This passage from a recent unfair dismissal case deals with the sometimes vexed legal issue of when an employment relationship ends by its termination at the initiative of the employer.
“It must be accepted that a dismissal, which is principally concerned with the ending of
the employment relationship governed by a contract of employment, may be effective even
though notice of termination (or payment in lieu) does not comply with s. 117 of the Act19 or
the dismissal of the employee was otherwise in breach of the employment contract.20 The
employment contract and the employment relationship are related but distinct.21 And so a
notice, whether oral or in writing, of dismissal which is ineffective to terminate the employment
contract may nonetheless be effective to terminate the employment relationship.22 Thus, the
wrongful dismissal of an employee (because of inadequate notice or some other contractual
breach) by an employer, or a unilateral resignation by an employee other than in accordance
with the terms of the contract, will generally be effective to bring the employment relationship
to an end, but the contract of employment is not automatically thereby discharged.
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[19] The Commission and its predecessor have, under the Act and the Workplace Relations
Act 1996, approached the question of when a dismissal takes effect in a manner consistent with
the common law principles relating to notice and the termination of an employment contract.24
At common law, an effective notice of termination of a contract of employment must specify a
time when termination is to take effect, or that time must be ascertainable.25
[20] We consider that although the termination letter suggested to the Appellant that the last
day on which he was required to work was 10 November 2022, the only date that is clearly
communicated by the termination letter as the date on which the employment will end is
16 November 2022. The reference to payment in lieu of notice and its consequences when read
with the whole of the letter is ambiguous as we have earlier noted. Indeed, the phrase
[2023] FWCFB 133
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“pay(ment) in lieu of notice” is inherently ambiguous. As Waite J, in Leech v Preston Borough
Council26 observed, the phrase is used in two quite different senses:
“. . .The first, which is the grammatically correct one, is when it is used to describe the payment to an
employee whom it is proposed to dismiss summarily of a lump sum representing compensation for the
wages or salary which he would have received if he had been given the notice to which he is entitled by
law. The second, which is the colloquial and grammatically inaccurate one, is when the term is used as a
convenient shorthand way of telling an employee that he is being given the full period of notice to which
he is entitled by law but is at the same time excused any duty (and refused any right) that he would
otherwise have under his employment contract to attend at the workplace during the notice period.”27
[21] In the first case, the employee’s employment terminates upon the date of payment of the
lump sum. In the second case, the employment extends until the expiration of the period for
which the payment was made.28 Whether a payment in lieu of notice immediately terminates
the employment is always one of fact. Here we have the assistance of the letter itself, which
told the Appellant that his “employment will end 16 November 2022” including “one week’s
notice”, however he would not be required to work the notice period and his last day of work
would be 10 November 2022. These statements give voice to the meaning and intended effect
of the subsequent reference to the Appellant receiving “payment in lieu of the notice period”.
This is a case where the reference to payment in lieu of notice fell squarely within the second
category discussed in Leech, with the consequence that the employment came to an end on
16 November 2022, just as the termination letter specified.
[22] For these reasons we consider that the Commissioner erred in concluding that the
Appellant’s dismissal took effect on 10 November 2022.
[23] In the circumstances it was unnecessary for the Appellant to be allowed a further period
within which to make the application under s. 365, since that application, having been made on
7 December 2022, was made within the time prescribed. It follows that the appeal should be
upheld on the first ground we have earlier identified, the Decision and the consequential Order
quashed, and the application remitted to the Regional Coordinator for Region One for allocation
to another member of the Commission to conduct a conciliation conference.”
Clarke v Uniti Group Ltd – [2023] FWCFB 133 delivered 31 July 2023 per Asbury VP, Gostencnik DP, and Clancy DP