The doctrine of repudiation looms large in employment law both from the perspective of dismissals and resignations. Here is an example of the legal issue.
Extract from
“Consideration
[39] In order for an employee to have been unfairly dismissed under the Act, it must first be established that the person has been dismissed. 46 The term “dismissed” is defined in s 12 of the Act by reference to s 386. Mr Johnson’s contentions are made on the basis that he was constructively dismissed, on the grounds of breaches of contract.47 This position is reflected in Mr Johnson’s 8 August 2022 email to Mr Govesis, which commences by stating, “From 10th August due to breaches of contract by P G and S Linehaul from 9th July to 8th of August inclusive I consider myself constructively dismissed.”48 Constructive dismissal is a term which is not used in the Act.49
[40] It is relevant to observe that Mr Johnson took specific issue with the cessation of his employment being characterised as a resignation. 50
[41] For the reasons that follow, I find that the respondent’s failure to provide Mr Johnson with, and pay Mr Johnson for, full time work as a local truck driver amounted to repudiation of the contract of employment. The repudiation was occasioned by the redundancy of Mr Johnson’s role on or about 9 July 2022. Mr Johnson’s 8 August 2022 email in which he considered himself “constructively dismissed” constitutes notice that he intended to accept the repudiation and terminate the employment contract on 10 August 2022. This is what occurred and amounts to a dismissal at the initiative of the employer for the purposes of s 386(1)(a) of the Act.
Terms of the contract
[42] It is trite to observe that in determining whether a party engaged in a repudiatory breach of a contract, the terms of the contract must be identified. 51 The contract of employment between Mr Johnson and the respondent is not before the Commission. Accordingly, its express terms are not known.
[43] In any event it is not in dispute, and I find, that Mr Johnson was employed as a MC Local B/Double local truck driver. The payslips before the Commission refer to Mr Johnson’s “Job Title” as “MC Local B/Double” and his wage and earnings rate as “MC B/Double Local Rate.” 52 The local driver role was paid at an hourly rate of $28.50.53 Mr Johnson’s unchallenged evidence, which is consistent with the payslips before the Commission, is that he was a full time employee working a minimum of 38 hours per week.54 I am satisfied that the terms of the employment contract included terms giving effect to these matters.
[44] The respondent employs a number of truck drivers undertaking different types of work including linehaul (State to State), changeovers (halfway between stations or States) and local. 55 Mr Johnson was employed as a local truck driver. Local and changeover employees were “home every day.”56 Mr Govesis described the duties of a local driver in the following terms:57
“Mr Johnson, what was he specifically employed to do? Well, he was employed over – we’ve got local trucks in each State as well, in Melbourne, also in Sydney and in Brisbane, and they would do local pick-ups and deliveries.
When you say local pick-ups and deliveries can you just elaborate a bit more for the Commission? We would pick up pallets from customers and bring them back to the warehouse or they’ll go to Woolworths or Coles or whatever the customer is going to take the trucks, yes.
Who do you get your work from? Several people. He was employed over in the Bluestar contract but we work with DHL, Allied Express, a lot of companies.
Bluestar, for example, does what? They’re a freight forwarder basically, they move freight, do warehousing and all that.
You just mentioned something to the effect that Mr Johnson was employed for Bluestar work. Can you explain what you mean by that? Well, he was employed to do local pick-ups and deliveries. That’s what he was employed to do…”
[45] Mr Johnson’s evidence was that he would commence work at 9:00am and had a “usual/current spread of hours.” 58 During cross-examination, he was questioned on his commencing at 5:00am for one week in July 2022, and responded that “because my children were on school holidays.”59 Having regard to this evidence, I am satisfied that Mr Johnson’s employment contract contained a term to the effect that his duties were as described by Mr Govesis. He performed work within the State of Victoria starting around 9:00am each day and working 38 ordinary hours each week.
Redundancy and repudiation
[46] Redundancy refers to a position being made redundant and not to an employee being made redundant. Not all redundancies involve dismissal. 60 However, redundancy can give rise to a termination at the initiative of the employer.61
[47] As earlier stated, it is not in dispute that the loss of the Bluestar contract meant that the duties Mr Johnson had been performing as a local truck driver were no longer available. The respondent’s “Offer of Temporary Position” email of 9 July 2022 to Mr Johnson which advises Mr Johnson that “…the position of Local Driver is at this stage no longer available due to unforeseen circumstances,” demonstrates the respondent’s understanding at the relevant time.
