious and necessary for the continuation of contract but not if it is really fair and just.

There is a significant difference between terms implied by law and terms implied in fact. Individualized terms which are specific to the context and are implied from specific provisions and terms of the employment and are considered against the contractual settings are known as terms implied in fact. These terms are only incorporated by the judges when they find that it is necessary to incorporate search terms to provide business appreciation to the contract. These terms are usually incorporated through the application of the objective test which means a reasonable person in the position of the parties to the contract would have assume such terms to be present in the contract even if they are not specifically mentioned as it was done in the  case of Byrne v Australian Airlines Ltd (1995) 185 CLR 410.

Standardise terms which are considered by the courts as necessary terms of all employment contracts are known as terms implied by law as provided in the case of UWA v Gray (2009) FCR 346. The test which is used in order to determine the presence of a term implied by law is wider than the objective test used to determine the presence of a term implied by fact. It is upon the will of the party to add or exclude Anita in a contract however if such things have not been done terms which have been employed by law would be said to be present in the contract and bind the parties irrespective of their objective or subjective intention. In the case of Malik/Mahmud [1998] AC 20 at 45 it was provided by the court that the terms which are unique to a specific contract in context and depend upon the form of the contract and the express terms along with the surrounding circumstances are terms implied in fact.

The common thing about both kind of implied turns out that they cannot be applicable into the contract if they are contradictory to anything which has been expressly incorporated into the contract.

Therefore before entering into an employment contract the employees and the employers have to gain knowledge about the application of different terms in the contract of employment as the terms specifically set out what are the legal rights and obligations of the employee and the employer.

According to the Fair work Act 2009, part 3 when an employee of an organization is harshly and dismissed from his job on unreasonable grounds, it can be stated that the employee has been dismissed unfairly. The employee who has been terminated on unfair grounds can seek remedies in the court of Fair work Commission. However it is to be noted that according to section 386 of the act, for an employee to seek remedy for unfair dismissal, it must be proved that he had been terminated on the initiative of the employer. However, it can be mentioned that a person who had been forced to resign because of the conduct of the employer will also constitute dismissal.  

Essentials of Unfair Dismissal

According to the aforementioned act (Legislation.gov.au, 2017), it can be stated that for an employee to seek unfair dismissal he needs to have completed the minimum period of employment. It is also to be mentioned that there must be an existing agreement between the employer and the employee who wishes to seek remedy for unfair dismissal. The aforementioned act states the definition of minimum time period of employment. If the employer cannot be called a small business employer, it is essential for the employee to be employed under him six months. However it is to be mentioned that the employee must be provided with a letter of dismissal prior to the dismissal. In case of a small business employer, it is necessary for the employee to be employed under him for a period of not less than one year before he can bring charges of unfair dismissal on the employer. It is important to mention that the period of employment with an employer is the period when the employee was providing constant service to the employer and was not on temporary employment. The time period of service of a casual employee does  not count and the same cannot be eligible to seek remedies for unfair dismissal. However, there are exceptions to the abovementioned provisions. If a casual employee can prove that he was working on a regular basis or if the employee can prove there was  reasonable ground for him to expect the continuation of service, he will be eligible for the seek remedies  of unfair dismissal.

However, section 387 of the aforementioned act governs the criteria to consider the harshness of dismissal. It can be stated that an employee will not be considered to have been dismissed harshly if it is to be proved that the employee was lacking the capacity required for the job or his conduct was inappropriate for the same. It is also to be mentioned that the employee must be notified of the same and given a warning and chance to rectify his actions before his dismissal. In that case the employee cannot claim that the employer was harsh in dismissing him.

Remedies for unfair dismissal  

Reinstatement – According to section 391 of the Fair Works Act 2009 it can be stated that the Fair Works Commission may reinstate a person if it is proved that the person was unfairly dismissed. Reinstatement of a person means to reappoint the person in the position in which he was working before.  The commission can also give the order to appoint the person in a position which would be in no way be less favorable than the position he was working in prior to his dismissal. It can be stated that an employee can only be employed  in a post which is equivalent to the position he was working in if the position in which he was employed is unavailable. It can be stated that the Fair Works Commission can order under subsection(1) of  section 391 of the act to ensure the continuity of employment of the employee in the position he was employed before or an equivalent position. The commission under the Subsection 1 can also order the employer to pay remuneration for the time period when the employee was unemployed. The commission however takes into account the amount earned by the employee during the unemployment from other work in deciding the compensation. It may also take into account the remuneration likely to be earned by the employee during his unemployment, which can be considered reasonable.

Compensation – According to section 392 of the Fair Works Act 2009 it can be stated that the FWC may grant an order of compensation to be provided to the employee by the employer, if it is proved that the employee had dismissed unfairly. Compensation can be considered a remuneration to be paid to the employee by the employer for being able to reinstate the same in the employee’s former position or equivalent position. According to subsection 2 of section 392 of the Fair works Act 2009 it can be stated that the there are certain criteria to be followed by the Fair Works Commission for judging the compensation to be granted to the employee. They are:

• The time period of employment of the employee with the employer,
• The remuneration to have been received by the employee had not been dismissed.
• The effort given by the employee to mitigate the loss suffered by the same during the term of un employment
• The remuneration earned by the employee from other employment or work during the period of dismissal
• The amount of remuneration to have reasonably been earned by the employee during the time period of the award of the compensation and the actual compensation received. 

