Unfair dismissal and the doctrine of repudiation

This extract from an unfair dismissal case turns upon the legal doctrine of repudiation, so often at the heart of such cases.

“Consideration – initial matters

Was Ms Wu dismissed?

[21]    A Full Bench of the Commission stated the following in City of Sydney RSL & Community Club Limited v Mrs Roxana Balgowan8 (City of Sydney) concerning the legal test to determine whether there has been a repudiation of a contract of employment by an employer:

 

“The question whether there has been a repudiation of the contract of employment is determined objectively, it is unnecessary to show a subjective intention to repudiate9 and is a question of fact not law.10 Relevantly, for present purposes, repudiation may exist where an employer reduces the wages of an employee without the employee’s consent11 or where there is a serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract.12 Similarly, if an employer seeks to bring about a change in the employee’s duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.

 

Conduct of an employer which repudiates the contract of employment does not by that act alone bring the contract of employment to an end. A repudiation of the contract by the employer gives the employee who is not in breach the option to decide whether to continue, that is to affirm the contract, or to treat the contract as at an end by accepting the repudiation.”13

 

[22]    I consider there was clearly a “serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract” when Ms Wu was converted to casual employment on around 2 January 2024. Unsurprisingly, the full-time employment contract did not allow for Ms Wu to be unilaterally converted to casual employment.

 

 

[23]    I find that Paddy & Zees repudiated Ms Wu’s full-time employment contract when it unilaterally decided to convert her from full-time employment to casual employment on around 2 January 2024.

 

[24]    As identified by the Full Bench above in City of Sydney, Paddy & Zees’ conduct in repudiating the contract did not bring the contract to an end. Although the parties were understandably not aware of this, I find Ms Wu continued performing duties under the full-time employment contract until her last shift on 25 January 2024. As identified above, Ms Wu performed the same duties and received the same income during this period. The situation here is somewhat similar to the circumstances considered by the High Court in Visscher v Giudice.14 In that case, Mr Visscher’s appointment to a Chief Officer position was purportedly rescinded by the employer, but Mr Visscher continued performing the role in what was described as an acting capacity with the payment of an allowance to top his earnings up from a lower substantive position to the Chief Officer rate of pay. The High Court found Mr Visscher’s employment contract for the Chief Officer position could continue operating after the employer’s purported rescission of the contract, in circumstances whereby Mr Visscher did not accept the rescission and continued performing the same duties.15

 

[25]    After increasing animosity between Ms Wu and Mr Dunphy caused by the repudiatory conduct on 2 January 2024, I find Ms Wu accepted the repudiation on 28 January 2024 and treated the contract as at an end. In this case, Ms Wu’s acceptance ended both the employment relationship and the full-time employment contract. I find the acceptance is established based on Ms Wu’s conduct in not notifying Mr Dunphy that she would continue working for the café after the argument on 25 January 2024 and based on the WhatsApp messages exchanged between Ms Wu and Mr Dunphy on 28 January 2024.

 

[26]    In Ms Tamicka Louise Dover-Ray v Real Insurance Pty Ltd, a Full Bench found that an employee’s actions in filing an unfair dismissal application constituted acceptance of an employer’s repudiation.16 However, in this case, I am satisfied that Ms Wu had already accepted the repudiation on 28 January 2024, and this occurred prior to the filing of her unfair dismissal application on 2 February 2024. If I am wrong about that point, I consider the Full Bench decision could have been relied upon to find that the repudiation was accepted when Ms Wu filed her unfair dismissal application.

 

[27]    It is well established that an employee’s acceptance of a repudiation of the contract by their employer constitutes a termination at the employer’s initiative and falls within the definition of a “dismissal” in s.386(1)(a) of the FW Act.

 

[28]    I am therefore satisfied that Ms Wu has been dismissed within the meaning of s.385 of the FW Act.”

 

Wu v Paddy & Zees Pty Ltd – [2024] FWC 1284 delivered 17 May 2024 per Crawford C