Tick tock; when does a dismissal take place?

For the dismissal of an employee to be capable of having legal effect, certain formalities need to be observed. This is an important issue in the unfair dismissal jurisdiction of the Fair Work Commission not just because its jurisdiction depends upon there having been a dismissal, but also for the purposes of determining when a dismissal may have taken legal effect. It is not until then that the clock for the tight time limits applicable in the Commission begins to tick.

“In Transport Workers’ Union of Australia v National Limited Dairies 46, Keely J said:

“In my opinion there mere posting of the letter of termination does not in itself amount to termination of the employment of the employee concerned until its contents are communicated to the employee.” 47

In Wilson v Commonwealth of Australia (Australian Taxation Office) 48a Full Bench of the then Australian Industrial Relations Commission agreed with the reasoning of Keely J stating that:

“We think that at common law, where termination occurs by letter, generally the termination is not effective until the letter is received. There may be a qualification to that general position. It may be that, in some circumstances, a termination is effective when its communication could ordinarily be expected to have been received. If an employer has attempted in good faith to communicate the termination and the Commission forms the view that the employee has deliberately avoided receipt of such communication, it may be arguable that in such circumstances termination occurred despite the fact that it has not physically been communicated to the employee. Those circumstances did not, however, exist in this matter and we therefore refrain from further discussion of the point.” 49

In Mohammed Ayub v NSW Trains 50 (Ayub), the Full Bench noted the following:

“[41] We therefore do not consider that there is any proper exception to the general proposition established by the authorities under the WR Act and the FW Act that a dismissal cannot take effect for the purposes of those statutes before it is communicated to the employee. There is little support for the existence of any such exception which may be derived from the common law. While it is not inconceivable, as earlier stated, that a contract of employment might expressly provide that it may be terminated by the employer on notice to the employee effective from a time prior to receipt of the notice by the employee, we do not consider for the reasons we have stated that any such contract could be treated as determining the date of effect of a dismissal for the purposes of s.394(2)(a). Termination of employment in accordance with such a provision would be in contravention of s.117(1). Statutory industrial instruments such as modern awards and enterprise agreements could also conceivably allow a date of dismissal which is effectively retrospective (although we are not aware of any which actually do so), but again this could not be treated as determinative of the operation of s.394(2)(a) in a particular case such as to deprive a dismissed employee of the full time period allowed by the provision. In relation to statutory provisions governing public sector employment, we have already noted what was said by the Full Bench in ATO v Wilson about the Public Service Act 1999. We do not consider that such legislation could establish an effectively retrospective date of effect of a dismissal for the purpose of s.394(2)(a) of the FW Act unless that was made clear by express words or by necessary implication. There is no such provision in the Public Service Act as it currently stands.

[42] We likewise consider that the mere delivery of a document to an employee’s usual address notifying the employee of his or her dismissal would not of itself constitute communication of that dismissal, and concomitantly the time at which the dismissal took effect, if the circumstances were that this did not constitute a reasonable opportunity for the employee to actually read the document. That is, we do not consider that s.394(2)(a) requires the strict application of a “postal delivery rule” where the employee has a legitimate explanation for not being able to read the document immediately upon delivery. The circumstances in which this may be the case are undoubtedly manifold, but for example if an employee is on an approved period of annual leave and is holidaying away from home when a dismissal letter is delivered, there is no reason to conclude that the date of dismissal is the date of delivery and not when the employee returns home and first has a reasonable opportunity to read the letter.” 51 [Footnotes omitted]……………………….

Thus, even if, contrary to my principal finding, the Applicant received and read the termination letter of 6 February 2016, it did not amount to an unequivocal notice of termination. In order to terminate an employment relationship, the party exercising the right to terminate must give clear and unequivocal notice that it no longer wishes to be bound by the employment contract. In other words, there must be no doubt in the mind of the party whose employment is being terminated that the employment relationship has come to an end. The law concerning the construction of notice is well established both generally and in the industrial relations context. Some of those established principles are outlined as follows.

The principles governing the interpretation of contractual notices were summarised in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd. 59 Although the notice in this case concerned the construction of a trust deed and notices under deed, the same principles of construction apply. Lord Steyn posited as follows:

“The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual sense. … the inquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind…” 60 [Emphasis added].

More relevantly, as Hatcher VP observed in Ayub:

“The general principle is that to affect the termination of a contract of employment, an employer must, subject to any express provision in the contract, communicate to the employee by plain or unambiguous words or conduct that the contract is terminated.” 61

Finally, in order to take effect, notice of termination of an employment relationship must stipulate when that termination is to take effect, or it must at least be possible to determine that time. 62”

Ilves v Lawson Worldwide Forwarding P/L (2017) FWC 2993