Q. We employ a worker on a temporary skilled visa (previously subclass 457, now subclass 482). Their visa is due to expire shortly, and their employment contract states that employment will end on that date.

Due to changing business conditions, we do not intend to continue the role or sponsor the employee further. 

Is the employee entitled to redundancy pay? Could they bring an unfair dismissal claim?

A. The answer depends on whether the employment is genuinely a fixed-term (specified period) contract, or whether the employment ends at the initiative of the employer. 

A visa alone does not automatically determine the legal position.

 

Specified period of time – unfair dismissal 

Under the Fair Work Act 2009 (Cth),s.386(2)(a), an employee who is employed on a contract for a specified period of time and whose employment is terminated at the end of that specified period is excluded from making an application for unfair dismissal. This is because such a contract terminates by the passing of time at the end of the period rather than by termination at the initiative of the employer. 

In order to be a contract for a specified period of time the dates of commencement and completion of the contract must clearly state a defined end date, demonstrate that both parties intended employment to end at that time and not operate as an ongoing employment relationship with an artificial end date. 

 

Does a visa expiry make it a fixed-term contract?

Not necessarily. The contract terms, not the visa, are decisive. A visa expiry date may act as an outer limit, but not necessarily a fixed end date. If employment is ongoing in nature, the expiry of a visa does not automatically prevent unfair dismissal claims, or redundancy entitlements.

 

Redundancy pay 

Under the Fair Work Act (s.119), an employee may be entitled to redundancy pay where their role is no longer required to be performed, and the termination is at the employer’s initiative. 

In this scenario, if the employer decides not to continue the role due to business changes, and does not renew sponsorship, this may be characterised as a redundancy, not simply expiry of a contract. 

If so, the employee may be entitled to redundancy pay where:

  • they have at least 12 months’ service, and

  • the employer has 15 or more employees

 

Termination at any other time 

An employer could be mistaken to believe that an employee on a temporary visa does not have access to unfair dismissal remedy or an entitlement to redundancy pay. A temporary visa holder can bring an unfair dismissal claim if they meet the minimum employment period, and their employment ends at the employer’s initiative. 

Even where a visa is expiring, the Fair Work Commission may find a dismissal occurred if the employer decides not to continue employment, or the contract is not a genuine fixed-term arrangement. 

The Commission will examine the substance of the employment relationship and whether the end date was genuine.

 

Bottom line 

An employee on a temporary visa does not automatically exclude them from redundancy pay or unfair dismissal rights. The key question is whether the employment ended due to a genuine fixed-term contract, or was terminated at the initiative of the employer. Getting this wrong can expose employers to significant legal risk.