However according to subsection 3 of the aforementioned section of the aforementioned act the it can be stated that the Fair works commission takes into account the whether the employee in consideration had been charged of misconduct prior to the dismissal. In case the employee was charged of misconduct, the Fair works commission reduces the compensation it would have ordered if the employee had not been charged of misconduct. It is to be mentioned that the FWC does not take into consideration the mental stress, humiliation, disregard faced by the employee prior to its dismissal. It can be stated that the remuneration to be paid to the employee should be total of what the employee was entitled to which is the remuneration of twenty-six weeks, prior to the dismissal of the employee. If the employee was on leave without or partial pay the remuneration to be received by the employee will be in accordance with regulations of the employer. Subsection 391(3) and 392(2) of the aforementioned acts states that the FWC may instruct the employer to pay  the compensation Installments. However it is to be mentioned that the employer must pay the compensation to the employee within the specified time as stated by the Fair Works Commission.

Unfair Dismissal Remedy Procedure:

It can be stated that the employee, who has been dismissed on unfair grounds and wishes to seek remedy must apply to the Fair Work Commission for granting a remedy to the employee. The application made to the Fair Work Commission must be made within a time period of twenty days of the dismissal. It is to be noted that the Fair Work Commission may grant an extension of the application period if:

• The reason of delay is mentioned by the employee
• The employee had become aware later of the dismissal of the same
• The application of the parties has merit.

An application fee has to be paid by the applicant under Division 5 of the aforementioned act to apply to the Fair Work Commission for seeking remedy for unfair dismissal.

Redundancy: An exception to Unfair Dismissal

According to section 389 of the aforementioned act it can be stated the dismissal of an employee due to genuine redundancy will not be considered unfair dismissal. Genuine redundancy can be defined as a situation when the employer of an employee no longer requires the  services of the employee due to a change in the nature of work. It can be stated when an employee is dismissed due the change in the operations of the business, his dismissal cannot be called unfair. However, it is to be stated that an employee’s dismissal cannot be justified by redundancy if the employee had a scope of redeployment in other sector of the enterprise of the employer or in the enterprise of an associate of the employer.

Thus to conclude, it can be stated that there are several criteria which are to be taken into consideration by the Fair Work Commission in identifying whether an employee was dismissed unfairly. It is important to state that there are several criteria for the employees to prove that they had been terminated harshly. However, the employees if terminated on unfair grounds have the right to seek remedies for the same. The aggrieved parties may apply to the Fair work Commission to seek remedies for Unfair Dismissal by following the procedures as stated by the Fair Work Act 2009. The remedies to be granted to the employees include Reinstatement and compensation. It is important to mention that if the employees had been dismissed due genuine redundancy they can claim that they had been dismissed on unfair grounds.

Reference List:

Byrne v Australian Airlines Ltd (1995) 185 CLR 410

Davidov, G. and Eshet, E., 2015. Intermediate Approaches to Unfair Dismissal Protection. Industrial Law Journal, 44(2), pp.167-193.

Fair Work Act 2009 (Cth)

Howe, J., 2013. Poles Apart? The Contestation between the Ideas of No Fault Dismissal and Unfair Dismissal for Protecting Job Security. Industrial Law Journal, 42(2), pp.122-151.

James, N. and Ombudsman, F.W., 2015. Commonwealth of Australia.

Johnson case [2003] 1 AC 578 at 539

Legislation.gov.au.(2017). Fair Work Act 2009. [online] Available at: https://www.legislation.gov.au/Details/C2013C00033 [Accessed 22 Nov. 2017].

Malik/Mahmud [1998] AC 20 at 45

Romero case [2014] FCAFC 177; 247 IR 315

Sanders, A., 2014. The law of unfair dismissal and behaviour outside work. Legal Studies, 34(2), pp.328-352.

Southey, K., 2015. UNFAIR DISMISSAL FOR AUSTRALIAN WORKERS: THE HUNDRED-YEAR JOURNEY. Asian Academy of Management Journal, 20(1).

Spring v Guardian Assurance plc [1995] 2 AC 296 at 335

Tasmanian Ports Corporation Pty Ltd v Gee [2017] FWCFB 1714

The Sarfaty case (1992) 28 NSWLR 68

UWA v Gray (2009) FCR 346

Van Gramberg, B.E.R.N.A.D.I.N.E., Bamber, G.J., Teicher, J. and Cooper, B.R.I.A.N., 2014. Conflict management in Australia. The Oxford handbook of conflict management in organizations, pp.425-448.

Walker v Salvation Army (NSW) Property Trust t/as The Salvation Army – Salvos Stores [2017] FWC 32

Welsby v Artis Group Pty Ltd [2016] FWC 2251

West v Holcim (Australia) Pty Ltd [2017] FWC 2346

Westpac Banking Corp’n v Wittenberg [2016] FCAFC 33