Unfair dismissal claims; forced resignations

This portion of a Fair Work Commission unfair dismissal case decision is an excellent summary of the legal principles at work to distinguish between the circumstances in which the conduct of an employee may be a regarded as a dismissal or the termination of employment by resignation.

“Applicable principles

[90] Section 394 allows for a person, who has been “dismissed”, to make an application that they were dismissed in support of a remedy for unfair dismissal. Satisfaction that a person was “dismissed” is a jurisdictional requirement under s.385(a).

[91] The term “dismissed” is defined in s.12 of the FW Act by reference to s.386. Section 386 is as follows:

“386 Meaning of dismissed

(1) 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.

(2)….”

[92] In Quirk v Construction, Forestry, Maritime, Mining, and Energy Union [2021] FCA 1587 (Quirk), Perram J stated in respect of s.386(1)(a) that:

“216 The Dictionary in s 12 of the FW Act defines ‘dismissed’ as having the meaning set out in s 386. It provides that a person has been dismissed if ‘the person’s employment with his or her employer has been terminated on the employer’s initiative’. A termination will be on the employer’s initiative if the act of the employer directly or consequentially results in the termination: Mahony v White [2016] FCAFC 160; 262 IR 221 (‘Mahony’) at [22] citing Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200 (‘Mohazab’) at 205-206.”

[93] At paragraphs [222] – [223] of Quirk, Perram J also stated:

“222 It is established that the use of the passive verb ‘terminated’ does not require the legal event which ends the relationship to be the employer’s. Thus in Mohazab, the employer accused the employee of the theft of an item of stock. It invited him to resign otherwise the police would be called in to investigate. The employee resigned. The question was whether the termination of the employment relationship was at the initiative of the employer. It was held, notwithstanding the fact that it was the employee who had brought the employment relationship to an end by resigning, that what had occurred was a termination of the employment at the initiative of the employer (and hence a dismissal). The correctness of this analysis was affirmed in a considered obiter dictum by the Full Court of this Court (Jessup, Tracey and Barker JJ) in Mahony at [21].

223 The question at hand is the meaning of the word ‘terminated’ in s 386(1). What that provision requires is two things: (a) an initiative of the employer; that (b) results in the termination of the employment relationship. The provision does not require the employer to pull the trigger but only to load the gun. In my view, the provision is expressed in such a way that it is agnostic as to the precise means by which the employment relationship comes to an end. Its focus is upon, however it might have ended, at whose initiative this occurred.”

[94] In respect of s.386(1), a Full Bench of this Commission in Bupa Aged Care Australia Pty Ltd t/a Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941 considered some of the circumstances where resignation (particularly ‘heat of the moment’ resignations) might be considered under either limb of s.386(1). The Full Bench stated:

“[47] Having regard to the above authorities and the bifurcation in the definition of “dismissal” established in s.386(1) of the FW Act, we consider that the position under the FW Act may be summarised as follows:

(1). There may be a dismissal within the first limb of the definition in s.386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer.

(2). A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here 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 probably result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element.”

[95] “Conduct”, as the term appears in s.386(1)(b), includes an act or omission: FW Act, s.12.

[96] In Barkla v G4S Custodial Services Pty Ltd (2011) 212 IR 248 ABB; [2011] FWAFB 3769 a Full Bench cited, with evident approval, the following statement from an early decision of the Full Bench of the Australian Industrial Relations Commission in Doumit v ABB Engineering Construction Pty Ltd (unreported, AIRC (FB), N6999, 9 December 1996):

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[97] In Koutalis v Pollett [2015] FCA 1165; 235 FCR 370 (Koutalis) – subsequently followed by Burley J in Dahdah v Platinum Distributors Australia Pty Ltd (No 2) [2022] FCA 416 – Rares J stated (all original emphasis):

“43. The question whether a resignation did or did not occur does not depend upon the parties’ subjective intentions or understandings. Rather, it depends upon what a reasonable person in the position of the parties would have understood was the objective position immediately after Mr Pollett left the Koutalis’ business’ premises on the morning of 5 May 2014, based on what each party to the conversation had said or done, in light of the surrounding circumstances. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179 [40], Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) [2004] HCA 35; 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction [Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-462 [22]]. (emphasis added)

  1. In my opinion, the same considerations apply to the evaluation of the circumstances where parties engage in conversations and conduct that affects their legal rights under a contract, including the assessment of whether or not words and or conduct can be seen to amount to a resignation. Nonetheless, in employment contexts, a court must be conscious that situations can arise in which one or other of the parties acts in the heat of the moment in such a way that a reasonable person in the position of the parties in all the circumstances would not understand the employee to be resigning or the employer to be terminating the employee’s employment, as the case may be. So much is reflected in what May LJ, with whom Croom-Johnson and Woolf LJJ agreed, said in Sovereign House Security Services Limited v Savage [1989] IRLR 115 at 116, namely:

In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise. However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the Tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight. (emphasis added)

  1. This consideration also bears on the question of whether, in the circumstances, Mr Pollett had been constructively dismissed within the meaning of s 386(1)(b) of the Act. That provided that a person will have been dismissed if he or she 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.”