[48] I am satisfied that there was a change in the operational requirements of the respondent’s enterprise as a consequence of the cessation of the Bluestar contract. As a result, the respondent no longer required the position of local driver held by Mr Johnson to be performed by anyone. The respondent advised Mr Johnson of this position in writing on 9 July 2022. I accept Mr Govesis’ evidence that at this time, there was “no work” for Mr Johnson. I consider that Mr Johnson’s position became redundant on or around 9 July 2022.
[49] Where a position is made redundant by an employer, the employer may require the employee work in another position which is consistent with the contract of employment, and this may avoid a dismissal. 62 The parties may also negotiate to vary the contract. However, redundancy can give rise to a repudiation of the employment contract. The Full Bench in NSW Trains v James63 provided a short summary of the law with respect to repudiation as follows:64
“The High Court has described repudiation as referring to conduct of a party ‘which evinces an unwillingness or an inability to render substantial performance of the contract’ or ‘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’. ‘Repudiation of a contract is a serious matter and is not to be lightly found or inferred’. 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.”
(citations omitted)
[50] Further to this, the Full Bench in Alouani-Roby v National Rugby League Ltd 65 considered that “where an employer has repudiated the contract and the employee has accepted the repudiation to bring the contract to an end, there has been a termination of the employment contract…. This is sufficient for an employee to be “dismissed” under s 386(1)(a).”66
[51] Following the redundancy of Mr Johnson’s position on or about 9 July 2022, the evidence reveals that Mr Johnson remained ready, willing and able to perform work as a local truck driver. However, the respondent did not provide Mr Johnson with 38 hours per week of paid work as a local truck driver and thereby breached essential terms of the contract identified above at [43] and [45]. The respondent’s conduct evinces an inability to render substantial performance of the contract. The repudiatory conduct was ongoing from on or about 9 July 2022 (noting this was a Saturday, it may be that the repudiation arose on Monday 11 July 2022) until the termination of the contract.
[52] Where an employer has repudiated the employment contract, the employee may either accept the repudiation and terminate the contract, or affirm the contract. The Full Bench in NSW Trains v James stated: 67
“…whether there has been a termination of the contract of employment following an employer’s repudiatory conduct ‘depends on the resolution of a factual inquiry as to the response to the repudiatory conduct.’ For example, the employee might affirm the contract by negotiating with the employer and agreeing to changes to the contract of employment. Alternatively, the employee could elect to accept the repudiation by lodging an application under Part 3-2 of the FW Act and leaving the employment or (reluctantly) continuing in employment with the employer in the demoted position under a new contract of employment, whilst pursing the unfair dismissal application.”
[53] The relevant period to consider is from the time of the repudiation on or around 9 July 2022 to the termination of the employment. I observe that on 5 July 2022, while Mr Johnson was still employed performing a type of local work, Mr Johnson sought to negotiate a new “Tarcutta return” position with the respondent. However as noted at [18] above, this role, which would have enabled Mr Johnson to return home each night, was not the subject of a formal offer from the respondent. As such, this need not be considered further.
[54] On 8 July 2022, following a conversation with Mr Cherry, Mr Johnson emailed Mr Govesis. The email expressed that the role on offer was the Melbourne to Brisbane linehaul (being a “State to State” 68) route. Mr Johnson sought more information on this role, which he was provided by way of an offer on 9 July 2022.
[55] Mr Johnson raised concerns with the nature of the work required by the “Brisbane run,” and ultimately refused it, noting his family commitments and concerns with the requirement to spend the working week travelling interstate. Mr Johnson requested to take a week of personal/carer’s leave followed by leave without pay to consider his options. Consistent with this, Mr Johnson took personal/carer’s leave in the period between 11 July to 15 July 2022, though it is noted that this was due to there being no work for Mr Johnson to perform. 69 From 18 July 2022, Mr Johnson commenced leave without pay.
[56] As noted, Mr Johnson refused to accept the offer to undertake the “Brisbane run.” I consider that the terms of this position, as set out at [19] above, differed substantially to the terms of Mr Johnson’s contract identified above at [43] and [45] above. Had Mr Johnson accepted the offer, I am satisfied it would have amounted to a variation or revocation of the original contract. 70 This is so because the nature of the work, being on the road for five days at a time, and the manner in which pay was calculated (on a cents per kilometre basis) was fundamentally different to Mr Johnson’s agreed position with the respondent.
