A religious school (the School) in Victoria has been fined $150,000 by the Federal Court after it was found to have unlawfully hired teachers on fixed term contracts and then altered the employment records when they were being investigated.

A fixed term contract specifies a specific project, or a start and finish date for employment; the contract comes to an end automatically on the specified date or when the project is completed. A fixed term employee usually attracts the same types of leave accrual as a permanent employee, such as personal/carer’s leave and annual leave during the course of their employment; but it does not attract a casual loading, and unless there are additional provisions in an enterprise agreement or contract of employment, their employment is terminated at the end of the contract period.

In terms of educational outcomes and planning, there is a clear preference for staff who have predictable ongoing (permanent) employment, as this provides security and stability for schools, teachers and students.

However, schools like most employers, have staff who take parental leave, long service leave, or sabbaticals which mean that while those employees are guaranteed their positions on their return, their roles need to be filled temporarily.

Temporary employees on fixed-term contracts are seen as potentially harmful if used to excess in place of permanent roles. Some employers use consecutive fixed term contracts as a way of avoiding unfair dismissal or severance conditions -  as each contract has an automatic termination date, there is no need to engage in potentially messy, time-consuming and expensive dismissal or redundancy procedures. Other employers use it as a trial period instead of a period of probation in a permanent contract of employment.

Teaching contracts: what are the rules?

Like any other employer, schools are bound by strict laws and obligations. National Employment Standards and awards outline employment conditions, and should be well-understood by employers as they include minimum standards that cannot be varied by contracts.

The Educational Services Teachers Award 2010, which applies to most independent schools outside of Western Australia, provides conditions under which a teacher can be hired on a fixed term basis.  Essentially the Award allows three situations when a school may hire a teacher on a fixed term contract:

1. to undertake a specified project;
2. to undertake a specified task which has a limited period of operation; or
3. to replace an employee who is on leave, performing other duties temporarily or whose employment has terminated after the commencement of the school year.  Provided that where the replacement arrangement extends beyond 12 months, the fixed term employment may be extended for up to a further 12 months.

With the exception of replacement employees, the period of the employment term must be for a minimum of 4 weeks and a maximum of 12 months. The employee can be employed on either a full time or part-time basis.

Enterprise Agreements can place further conditions on the employment of fixed term staff, such as limiting the number of times that a fixed term agreement can be rolled over, or requiring the employer to offer permanent employment after a period of fixed term. Some agreements place limits on the number of casual and fixed term staff in relation to permanent staff numbers.

Government schools must also abide by human resources guidelines produced by State and Territory Education Departments, such as the Recruitment in Schools Guide published by the Victorian Department of Education and Training.

Schools should also be aware that if a fixed term contract is terminated prior to the stated finish date, the employee may be able to make an unfair dismissal claim (usually only if they have been employed for more than 12 months). Furthermore, provisions under the Fair Work Act which protect employees from  an employer taking unlawful dismissal or other adverse action against them if they exercise a protected workplace right, also apply to fixed term employees.

A 'calculated deception'

What this case demonstrates is that the Award condition relating to fixed term staff used as ‘replacement’ employees, is taken seriously by the courts. The School breached the Award when it had almost twice the number of teachers on fixed term contracts than it had staff who were identified as being temporarily absent. The evidence over a number of years showed that this was not a temporary oversight.

The School exacerbated the situation when it attempted to conceal this by altering their records when they were investigated.  This action amounted to a breach of the Fair Work Act and Fair Work Regulations which require an employer to ensure that employee records are not false or misleading.

The Court found that the School had breached the relevant award and engaged in a ‘calculated deception’ when the records were altered to conceal the wrongdoing.

The fine of $150,000 is one of the largest penalties ordered against a school in Australia. The director-general of the School was personally fined $2,200 for obstructing Union officials as they tried to investigate the contracts. The Federal Court demonstrated that individuals with key decision making responsibilities may be held personally accountable for interfering in investigations. In the event that an error is discovered, it is better for school staff to be honest with investigators and show they are willing to work towards compliance rather than attempt to conceal what has occurred.

Could this happen in your school?

When hiring staff, schools must ensure that the contract they have chosen to govern the employment relationship is not only appropriate for the role but also meets their broader legal obligations

The Sydney Morning Herald reports that the Union is planning on investigating ‘other schools and colleges that have made a habit of putting people on fixed-term contracts’. Schools should review their obligations in light of this ruling, in order to ensure that they are correctly using different types of contracts.