Renee Jones v Nga Rangitahi Toa Creative Arts Initiative Trust is a September 2022 decision and the latest word from the Employment Relations Authority (ERA),about when employers can rely on fixed-term employment agreements.
Section 66 of the Employment Relations Act 2000 limits when employers are allowed to rely on fixed-term employment agreements (as opposed to offering permanent employment to workers). Section 66(2) says :
Before an employee and employer agree that the employment of the employee will [be fixed-term only] … the employer must … have genuine reasons based on reasonable grounds for specifying that the employment of the employee is to end in that way…”
This issue was previously considered by the Employment Court in 2019 in Morgan v Tranzit Coachlines Wairarapa Limited. In that case a bus driver was on a one year fixed-term employment agreement that the employer has been rolling over every year for 18 years. The employment was fixed-term because the job was reliant on the employer continuing to secure annual Government funding. The Employment Court did not accept that this was a genuine reason based on reasonable grounds for continuing to offer the employment as fixed-term only. The concern that the Government would not continue funding was speculative (not an actual reason to think that was going to happen), and if it did happen the employer could address that through a redundancy process. This case resulted in some uncertainty among employers and employment lawyers about when fixed-term employment agreement are allowed.
Renee Jones was employed as an administrator by Nga Rangitahi Toa Creative Arts Imitative Trust (‘the Trust”), on a one year fixed-term part-time agreement, from February 2020 to February 2021.
The Trust works with vulnerable South Auckland students, and uses arts and well-being programmes to engage those students in higher education and employment. The Trust relies on philanthropic funding,and most of its funding was tagged for specific purposes. In previous years it had insufficient unallocated funding to employ an administrator (and had relied on volunteers), and there was no guarantee it would have sufficient unallocated funding to employ an administrator in future years.
When Ms Jones’ fixed-term agreement came to an end, so did her employment. She claimed that this amounted to an unjustified dismissal, and argued (amongst other things) there were not genuine reasons based on reasonable grounds for the employment being fixed-term only.
The ERA followed the Employment Court decision from Morgan v Tranzit Coachlines Wairarapa Limited and applied the following test:
When assessing whether a fixed-term agreement has been entered into for genuine reasons based on reasonable grounds, it will be relevant to consider whether the stated reasons were sincerely held (at the time the agreement was entered into) and whether they were for a proper purpose.
Applying the Criteria in the Renee Jones case
The ERA found that the employer had more genuine and reasonable grounds in the present case, compared to the Morgan v Tranzit Coachlines Wairarapa Limited case, to be concerned about its ability to fund ongoing employment. In the earlier case, there was an 18 year track record of being able to fund the role, and no particular reason to think that was about to end. In the present case, there was a track record of not being able to fund the role, and funding being earmarked for other purposes. It was reasonable for the employer to honestly believe that its ability to fund the role on an ongoing basis was too uncertain.
The fixed-term nature of the employment agreement was upheld. The termination of the employment at the end of the agreement was not an unjustified dismissal.
For further information please contact Director, Rob Ogilvie