[57] Mr Johnson subsequently remained on leave without pay. The respondent contends that Mr Johnson’s email of 9 July 2022 amounts to an express request to be placed on leave without pay. 71 While I accept that this is what Mr Johnson stated, the request was made so Mr Johnson could consider his options. In effect, Mr Johnson provided the respondent with an opportunity to remedy the repudiation, as he was contractually entitled to do. It does not constitute an affirmation of the contract, or an acceptance by Mr Johnson of a variation or revocation of the contract.
[58] Mr Johnson was offered yard work on 18 July and 19 July 2022, which he refused. I accept Mr Johnson’s contention that the performance of yard work would have amounted to a significant diminution in his duties and would not represent performance of the terms of his contract. The duties did not involve driving trucks, and the hours attached to the role required pre-dawn starts which did not accommodate Mr Johnson’s family responsibilities. Mr Johnson was entitled to refuse the respondent’s offer of yard work.
[59] On 25 July 2022, Mr Johnson lodged in the Commission a s 372 general protections application. Mr Johnson sought, amongst other things, a redundancy if there was “genuinely no work.” As Mr Johnson had not returned to work in any way at this point, this bears little upon the matter other than to further demonstrate Mr Johnson’s unwillingness to affirm the contract by, for instance, agreeing to changes to his contract of employment.
[60] Mr Johnson’s 8 August 2022 email to Mr Govesis states that due to breaches of contract by the respondent, Mr Johnson considered himself constructively dismissed. It has been said that there is no real difference between an employee’s acceptance of their employer’s repudiation of the contract, or a constructive dismissal. 72 Essential in both is that one side to a contract of employment has made it clear that the contract in its existing form is not to continue.73
[61] In any event, Mr Johnson submits that he did not resign, and I accept this. The language in Mr Johnson’s 8 August 2022 email refers to the respondent’s “breaches of contract” and reflects the acceptance of the respondent’s repudiation unequivocally through the use of the words “constructive dismissal.” It is unnecessary for a person electing to affirm or terminate a contract to be aware of their right to do so. 74 Mr Johnson’s choice to terminate the contract was clear,75 and he was aware of the facts which gave rise to his right to terminate the contract.
[62] The events preceding the email provide relevant context. Mr Johnson had attempted to negotiate new work with the respondent in order to remedy the breach. However, Mr Johnson was not satisfied that the alternative roles presented to him by the respondent over a three-week period, in which he was otherwise unpaid, were suitable redeployment opportunities. I accept that Mr Johnson ultimately formed the view that the contractual breach could not be remedied. In this respect, I acknowledge that Mr Johnson posed his case, in part, as one of constructive dismissal under s 386(1)(b) of the Act. However, in so framing, Mr Johnson submits he had “no real choice in the end but to constructively dismiss. The employee had no option but to attempt to seek alternate employment to mitigate/minimize loss already suffered by breach of contract.” 76 Mr Johnson exercised his right to accept the repudiation, terminate the contract and seek a remedy in the Commission. As noted above, “this is sufficient for an employee to be “dismissed” under s 386(1)(a).”77
[63] It is noted that Mr Johnson’s employment did not terminate until 10 August 2022. On 9 August 2022, Mr Johnson took one day of personal/carer’s leave and was paid by the respondent accordingly. The respondent submits that the Commission should find that Mr Johnson resigned voluntarily from his employment. The respondent contends that the provision of advance notice of a forced resignation is at odds with a conclusion that Mr Johnson had no choice but to bring his employment to an end. While this may be the case, it does not detract from the fact that (a) there had been a repudiation of the contract that the respondent had not remedied, and (b) Mr Johnson was entitled to accept the repudiation and terminate the contract. The evidence does not support a finding that Mr Johnson resigned voluntarily from his employment, and I reject the contention.
