Repudiation and renunciation in employment law

What is the distinction between repudiation and renunciation in employment law? Here is the answer.

“General principles

[5] The expression “termination at the initiative of the employer” in s 386(1)(a) is a reference to a termination of the employment relationship and/or termination of the contract of employment 3 that is brought about by an employer and which is not agreed to by the employee.4

[6] In circumstances where the employment relationship is not left voluntarily by the employee, the focus of the inquiry under s 386(1)(a) is whether an action on the part of the employer was the principal contributing factor which results, directly or consequentially, in the termination of the employment. 

[7] Where the conduct of an employee amounts to a renunciation of the contract of employment, it is the conduct of the employee that terminates the employment relationship. 6 Renunciation is a species of repudiation which entitles the employer to terminate the employment contract.7 The difference between renunciation and repudiation was explained by Gleeson CJ, Gummow, Heydon and Crennan JJ in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited8 as follows (references omitted):

“In its letter of termination, Koompahtoo claimed that the conduct of Sanpine amounted to repudiatory breach of contract. The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it… Secondly, it may refer to any breach of contract which justifies termination by the other party… There may be cases where a failure to perform, even if not a breach of an essential term … manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.” 9

[8] Abandonment of employment is an example of renunciation. It occurs where an employee ceases to attend his or her place of employment without proper excuse or explanation and thereby evinces an unwillingness or inability to substantially perform his or her obligations under the employment contract. 10

[9] Section 386(1)(b) of the Act concerns the resignation of an employee where the resignation was “forced” by conduct or a course of conduct on the part of the employer. The question of whether a resignation did or did not occur does not depend on the parties’ subjective intentions or understandings. 11 Whether an employee resigned depends on what a reasonable person in the position of the parties would have understood was the objective position, based on what each party had said or done, in light of the surrounding circumstances.12

[10] The test to be applied in determining whether a resignation was “forced” within the meaning of s 386(1)(b) 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 result of the employer’s conduct such that the employee had no effective or real choice but to resign. 13 The requisite employer conduct is the essential element.14”

Ambrose and others v OS MCAP Pty Ltd (2022) FWQC 1481 delivered 10 June 2022 per Saunders DP