[98] As to the operation of the exceptions in s.386(2), a Full Bench majority in NSW Trains v Mr Todd James [2022] FWCFB 55 recently clarified that the question of whether a person has been “dismissed” is determined by satisfaction of either limb of s.386(1). At [34], the majority stated “Section 386(2)(c) clarifies that s.386(1) does not apply to certain circumstances. It does not give rise (by implication or otherwise) to a category of dismissal that is separate to s.386(1).”

Consideration – dismissal

Section 386(1)(a)

[99] While I apprehend that the Applicant’s primary case is that she was “forced” to resign (i.e. s.386(1)(b)), I will first consider whether the Applicant was dismissed at the initiative of the employer within the meaning of s.386(1)(a).

[100] At the second meeting on 6 May 2022, I consider that the Applicant conveyed in clear terms she was quitting her job. Assessed objectively, there is little doubt in my mind that her statement to the effect “You can stick your fucking job up your arse”, coupled with the action of getting her bag to leave and then leaving, conveyed that resignation in direct and clear terms. If there was doubt, she specifically confirmed “I’m quitting” before finally walking out with a further threat of legal action – the “statements” ready to go – made that clear.

[101] There is no doubt that the circumstances were made in the “heat of the moment”, in the sense that there was a heated discussion taking place. However, this is not a case of an employer opportunistically accepting a resignation in circumstances where a retraction of a purported resignation was on the cards. I consider that it is tolerably clear from the decision of Rares J in Koutalis that the factual matter to be determined is whether in fact the employee has, when assessed objectively, resigned. There is no evidence that would satisfy me that the Applicant did not, as a matter of fact, wish to resign. While her repeated evidence was that she felt she had “no choice”, it was clear that she intended to resign and, more relevantly, objectively did so.

[102] While there were no discussions between the parties following the resignation (perhaps where a retraction might have been sought), the situation is some distance away from that before Rares J in Koutalis. In that matter, the plaintiff, Mr Pollett, had verbally resigned in the morning and then sought to retract that resignation that very afternoon. He also turned up to work the next day in uniform. Notwithstanding Mr Pollett’s somewhat “agitated” state at the critical meeting in question and purported retraction only hours later, Rares J was satisfied that, objectively, Mr Pollett’s statements at the end of a discussion that he was going to go and start his own business (before walking out) made it clear he had resigned. In this respect, the purported retraction was of no effect, given that the resignation had been accepted.

[103] Other evidence before the court in Koutalis indicated that Mr Pollett’s existing state of mind on the morning of his resignation was to the effect that he had decided to leave and he had “had had enough of dealing with [his employers] Mr and Mrs Koutalis.” Objectively, Mr Pollett effectively communicated that intention to his employer. In this latter respect, and similar to the matter in Koutalis, the Applicant here was giving very strong signals that her employment was close to an end. She had specifically communicated to Mr McKinnon on the morning of 6 May 2022 that she was in the process of deciding whether to leave or not.

[104] In my view, if (as was the case in Koutalis) a conclusion can be reached that, assessed objectively, there was a resignation, then it is unnecessary to consider whether a period of time might have been required for that resignation to be retracted. I consider that all the circumstances before me allow me to be satisfied that the resignation was effective at the time it was given. Even if a ‘cooling off’ period was expressly given, the evidence does not satisfy me that a different position would have been arrived at.

[105] Justice Rares did not otherwise consider that the employer had “contrived, provoked or sought to engineer” the resignation. In this respect, I have considered whether the employer’s conduct here was of such a character the purported effect of the resignation might be vitiated by such conduct of the employer.

[106] I do not consider that, in all the circumstances, the employer contrived, provoked or sought to engineer a resignation. Firstly, I do not consider the anterior events in the months and years referred to in the Applicant’s evidence warrant a conclusion that the Respondent contrived, provoked or engineered the resignation on 6 May 2022. I accept that the Applicant was unhappy.

[107] The Applicant’s unhappiness was aggravated on 6 May 2022, as a result of the initial meeting with Mr McKinnon. In that meeting, she had already indicated she was considering leaving.

[108] After brooding on the matter following the initial meeting on 6 May 2022, the Applicant decided to leave for the day and, somewhat abruptly, said exactly that. Mr McKinnon was entitled to try and clarify if she was leaving for the day or if she was never coming back. That was met with a non-answer about the Applicant wanting to see her son.

[109] While neither of these two witnesses struck me as being overly offended by the use of swear words, Mr McKinnon’s outburst that followed nonetheless reflects very poorly upon him. Mr McKinnon should have behaved better and if he is unable to manage his temper in response to provocation, it might be better for the Respondent to leave primary responsibility for those matters with the other owner, Mrs McKinnon.