[64] I accept that the effect of Mr Johnson’s email on 8 August 2022 where he expressed his choice to terminate the contract on 10 August 2022 raises a question of when the dismissal took effect. I consider that this is of no moment to my findings above. Fundamentally, Mr Johnson sought a remedy in the Commission the day he purported the “constructive dismissal” to have taken effect. This reflects his choice to terminate the contract and pursue his rights in the Commission. The repudiation was at all times ongoing and therefore Mr Johnson could accept the repudiation at any point. Any ambiguity arising from the email does not bear upon the task of determining whether there was a dismissal for the purposes of s 386.
[65] The respondent submits that much like the single member decision in Blair v Kim Bainbridge Legal Service Pty Ltd (Blair), 78 Mr Johnson’s decision to resign was premature. Contrary to the view of the respondent, I regard the facts arising in Blair to be distinguishable, as the circumstances in Blair did not give rise to a repudiation. Conversely, the employer had yet to determine to reduce the employee’s wage, and no term of the contract had been breached. In any event, I do not accept that it can be said that Mr Johnson acted prematurely. As stated, it is apparent on the evidence that the respondent engaged in ongoing repudiatory conduct from around 9 July 2022.
[66] Further, the respondent submits that Mr Johnson did not engage with Mr Cherry in July 2022 about the yard work because he had secured new employment with F Vitale & Sons Pty Ltd (Vitale). However, in response to questions from the Bench regarding Mr Johnson’s non-attendance at the respondent’s yard on 19 July and 20 July 2022, Mr Johnson denied that he was employed elsewhere at that time and said that he commenced employment with Vitale two months prior to the hearing, being around mid to late August 2022. 79 There is no direct evidence before the Commission that Mr Johnson commenced employment with Vitale prior to the cessation of his employment with the respondent, as contended by the respondent, nor was such evidence formally sought to be produced by the respondent. While Mr Govesis gave evidence that his sister-in-law, Stephany Govesis telephoned Vitale and was advised that Mr Johnson commenced employment on 14 July 2022,80 Ms Govesis was not called to give evidence in relation to this matter. In the absence of direct evidence which supports the respondent’s contention, I decline to draw the inference sought by the respondent that Mr Johnson commenced employment with a new employer prior to the cessation of his employment with the respondent.
[67] In the alternative, the respondent submits that Mr Johnson abandoned his employment by failing to present for work on 19 July or 20 July 2022 at the respondent’s request. I am not satisfied in the circumstances described that Mr Johnson abandoned his employment. Mr Johnson was not contractually required to undertake the yard work offered to him on 19 July and 20 July 2022.
[68] A further alternative advanced by the respondent is that this is a case of genuine redundancy. It is open to the respondent to advance its position in respect of s 389 of the Act in its response to Mr Johnson’s merits case.
[69] For completeness, I note that the respondent raised concerns with respect to Mr Johnson’s evasiveness as a witness when pressed on “critical” matters, and the bearing this has upon Mr Johnson’s credibility. 81 However, as is apparent from the preceding analysis, the conclusions I have reached arise from the consideration of documentary material and evidence that is largely not in dispute. While Mr Johnson was directed by the Commission on occasion to answer the questions posed of him during cross examination, Mr Johnson’s oral evidence does not materially bear upon my consideration of the relevant facts.
[70] The conclusion that I have reached turns upon largely undisputed or documented matters. In summary:
(a) Mr Johnson was employed with the respondent as a local truck driver, paid an hourly rate with full time hours of work;
(b) in June 2022, the respondent became aware that its contract with Bluestar would cease;
(c) on around 9 July 2022, Mr Johnson’s position was redundant;
(d) Mr Johnson was not redeployed or offered another suitable role with the respondent;
(e) Mr Johnson remained on personal/carer’s leave and leave without pay until 10 August 2022; and
(f) Mr Johnson sent an email on 8 August 2022 in which he said he was constructively dismissed because of the respondent’s breaches of contract with effect on 10 August 2022, the same day he filed his application for an unfair dismissal remedy in the Commission.
[71] Having regard to these matters, and the conclusions reached, I find that Mr Johnson has been dismissed at the employer’s initiative pursuant to s 386(1)(a) of the Act.
Conclusion and disposition
[72] As I am satisfied that Mr Johnson has been dismissed, it follows that I dismiss the respondent’s jurisdictional objection.
[73] Directions will issue for the further programming of Mr Johnson’s application for an unfair dismissal remedy.”
Johnson v PG & S Linehaul Pty Ltd (2022) FWC 3132 delivered 25 November 2022 per Millhouse DP