Unfair dismissal, constructive dismissal and repudiation

This extract from an appeal decision in the Fair Work Commission is another example of the complex legal issue of repudiation and the role it plays in the law of unfair dismissal and whether there was a dismissal.

 

“Consideration

[24]    The Appellant has prosecuted the appeal on the basis that there was a termination on the initiative of the Respondent (i.e. a dismissal) based upon the Respondent’s repudiatory conduct in forwarding the Notice to Terminate the training contract to the Department, such that the Deputy President’s finding that the Appellant was not dismissed was erroneous (appeal ground 5). Through appeal grounds 1-4, the Appellant contends the Deputy President erred in regard to the application of the law of repudiation in a number of respects. As will be apparent from that which follows, we have decided to uphold the appeal and quash the Decision and Order.

 

[25]    The Deputy President was not persuaded that the training contract was a contract of employment for a new and separate period of employment. Rather, the Deputy President was satisfied there was an employment relationship of a casual driller’s offsider existing separate to, and independent of, the contractual agreement by the Respondent to provide the Appellant with the training opportunities. As to this, it may be observed that the training contract included a statement that it was a legally binding agreement between the employer and the employee for the training of Apprentices and Trainees.

 

[26]    Weighing against those particular conclusions of the Deputy President are the provisions in the training contract which outlined that it was for full time employment for 54 hours of employment and training per week and that there was a prior period of casual employment from 31 March 2023 to 29 May 2023, during which the Appellant worked a fluctuating pattern of hours. The training contract also obliged the Respondent to “employ” the Appellant, indicated the relevant award coverage and included terms to the effect that the employer agreed to “employ and train the apprentice/trainees as agreed in our Training Plan…” and “provide work that is relevant and appropriate to the vocation” and “meet all legal requirements regarding the apprentice/trainee, including but not limited to, occupational health and safety requirements and payment of wages and conditions under the relevant employment arrangements.” Further, payslips were in evidence revealing an hourly rate of pay of $37.50 prior to the Traineeship and $40 per hour after it commenced10 and periods of paid annual leave and personal leave taken while the Appellant was a Trainee.

 

[27]    We consider the employment relationship that existed prior to the training contract was fundamentally different to the employment relationship in existence after its commencement and that there is no warrant for a conclusion that there was a collateral casual employment relationship during the period in which the training contract was in operation, much less one that survived its termination. At a minimum, the training contract constituted a fundamental obligation under the employment contract.

 

[28]    The Deputy President’s primary position was that the action of the Respondent in forwarding the Notice to Terminate the training contract to the Department did not have the legal effect of terminating the employment relationship between the Appellant and the Respondent. The Deputy President also concluded that it was arguable that the forwarding of the Notice to Terminate did not have the legal effect of terminating the training contract either.

 

[29]    The Deputy President held that there was no evidence the employment relationship had been terminated and that no repudiation occurred because the Notice to Terminate was incomplete and not legally effective because the requirements of the VET Act had not been complied with.

 

[30]    In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited,11 the High Court outlined what constitutes repudiation in the following manner:

 

“The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party 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. It may be termed renunciation. 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.”12

 

(references omitted)

 

[31]    The questions of the Respondent’s intention and whether the Notice to Terminate was complete or effective at law are not determinative. The Deputy President failed to consider whether a reasonable person, in the situation of the Appellant, would have inferred that the Respondent did not intend to be bound by the contract of employment, or at least a fundamental obligation under it, i.e. the training contract, upon receipt of notification that the training contract had been terminated. As a result, the Deputy President was in error in concluding that the Notice to Terminate did not amount to clear renunciation. We uphold appeal ground 1.