[110] Specifically, saying that he did not “give a fuck” about the Applicant’s son (which although was also followed by additional important words said, albeit evidently not properly received or heard) was plainly inappropriate. I accept that the Respondent was a very small business and he was evidently dealing with his own significant personal stress as well as legitimate concerns about managing evidently poor relations between employees in a small work environment. However, allowing the situation to descend into an event where each of the two were yelling at each other mismanaged the situation.

[111] I do not consider, however, the circumstances in their totality would impugn the resignation. It follows that I conclude that the Applicant was not dismissed within the meaning of s.386(1)(a).

Section 386(1)(b)

[112] As to s.386(1)(b), the inquiry is directed to whether a person was “forced” to resign “because of conduct, or a course of conduct, engaged in” by her employer.

[113] As Rares J makes clear in his Honour’s decision, the matters informing the factors he identified in Koutalis, and as stated in Sovereign House Security Services Limited v Savage [1989] IRLR 115, bear on the question of whether a person was constructively dismissed for the purpose of s.386(1)(b): Koutalis, [45].

[114] Identification of the “conduct” or “course of conduct” is necessary.

[115] The Applicant’s reply submissions state, with reference to the 6 May 2022 events, that “As a result of that discussion” (my emphasis), the Applicant resigned. This suggests that the critical events were those during the second meeting on 6 May 2022 (and possibly the events directly leading to it). However, the Applicant’s evidentiary case is broader. She says in her witness statement, in effect, that she had been screamed at and belittled since she commenced in September 2017 and “unfortunately putting up with it over 4 ½ years took its toll.”.

[116] I am not satisfied that the sole event was the second meeting on 6 May 2022 but, rather, the Applicant’s decision to resign was due to her perception of a combination of events leading up to it. So much is clear from the Applicant’s own evidence, let alone the context of the morning of 6 May 2022, which led to the Applicant’s abrupt decision to leave for the day barely two hours after starting work.

[117] However, I am not satisfied that the state of evidence allows me to conclude there was a “course of conduct” occurring in the months and years prior to 6 May 2022 such that, combined with the events of 6 May 2022 themselves, she was “forced” to resign as a result of that conduct or course of conduct. I have set out my findings in relation to those matters earlier, which I will not repeat here.

[118] Even if the specific statement by Mr McKinnon regarding the Applicant’s son was the key event, there are two further matters I consider relevant. The first is that that the conduct – the words used by Mr McKinnon and how they were said – were heard differently by the Applicant than what was fully said. I am not satisfied it would be appropriate to conclude that the Respondent forced the Applicant to resign based on only part of conduct that the Respondent actually engaged in (and in this case the worst part).

[119] The second relevant matter is that the key conversation was the culmination of the events of that morning. It would be unrealistic to treat the final moments in isolation from the course of conduct of the day. I do not consider that the conduct, or course of conduct, of the Respondent on that day (even factoring the particular seriousness of the final moments) satisfies me that the Applicant was forced to resign. Compounding these matters, in my view, was the Applicant’s sense of unfairness in relation to Mr McKinnon’s upbraiding of her own conduct. The Applicant’s alleged conduct in relation to Ms Williams was the specific matter that Mr McKinnon called the meeting for on the morning of 6 May 2022. It is clear from the evidence that the Applicant did not consider this fair or correct. She substantively disagreed that the matters Mr McKinnon raised occurred or were issues at all. Taking the allegation that the Applicant was not speaking to Ms Williams, the Applicant contends she did so (a matter I do not accept that contention beyond the cursory minimum) and then, somewhat contradictorily, said it “it takes two to make a conversation.”.

[120] As I have already indicated, the conduct of that day was originally focused on Mr McKinnon’s attempts to manage the Applicant’s performance. Those attempts did not prove successful and, to the contrary, the Applicant’s view was that the process was unfair, that she had not behaved poorly toward other staff (most recently Ms Williams). The initial discussion with Mr McKinnon caused her to brood, to become more anxious and, far from getting better during the course of the hour or so that she worked, they led the Applicant to abruptly deciding to leave.

[121] I have described what happened above, which began with Mr McKinnon first seeking to find out if she was coming back, and then the argument that then quickly developed. As also noted, it is my view that Mr McKinnon’s manner and language reflected poorly upon him. However, that does not alter my overall conclusion that I am not satisfied that the Applicant was “forced” to leave.

[122] As I am not satisfied that the Applicant was dismissed within the meaning of either limb of s.386(1) of the FW Act, it follows that the Applicant’s claim must be dismissed.”

Hall v Calum John McKinnon & Sheree Ann McKinnon (a Partnership) (2022) FWC 2907 delivered 2 November 2022 per Bell DP