Small Business Fair Dismissal Code and constructive dismissal principles

This extract from an unfair dismissal decision of the Fair Work Commission contains an excellent summary of the legal principles involved in determining whether a resignation can constitute a dismissal and also the Small Business Fair Dismissal Code.

“Was the Applicant dismissed in accordance with s.386 of the Act?

[24] Section 396(b) requires a consideration of whether the person is protected from unfair dismissal. To be eligible to make an unfair dismissal claim, the Applicant must establish that they were dismissed.

[25] 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.

[26] The Full Bench in Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli outlined the relevant authorities with respect to what it means for an employee to be terminated at the initiative of the employer.13 In short, it is not sufficient to simply demonstrate that the employee did not voluntarily leave their employment.14

[27] While it may be that some action on the part of the employer is intended to bring the employment to an end, it is not necessary to show the employer held that intention.15 It is sufficient that the employer’s conduct, would, on any reasonable view, be likely to bring the employment relationship to an end.16

[28] All the circumstances – including the conduct of both the employer and employee – must be examined.17 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.”18

[29] Where a resignation is given in the heat of the moment or under extreme pressure, special circumstances may arise.19 In special circumstances an employer may be required to allow a reasonable period of time to pass. The employer may have a duty to confirm the intention to resign if, during that time, they are put on notice that the resignation was not intended.20

[30] The Applicant had an intention to resign at the end of her apprenticeship. However, it appeared to be a ‘heat of the moment’ resignation resulting from the argument raised by the Applicant and Respondent. This is supported through a text message that was subsequently sent after the meeting on 4 July 2023 when the Applicant stated she did not intend to resign or quit in a text message.

[31] The employment relationship ended at the initiative of the employer when the Respondent had texted the Applicant that she had ‘two weeks notice to terminate [her] employment.’

[32] The Respondent referred to TikTok clip reposted by the Applicant on 18 July 2023, which referenced quitting a toxic job, as evidence that the Applicant resigned. Although the Applicant acknowledged this was an unwise decision, it did not change the fact that the employment relationship was ended by the Respondent via text on 4 July 2023.

[33] Section 386 is clear that a person is dismissed when they are terminated on the employer’s initiative. The Applicant was not expected to return to work as a result of the text

message sent by Ms Park. The Respondent had no intention to continue the employment relationship past 15 July 2023.

[34] The Applicant was dismissed within the definition of s.386 of the Act and is a person protected from unfair dismissal.

Was the Applicant dismissed in accordance with the Small Business Fair Dismissal Code?

[35] The Respondent states that there were only 5 employees at the time of the Applicant’s dismissal. This was not contested by the Applicant. The Respondent states that she complied with the Small Business Fair Dismissal Code.

[36] The Small Business Fair Dismissal Code states the following: “Other Dismissal

In non-summary dismissal cases, the employee must be warned that if there is no improvement to their conduct or capacity, they could be dismissed.

The employee must be given a reason as to why their employment is at risk and the reason must be a valid reason based on their conduct or capacity to do the job.

The employer must give the employee an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[37] Although I acknowledge the frustration of the Respondent of losing a long-term client, the incident could have been better managed.

[38] The nature of the industry requires communication skills with clients who may raise an array of topics. A topic raised in this instance was a discussion about a workplace situation. It is likely that Ms Park’s comment to the long-term client on 13 June 2023 may have been a passing comment which was misinterpreted by the client. The comments became a misunderstanding through gossip shared between the Applicant and the long-term client. The

Applicant may not have had the context when hearing about the comments from the long-term client which led to tension between the Applicant and the Respondent.

[39] The Applicant received a formal warning on 4 July 2023, and did not have an opportunity to improve. Although Ms McGennan had refused to apologise to the client on this day, alternative solutions could have been proposed by the Respondent before considering dismissal. If it was regarding her communication style, this should have been reevaluated on 11 July 2023 as stated in the written warning notice.

[40] It was hasty to press the Applicant in apologising to the client and asking her to sign off on the written notice without doing a proper inquiry with the Applicant. In order to assist the Applicant in rectifying the problem, the written notice should have been provided instead of it being read out to her, and a period of time (such as a day) could have been provided for her to consider the notice.

[41] As a result, the Respondent failed to comply with the following part of the Small Business Fair Dismissal Code, and the Applicant was not dismissed in accordance with the Code:

The employer must give the employee an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

[42] As a result, I am required to consider whether the dismissal was harsh, unjust or unreasonable under s.387 of the Act.”

Mcgennan v Angela Joy Park (2024) FWC 255delivered 31 January 2024 per Lake DP