Rare unfair dismissal with resignation

Here is an extract from an unfair dismissal case in which an employee succeeded in demonstrating that he had been forced to resign and thus had been dismissed due to “an egregious non-compliance with an employer’s obligation to pay their employees in accordance with their entitlements over a significant period.” The case marks one of the rare occasions on which the Fair Work Commission regards a resignation as a dismissal. The issue whether it was an unfair dismissal will be dealt with in the future.

“Consideration

[60] Section 386(1) of the Act relevantly provides that a person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

[61] There is no suggestion that the Applicant’s employment was terminated on the Respondent’s initiative. The question before me is whether the Applicant resigned from his employment because he was forced to do so as a result of the Respondent’s conduct or course of conduct. In short, whether the Respondent’s failure to pay the Applicant on time over a substantial period forced the Applicant to resign from his employment.

[62] In Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli (BUPA v Tavassoli), the Full Bench expanded on the second limb in the following terms:

“A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable (sic) result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element.”    1

[63] The Full Bench went on to outline the relevant authorities in relation to the second limb. In short, it is not sufficient to simply demonstrate that the employee did not voluntarily leave their employment. 2 While it may be that some action by the employer brought the employment to an end, it is not necessary to show the employer held that intention.3 It is sufficient that the employer’s conduct, would, on any reasonable view, be likely to bring the employment relationship to an end.4 Put another way, did the employer’s conduct have the probable result of bringing about the end to the employee’s employment or leaving the employee with no effective or real choice but to resign?5 It is necessary to conduct an objective analysis of the employer’s conduct to determine if it was of such a nature that resignation was the probable result or that the employee had no effective or real choice but to resign.6 In other words, it must be shown that “the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.”7

[64] The Applicant’s wages were paid late for six consecutive months, beginning in February 2021. For each of those months, the Respondent’s management communicated with staff indicating that funding had not been received and set out an expected payment date. Often the new date promised by the Respondent – which itself was already late – was not met. In considering whether the Respondent’s conduct left the Applicant with no effective or real choice but to resign, this fact is telling because not only was the Applicant consistently paid late, but he could also not trust that the Respondent would pay him by any revised date.

[65] The payment of wages monthly is a basic requirement under the Act. Indeed, that the return of effort is to be paid according to the with the employment contract and any other applicable industrial instrument is fundamental to the employment relationship. By frequently not complying with that agreement, the Respondent indicated that they were not going to live up to the contract between themselves and the Applicant. One or two momentary and short-lived occurrences of late payment may be accepted by parties engaged in a start-up or new organisation. Employees may be more forgiving if that occurred once or twice and was met with deep apologies and quick rectification. However, this is not such a case. This matter involved an egregious non-compliance with an employer’s obligation to pay their employees in accordance with their entitlements over a significant period. The present matter involved breaches of the employment contract by the Respondent on multiple occasions, during the course of which they only provided platitudes to the workforce about the reasons for the delays. That Mr Chou was not able to finance the regular wages of his staff and so frequently left the workforce without their monthly pay demonstrates a lack of understanding of the employment conditions and obligations required by law in Australia.

[66] I accept the Respondent’s management team on the ground in Australia had very little control and that the funding issues fell at the feet of Ms Wang and Mr Chou who were based in China and Canada respectively. Wherever within the Respondent’s enterprise those issues arose, the impact was significantly felt by each of its employees of which the Applicant and his wife were two. It seems that up until July 2021 there was very little acknowledgement from Ms Wang, Mr Chou and others within the senior management team of the significant impact that the late payment of wages was having on staff members. Even then, that acknowledgment only came about after the concern and discontent felt by staff was reported to senior management through various communications from both the Applicant himself and more senior individuals in his team.

[67] The Applicant and other employees had made it clear to the Respondent that the situation was far from satisfactory. The Applicant had specifically written to the Respondent in March noting the requirements under the employment contract and the Act. He had also raised his concerns with the FWO. Given the broken promises and lack of commitment to the monthly deadline, it is understandable that the Applicant (who was jointly responsible for the economic welfare of his family) determined that he had to leave his employment.

[68] The Respondent asked how the Applicant’s resignation on the same day as his wife without further employment to go to provided a stable and reliable income opportunity for their young family. The Applicant acknowledged that it did not and that they had been relying on savings ever since. However, he noted that the Respondent’s work environment – with the uncertainty regarding the payment of wages and other workplace issues (such as bullying) that were exacerbated by the uncertainty and discontent amongst the workforce – was not an environment in which he could continue to work. For the first time in his career, he had required two periods of sick leave due to his mental wellbeing.

[69] The Respondent seeks to utilise the pandemic as a shield against responsible financial management. It relies on the proposition that staff wages were affected by the impacts of COVID-19 on Mr Chou’s other businesses, yet there was no transparency in respect of this issue. Similarly, the communication from Ms Wang noted the impact of the pandemic on the industry and suggested that the Respondent was lucky in that it had avoided the need to impose shutdowns and layoffs. The communications from the Respondent suggest an attitude whereby staff should continue working as normal, despite the consistently late wage payments, on the understanding that they would be paid at some point in the future. That is not good enough and it is not in accordance with the expectations of an employer conducting business in Australia.

[70] The Respondent points to the efforts made to mitigate the impact of the late payment of wages by the $1000 goodwill payment and the offer to staff suffering financial hardship to provide the invoices to management for assistance. Whilst at least demonstrating some awareness to the plight of the workforce (including the Applicant) it does not mitigate the Respondent’s responsibility to pay their staff in accordance with their employment contracts and pursuant to their obligations under the Act.

[71] The Respondent further asserts that by the time the Applicant resigned in September his wages had been paid in full and that he could have contacted the FWO if late payment occurred in future. On that basis, the Respondent argues that there were options available to the Applicant other than resignation.

[72] While I accept that may be so – the Applicant could have remained employed and continued working for the Respondent in a state of uncertainty as to if or when his wages would be paid – that is hardly a realistic option. There was no absolute commitment from the Respondent that the funding issue had been substantially addressed or an alternate plan being put in place by the Respondent to avoid further late payments of wages. The Applicant could have no confidence that the Respondent’s inconsistent and casual approach to the payment of wages would not continue.

[73] In that way, while the Respondent’s failure to pay its staff on time was not taken with the intention of bringing their employment to an end – in fact they continued to impress upon the staff that they should continue to work hard to ensure that the timelines for the project were met – it would, on any reasonable view bring about that outcome. Indeed, the Applicant was not the only employee to resign in these circumstances. Based on the evidence before me I am satisfied that the Respondent’s failure to pay its employees’ wages on time for six months – in circumstances where new dates for payment were proposed and then missed and when, in one month, wages remained outstanding for nearly two months – had the probable result of bringing about the end to the employee’s employment. In other words, I accept that the frequent late payment of wages to the Applicant was of such magnitude and frequency that the Applicant was left with no other reasonable choice but to resign.

[74] Accordingly, I find that there was a dismissal. I order that the jurisdictional objection be dismissed. I will list this matter for conference in due course.”

Mckay v Astro Aero Pty Ltd (2022) FWC 170 delivered 25 January 2022 per Lake DP