 

[32]    It is convenient to consider appeal grounds 2 and 4 together. Ground 2 focusses on the Deputy President’s finding that the Appellant did not accept the alleged repudiation because “he immediately contacted the Department and clearly stated to the Department that he rejected the purported termination of the Training Contract…”13 In reaching this conclusion, we consider the Deputy President mistook the facts. The email the Appellant sent to the Department on 9 March 2023 was in direct response to the email he had received that day advising him that notification in relation to the termination of his training contract had been received and requesting that he contact the Apprenticeships Office if he had not requested or agreed to end his apprenticeship. The Appellant’s response to that request was concise and factual. We consider the Deputy President erred by concluding the Appellant “clearly stated… that he rejected the purported termination of the Training Contract”14 when he sent his email to the Department on 9 March 2023. The Appellant simply advised that he had not agreed to the termination of the training contract. Nor did the Appellant affirm the training contract. After sending this email, the Appellant did not attend, perform or receive payment for any work and nor did he communicate with the Respondent.

 

[33]    However, the Appellant also contends that by filing the unfair dismissal application (in which he sought compensation and did not seek reinstatement), he clearly and unequivocally accepted the repudiatory conduct of the Respondent and asserts that the Deputy President erred in finding otherwise. The Deputy President held that that the lodgement of the unfair dismissal application did not “constitute clear communication of acceptance of the alleged repudiation because it challenges the lawfulness of the termination of the Training Contract and the dismissal from employment.”15 Through ground 4, the Appellant submits that the Deputy President erred in concluding that the lodgement of the unfair dismissal application did not constitute a clear communication of the acceptance of the repudiatory conduct of the Respondent. We agree. We consider the following conclusion of the Full Bench in NSW Trains v James relevant and instructive:

 

“[70] As the Appellant contends, 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.

 

[71] Here, Deputy President Saunders found that Mr James did not agree with the NSW Trains’ unilateral decision to reduce his grade and pay, although he remained employed by NSW Trains in the position of Shift Manager. We agree with the Deputy President’s findings in this regard. While Mr James continued in employment with NSW Trains as a Shift Manager, he purported to accept the employer’s alleged repudiatory conduct by lodging an unfair dismissal application under Part 3-2 of the FW Act.”16

 

(reference omitted)

[34]    We uphold appeal grounds 2 and 4.

 

[35]    The Deputy President stated at paragraph [104] of the Decision, “Critically the evidence is that Mr Harding sought to correct the information provided to the Department and that he did so prior to the Application being filed” before enunciating, at [108] of the Decision, the principle that if genuine attempts to cure any breach are made, there is no repudiation and seemingly impugning, at [109] of the Decision, the filing of the Application by the Appellant because it occurred after Mr Harding had taken steps to correct the information contained in the Notice to Terminate. It is, however, well established that a repudiation may only be retracted or cured by the party in breach if reasonable notice of the change of intention is given to the innocent party and this is done so before the innocent party exercises the right to terminate the contract.17 Therefore, to the extent the Deputy President’s finding that there was no repudiation was based on the Respondent having made genuine attempts to cure the breach, we consider this finding was not open to her based on the evidence and uphold appeal ground 3.

 

[36]    It follows from our findings in relation to Appeal Grounds 1 to 4, that the Deputy President erred in finding that the Appellant was not dismissed.

 

Rehearing

 

[37]    On rehearing we have had regard to the evidence and submissions filed before the Deputy President and based on our findings above, we have determined that the Appellant was dismissed within the meaning of s 386 (1)(a) of the Act for the reasons that follow.

 

[38]    As outlined above, the test for establishing repudiation outlined in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited 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. 18

 

[39]    It is not disputed that the Respondent sent an email attaching the Notice to Terminate to the Department, which in turn sent an email to the Appellant on 9 March 2023, advising:

 

“The Apprenticeship Office received notification in relation to the termination of your Training Contract, which has been processed.”

 

[40]    Notwithstanding that the Department administered the training contract, the Appellant and the Respondent were the only two parties to it. We therefore consider that a reasonable person in the Appellant’s position, knowing that they themself had not contacted the Department to terminate the Training Contract, would have considered (correctly) that the Respondent had given notification to the Department to terminate the Training Contract.

 

[41]    We also consider the following content in the 9 March 2023 email from the Department to the Appellant would convey to a reasonable person, in the situation of the Appellant, repudiation either of the employment contract as a whole or the fundamental obligation under it to comply with the training contract:

 

  • The subject line, which read “Termination With Apprentice Consent of Trent J Jowett’s Training Contract [identification numbers etc]”;
  • “Termination type: With Apprentice Consent”;
  • “Termination approval date: 9/03/2023”.

 

[42]    The 9 March 2023 email also details support services for people who have been ‘displaced’ and includes sources of information for ongoing employment advice and assistance. The email goes on to address the option of recommencing a traineeship and provides contact details for a helpline with assistance available for apprentices and trainees.

 

[43]    We have noted the Deputy President’s conclusion that the parties’ casual employment relationship survived the apparent cancellation of the training contract but we are not persuaded

 

 

 

there was a collateral casual employment relationship during the period in which the training contract was in operation. Bearing in mind that the parties had entered into a training contract providing for 54 hours of full-time employment per week and the Respondent had committed to an 18-month training plan, we consider the Respondent’s apparent cancellation of the training contract constituted a repudiation capable of acceptance because it was a renunciation of such a fundamental obligation. Further, the Appellant received no communication from the Respondent on or after 9 March 2024 providing confirmation that the Notice to Terminate had been lodged in error and his employment was in fact ongoing until after he had filed the unfair dismissal application. We consider a reasonable person, in the situation of the Appellant, would have understood that the Respondent did not intend to be bound by the contract of employment, or at very least a fundamental obligation under it comprising the training contract, upon receipt of notification that the training contract had been terminated.

 

[44]    At this point, the Appellant had the choice either to accept the Respondent’s repudiation or affirm the employment contract and continue it. In Sargent v A.S.L. Developments Limited,19 Mason J, as he then was, outlined:

 

“A person confronted with the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side.”20

 

[45]    We do not consider the Appellant either expressly or impliedly affirmed the contract of employment or the training contract by his conduct on or after 9 March 2023 and further, we do not consider that delaying in filing of the unfair dismissal application until 30 March 2023 caused prejudice to the Respondent.

 

[46]    The questions of the Respondent’s intention and whether the Notice to Terminate was complete or effective at law are not determinative. Having regard to the circumstances of the matter before us, we are not persuaded the Respondent made genuine attempts to cure the breach such that the repudiation was incapable of being accepted by the Appellant. As outlined above, no communication between the Appellant and the Respondent occurred between 9 March 2023 (when the Notice to Terminate was provided to the Department and the Appellant was notified of it) and 30 March 2023, when the Appellant filed his unfair dismissal application. The Respondent’s attempts to cure the breach prior to 30 March were ineffective because the Appellant was not made aware of them. The Respondent’s attempts made after 30 March 2023 were also ineffective because they occurred after the Appellant’s acceptance of the repudiation.

 

[47]    After 9 March 2023, the Respondent did not cure the repudiation and the Appellant did not affirm the contract of employment. We are satisfied the Appellant accepted the repudiation by the Respondent and clearly communicated this to the Respondent by lodging his unfair dismissal application. This brought the employment relationship to an end. In circumstances where the acceptance of the repudiatory conduct of an employer brings an employment relationship to an end, there is a dismissal within the meaning of s 386(1)(a) and this is our conclusion in this matter.

 

Disposition of the appeal

 

 

[48]    We order as follows:

 

  1. Permission to appeal is granted.

 

  1. The appeal is upheld.

 

  1. The decision of Deputy President Binet of 13 November 2023 in Mr Trent Jowett v Idrilling Australia ([2023] FWCA 2017) and the order in Mr Trent Jowett v Idrilling Australia PR768218 are quashed.

 

  1. On rehearing, the Respondent’s jurisdictional objection that the Appellant was not dismissed is dismissed.

 

  1. The application is remitted to Deputy President Binet to determine the merits.”

 

Appeal by Jowett v iDrilling Australia Pty Ltd T/A iDrilling Australia Pty Ltd  [2024] FWCFB 262 delivered 20 May 2024per- Clancy DP, Dean DP and Grayson DP